Looking for some light reading? Well, print this out, sit down, and stay for a while…
It’s a bit embarrassing to admit but my inaugural purchase of cryptocurrency wasn’t bitcoin or Ethereum or even NEO. Nope, I filled a bag with a shitcoin.
I was simply thunderstruck by FOMO during the Great Bull Run of December 2017. Coins were rocketing up every time I awoke to check coinmarketcap. I really wanted some skin in the game.
Coinbase was taking waaay too long to approve my application and I managed to find a project that sold coins straight from their website.
I was super-excited to finally be in the game with a massive 1,000,000 coins living in a QT wallet. I was a freaking cryptillionaire for only $60!
The coin’s value quickly tripled (OFY!) but then came the delisting from the sole exchange trading it (DAMN!!). I never realized any actual gains.
Now that I’ve more experience in the space there’s no way I’d ever feel compelled to add such an obvious turd to Blockfolio.
You see, when you know what to look for it’s easy to spot the brown trout floating in a sea of crypto.
The good news? You can learn from my rookie mistake and only get involved with genuine projects. The whole point of this article is to prevent you from stepping into a similar mess.
Here’s how to easily identify a questionable, high-risk blockchain project…
1) Vague Website
A project’s web presence speaks volumes about their overall grasp of technology. The site should be sleek, modern, and fluid.
Granted, a fancy website with no real project behind it can be a wolf a sheep’s clothing. Conversely, a great project running a sad website won’t find much traction in the hype-heavy land of crypto.
A project’s site should also clearly state the team’s vision and exactly how they plan on achieving their goals.
And be wary of sites overflowing with buzzwords. Failure to explain the terms they’re using is a sign of a weak project relying on marketing fluff to keep their ship afloat.
We’re building the foundation of the world’s first blockchain-powered, globally decentralized, trustless, peer-to-peer yet peerless, distributed atomic protocol ledger for the IoT’s future sharing economy platform model. Help us stack blocks on blocks until we reach the moon!
Eww, what is that smell?
2) Invisible Team
Anonymity is certainly appealing for a certain type of blockchain developer. Some coders just want to code and prefer to keep their identity hidden.
I can respect that. But CEOs and founders and advisors and marketing executives of legit projects are typically visible.
Solid projects let you reach out to the top brass on LinkedIn. You should be able to easily contact members of the team if you’ve got any questions at all.
If you don’t see photos, or at least digital caricatures of real people, plus multiple channels for investor outreach, the project is suspicious.
3) Fakeass Project
If a project isn’t trying to solve a real-world problem then their attempt to blockchainify may be nothing more than a bandwagon-jumping money grab.
Projects that are nothing more than a fluffy whitepaper will most likely, in the long run, fizzle out before they create any product of significance.
Do they even need a blockchain and/or their own coin or is a website sufficient for their business model?
I mean, will the under-home skunk removal industry truly benefit from tokenization?
Look for real projects with real customer bases and real revenue streams. They should have an ever-growing list of partnerships with similar players in their niche.
Shitcoins fall short on all fronts.
4) Antisocial Behavior
Lack of activity on social media is a sign of a coin that’s not going anywhere.
Maybe the team is small and they’re trying to create code but if you’re not building or marketing then you’re just kinda floating around in the bowl.
Commits on GitHub is an excellent start. Shitcoins have few or zero people actually contributing to the project.
Do they have a Twitter account and post regular updates?
Even if it’s just an announcement of an announcement, solid teams are public about what’s going on.
Can you reach out to admins on Telegram? Or do you get insta-banned for merely asking a legitimate question?
Real projects welcome all types of feedback. Scams show you the door as soon as you call them out.
Does the project have an active community on Reddit? Shitcoin subreddits are typically nothing but speculation and randomly hopeful price predictions. A solid project has an engaging series of posts that shed light on legitimate project concerns. Good or bad, there’s plenty of discussion surrounding them.
5) Look at All Those Zeros!
Hmm, if I buy this gem at 769 for a penny, I can get a huge bag full of these at bargain prices. $100 will make me a cryptillionaire many times over. Granted, some of these micro-cap coins may smell bad initially but are later polished enough to see fantastic gains.
So, I have 7.7 million coins in my bag and when they hit 10 cents I’ll sell my position to pay off my house.
I may go against the grain here but I’d much, much rather eliminate my mortgage payment than ride around in an overpriced, gas-guzzling, trying-too-hard, high maintenance, flashy tin can of a douchewagon.
But let’s add some perspective here.
This coin going from $0.000013 to $0.10 would mean a 7,692X jump in market cap.
I’ve already done the math and the figure is $15,872,880,444!
Looking at today’s rankings, this would occupy the #4 spot. It’d squeeze in right under BCH and kick EOS down a notch.
Now, do you think the one-man team over at GCN can pull this off by creating a ridesharing app for the fine people of Dublin, Ireland? Doubtful.
Point is, don’t let lots of zeros warp your expectations for a coin’s growth potential.
6) There’s No Liquidity
As I’ve experienced first-hand, an illiquid coin is just dead weight. You don’t want to be carrying one around because it’ll drag your portfolio down with it.
Even if you do luck-out and pick a winning shitcoin, you may not be able to sell it. Picking on GCN again, the daily volume is barely more than half a bitcoin.
Even today’s #100 coin trades a quarter of a million dollars every 24 hours — more than 30 BTC.
Trading volume should be in the tens or hundreds of thousands of dollars. Anything less and you risk constipation in the market.
The cryptosphere is anything but traditional. While technical analysis can be comforting, drawing lines on a screen is a game reserved for a more mature market.
And since the space is so unruly and driven by hype, you can put fiat behind just about any project and patience may deliver a profit. Remember, my shitcoin tripled in value.
But wouldn’t you much rather align with a team working towards a well-defined vision? Won’t you sleep easier knowing that your funds are with a project that’s trying to make a difference in the world?
2017 was the Year of the Shitcoin. But informed investors in 2018 are seeing right through the bullshit. These odorous projects will see fewer and fewer funds flowing into them.
I think loads of shitcoins will be flushed right out of the market this year.
And when that happens, you don’t want to be the person still jiggling the handle.
By the way…
If you like what you see here and are in need of help getting your crypto message to the masses, I’d love to hear about your project.
Feel free to reach out to me here: blockchainauthor at Gmail