What is a shitcoin: The class clowns of cryptocurrency
From silly meme humour to ridiculous tokenomics, shitcoins are a crypto oddity. Let’s check them out
- Are shitcoins and scam coins the same thing?
- Anatomy of a shitcoin: presentation
- Shitcoins as a political statement
- Anatomy of a shitcoin: Liquidity
- Should I invest in shitcoins?
- Is DOGE a shitcoin?
- What is a shitcoin: A summary
Coins, tokens, digital assets, Ponzi schemes… Whatever you like to call them, cryptocurrencies have fundamentally changed the face of the financial services industry. From bitcoin’s inflation-resistant store of value, to the stablecoin market’s efficiency as a globally tradeable asset, by way of the hundreds of governance, staking and yield-farming tokens in the cryptosphere, the utility of crypto assets continues to diversify.
On the other side of the coin, there is also a class of cryptocurrencies without any true function or worth: tokens that exist either as a joke, as a get-rich-quick scheme or sometimes to troll existing projects. Collectively, they are referred to as shitcoins.
What is a shitcoin and how do you spot one? How do shitcoins work in comparison to other cryptocurrencies? That is what we aim to find out.
Are shitcoins and scam coins the same thing?
An important distinction needs to be made: shitcoins and scams are slightly different. Even if a token is launched as a joke or trolling exercise, it does not necessarily mean that it is a scam, even if many of the same properties are shared.
Scams may actually provide some working utility in order to rope investors into the project, even if their underlying intentions are malicious. Scam coins may also have the veneer of a genuine, serious project, with attractive websites and high social media engagement.
A shitcoin, on the other hand, is more often than not presented as a joke, both in presence and in name. While their intentions may also be malicious (and often are), such as a cover for a Ponzi scheme, shitcoins can actually turn into a genuine project given the right user base. DOGE, for instance, started life as a shitcoin, before eventually becoming the multibillion-dollar giant it is today. The major distinction between shitcoins and scam coins, then, is in presentation and intent.
So yes, shitcoins can turn into projects with significant value. Additionally, micro-cap cryptocurrencies may serve a genuine purpose, however niche. Market capitalisation is not a fair indication of a shitcoin. With that said, these terms are certainly up for debate.
Anatomy of a shitcoin: presentation
A shitcoin will often incorporate a crypto buzzword into its name. A keyword search of “DOGE” on Coin Market Cap produces more than 100 tokens, with names such as Swole Doge, Doge Bonk, Doge Cola and WifeDoge, the latter implying that our favourite furry mascot has finally found love.
Of the dozens of results arising from an “Elon” keyword search, standouts include POKELON, ELONGATE, ELONBALLS and Brother of Elon. Whether Elon’s younger brother Kimbal is behind the latter is unclear. Moon Pirate, Squid Moon and Baby Moon Floki are returned from a “moon” keyword search.
Choosing WifeDoge as an example, we can see the rudimentary, poorly designed and perhaps cringeworthy webpage aesthetic ubiquitous among the shitcoin scene.
While not necessarily poorly written, shitcoin websites use tongue-in-cheek meme humour in their copy. A token’s website should also be the first port of call for your usual due diligence checks. Does the project have a decent whitepaper? Are there any team details? Is there a clear roadmap and tokenomics?
Circulating supply is another important factor. Shitcoins typically have extremely large supplies, up to and beyond the quadrillion mark.
Shitcoins as a political statement
Launching a token on Ethereum or BNB Chain is not difficult, particularly if quality and longevity are not essential factors. Because of that, token launches are becoming an increasingly popular method for political expression. In a prominent recent example, anonymous developers launch the “Let’s Go Brandon” token, named after a right-wing slogan used pejoratively against US president Joe Biden.
Despite lacking any genuine purpose or function, the Let’s go Brandon token (ticker name LGB), found favour among right-wing commentators including Candice Owens and Ryan Fournier. Despite the headlines, the Ethereum-based token inevitably crashed in value and currently trades at $0.000000002936, with a market capitalisation below $1m.
Other politically charged coins of dubious worth include PUTinCoin and the Trump-themed Freedomcoin, the self-described “Number 1 Patriot Cryptocurrency” which was threatened with legal action by Eric Trump, third child of the twice-impeached former US president.
Such coins generate interest purely on the basis of association, rather than their inherent worth. They can be considered as a form of trolling, not dissimilar the tactics used by internet trolls on Twitter.
