The term ‘shitcoin’ refers to all of the offshoots of faltering or already defunct cryptocurrencies. These currencies to sell bitcoin in Dubai, which are typically devoid of any discernible purpose, have no basis for existence and no fundamentals to back them up. These currencies have no lifespan because their function is unknown, unlike Ether and Bitcoin.
Dogecoin is the most well-known example. In 2013, Dogecoin was ‘forked’ from Litecoin as a ‘fun currency.’ It was designed as a meme coin with a focus on the Shiba Inu dog breed featured on its logo.
What determines the worth of shitcoins?
Shitcoins have no intrinsic worth other than the fact that they exist. When their product is out, the speculation surrounding it causes an inflow of investors to pour money into it. The price of these coins rises dramatically as a result of mass purchase in a short period of time.
When these investors cash out to achieve short-term gains, their stock price plummets as soon as it rises.
After all early profits have been realized, the price of shitcoins remains stable with little volatility. This pump-and-dump trend frequently leaves unwary newbie investors with a slew of worthless shitcoins. Dogecoin, for example, derives its value on the tweets of Elon Musk, the world’s richest individual to sell bitcoin in Dubai. The coin’s worth would be meaningless without his support and openly articulated ideas. Furthermore, Tesla’s CEO has declared that the firm will accept payments in Dogecoin on a trial basis.
How can investors spot shitcoins?
Despite the creators’ best efforts, shitcoins include numerous obvious red flags. Here are some things to look out for:
- Developers who are shady: If cryptocurrency creators are present in the public eye, they command adequate confidence from the masses and provide credibility to the newly created cryptocurrency. Developers who don’t have a face are obviously suspect and more prone to deceive individuals.
- Undefined functionality:
Blockchains such as bitcoin and ethereum were created to promote decentralized finance (DeFi) by eliminating a central authority and improving transaction security. Because of the usefulness they provide, BTC and ETH are thus valuable repositories of wealth. Shitcoins have no such underlying purpose and exist purely for the sake of being.
- Generic projects:
If a project makes huge claims but lacks clear features, it is most certainly a shitcoin. These project websites are typically hosted on free domains, are filled with mistakes, and are even poorly designed.
- Only a few holders
According to the usual, a reputable cryptocurrency must have at least 200–300-coin owners. Any value less than the bottom end of this range denotes malevolent behavior. A healthy currency that is worth investing in should also have 5-10 transactions per minute.
- Pool of dry liquidity:
A newly formed decentralized exchange relies significantly on liquid money. Less than $30,000 in liquid assets is a warning sign that you must avoid. The coin may potentially list at absurd discounts of up to 30%, which is not sustainable.
What should you look for before investing in cryptocurrencies?
- Availability of a project whitepaper:
A whitepaper verifies the project’s legitimacy. Without it, the cryptocurrency to sell bitcoin in Dubai will become invalid. The whitepaper’s quality is equally crucial. Its poor structure, lack of consistency, and frequent mistakes raise concerns about its legitimacy.
- Examine the developer’s promise:
Most of us, as inexperienced investors, prefer to pass through the technical aspects, expecting they will be incomprehensible. However, it is the one habit that con artists use to enrich the information. It may claim that the initiative will achieve a certain objective, but it does not explain how.
As a starting point, investors should read the whitepapers of Bitcoin, Ethereum, Cardano, and Polygon.
The dangers of shitcoins
There are about 4,000 cryptocurrencies on the market as of January 2021. They can’t all be as good as Bitcoin, Binance, or Tether. There are excellent and poor investing possibilities in the stock market, and the same can be said with cryptocurrencies. Many shitcoins are designed to take advantage of sell bitcoin in Dubai by folks who jump on the crypto bandwagon without doing their homework beforehand. Their worth is dependent solely on assumption.
Many people have lost large sums of money to shitcoins, ranging from hundreds to thousands of dollars. Hearing stories like Contessoto’s might make buying inexpensive, lesser-known cryptocurrency incredibly appealing. Investing in cryptocurrency carries the same dangers as investing in the stock market.
How to Spot a Fake Bitcoin
- The developers are shrouded in mystery.
The individuals behind a project should be reliable, not a random assortment of strangers with fictitious identities. You wouldn’t buy shares from an unidentified group, would you? The same is true here. If the creators have identified themselves through video on Instagram or YouTube, for example, they are regarded as doxxed and far more credible. It’s considerably less likely to be a fraud now that their look is known to the general public.
- The project makes lofty claims but lacks clear features
Anyone may set lofty objectives and make lofty promises. However, not just anybody can create a plan for how those goals will be met. If a project fails to define its functionality, it is untrustworthy.
- Aspects of the project appear to be duplicated or generic
If a project’s website appears generic or utilizes a free domain, this should raise an eyebrow. It indicates a lack of the authenticity of a genuine, well-developed project. Furthermore, if the white paper is indistinguishable from that of other prominent projects, it’s most likely a forgery designed to fool people into thinking they’re safe. Alternatively, if it’s written in such technical language that it’s difficult to comprehend, it’s probably a shitcoin.
- Examine the number of holders
According to experts, to sell bitcoin in Dubai, each new coin worth investing in should have at least 200 to 300 holders. Any coin that does not match that criterion is unhealthy and not worth investing in. Likewise, a healthy new coin should have five to ten transactions.
- Think about the liquidity pool
The liquidity pool is regarded as the backbone of the majority of decentralized exchanges. If the project you’re considering investing in doesn’t have at least $30,000 in it, it’s most likely a shitcoin. Low numbers, such as hundreds or thousands, should be considered a red flag.
After all, many of the regulations that apply to the stock market also apply to the crypto realm. Two fundamental concepts can help you invest wisely: Before investing, do your homework and never invest more than you can afford to lose.