What are shit-coins?

That’s one whacky name, isn’t it? Shitcoins have been in the news ever since a few years. But what exactly is a shitcoin? And more importantly, why did some of them get their fifteen minutes of fame? The term shitcoin refers to a cryptocurrency with little to no value or a digital currency that has no immediate purpose. This word can often be confused with alt-coins, which are basically all other coins other than Bitcoin.

Shitcoins are usually born to troll or as a joke on the internet. The diminished value of a shitcoin is often due to the death of a fad or failed investor interest thus making them bad investment ideas.

So how do Shitcoins work?

Ever since the birth of Bitcoin in 2009, people have been intrigued about Shitcoins as well. Their success was largely drawn by investors who are potentially looking to get into investing in the coin early.

So how this works is, the developer of that coin usually announces the capped number of tokens that will ultimately be available in the network, for example, bitcoin is capped at 21 million, while ether supplies are capped at 18 million per year.

Setting a supply limit creates scarcity in the market thus driving investors to HODL onto their coins. Introducing coins into the system at regular intervals dilutes the value of the coin initially, but invites more investors to join the crypto wave in the long run as well.

But with most cryptocurrencies being limited to their practical use, buying and selling real-world goods and services using cryptocurrencies is not yet a common occurrence; i.e. crypto is no longer seen as a currency but rather as an investment; kinda like gold.

So what makes Shitcoins shoot up in value?

Most of the value from Shitcoins come from the FOMO market. Basically, remember when Elon Musk tweeted a photo of his dog that shot up the value of Dogecoin? Yeah, that’s exactly it. Once the fad dies, so does the value of the coin.

But there’s more. Because of the cryptocurrency market, there is no historical data to draw value points from. Cryptocurrency is entirely new and so most of the value is driven by speculation which means that it could all shut down tomorrow and there’s really nothing that you or I can do about it. That being said, it would be totally unfair to also say that this is a fad. This could be the next Web 3.0 and the technology might be a revolution that is here to stay. But that being said, do your research. There is potential with certain coins and with certain others, well they end up on the shit list. And remember, all shitcoins are altcoins, but all altcoins are not shitcoins.

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