Anatomy of a shitcoin: Liquidity
If a developer is serious about a project beyond making a quick buck from a rug pull, they will have some skin in the game. Checking for liquidity is easy: By going to the relevant blockchain scanner address (usually BscScan or EtherScan) and checking the holders tab of the token, a liquidity account should be the largest or second-largest wallet. Since most low-value coins are traded over a decentralised exchange (DEX), the account can be identified as PancakeSwap: *token ticker*, or another DEX such as Uniswap or SushiSwap.
For example, above we can see the top holders for the BNB Chain-based token Dogestribute, billed as an automatic rewards-based coin (Note: this token was chosen entirely at random. We do not endorse Dogestribute, nor are we suggesting that it is a scam.)
The PancakeSwap liquidity pool is by far the largest account, holding $54,357, which is nearly 60% of the $90,782 market capitalisation. If you want to cross reference a token’s liquidity, you can paste the contract address into PooCoin, a beautifully titled platform for researching tokens. We can see a similar reading at PooCoin below, suggesting that the liquidity is there.
It is also important to check for lock-up times. In the case of Dogestribute, even though the amount of liquidity is good, it lacks a lock-up period, suggesting that that liquidity could be pulled at any moment.
Any cryptocurrency, even shitcoins, need a strong liquidity backing to sustain any true longevity. A lack of liquidity is a major red flag for a scam.
Should I invest in shitcoins?
Just like any investment, an investment in a shitcoin is a gamble. While not necessarily a scam, the project could flatline in value as investors jump ship, or the developers could abandon the project after losing interest. Shitcoin projects are also often created by amateur developers, making contract vulnerabilities more likely.
Yes, money can, and has, been made on shitcoin investments, particularly for investors who can predict when a short-term bull run is due. However, Currency.com recommends extreme caution when investing in shitcoins, as they are some of the most volatile investments on the market.
Is DOGE a shitcoin?
Dogecoin (DOGE) is often pointed to as the archetypical shitcoin and the inspiration for all shitcoins since. But is the token, worth upwards of $19bn by market capitalisation, actually a shitcoin?
DOGE does tick many shitcoin boxes. It was launched as a joke in 2013, inspired by the Shiba Inu meme popular at the time. Its presentation very much in the tongue-in-cheek area, down to the abundant use of the Comic San typeface. When it launched, DOGE was “defined by humour and social media chatter”, as opposed to any observable utility.
Then came Elon Musk’s infamous February 2021 Tweet, in which he labelled the fledgling token “the people’s crypto”, kickstarting a long-term love affair with the token that lasts to this day. As a consequence, DOGE rocketed up the charts and today remains the 12th largest cryptocurrency by market capitalisation.
Whether DOGE is a shitcoin or not is a matter of personal opinion. Although it historically lacked any real functionality, the token has morphed into a prominent store of value. It is a journey not dissimilar to its prominent meme-coin competitor Shiba Inu, which morphed from a trolling exercise into a major DeFi ecosystem used across the globe.
What is a shitcoin: A summary
So, what are shitcoins? They may have etymological roots in the term “shitposting”, which one Urban Dictionary contributor defined as: “A post, typically in a forum, that contributes nothing of value towards, or is an attempt at derailing a discussion.”
It is not difficult to identify the main characteristics of one. An overuse of meme humour, immature token names, lack of utility and ridiculously bloated circulating supplies are key indicators.
What is not so obvious is the distinction between shitcoins and genuine scams. Is there a moral distinction between launching a token as an obvious pisstake and launching a token with the hidden intention of fleecing users out of their money?
The obvious answer is yes, although the two terms are not mutually exclusive. Furthermore, where do politically motivated token launches sit in the spectrum? Can a political statement be classed as functionality? Also, does a shitcoin remain a shitcoin when a community rallies behind it, subsequently driving up its value? In the end, questions are a matter of opinion!
How many shitcoins are there?
It is impossible to know exactly. The figure changes daily, and defining a shitcoin is problematic, but they likely number in the hundreds.
How to identify shitcoin
Shitcoins can be identified by poorly designed webpages, overabundance of meme humour, lack of any observable utility and a hugely inflated circulation supply, sometimes in the quadrillions.
Are shitcoins legal?
There is a distinction between a crypto scam and a shitcoin. Shitcoins are not necessarily illegal, unless they intentionally scam investors out of their money.