What are shieldcoins? How to analyze them correctly

11 MIN READ
Cryptocurrency
29 May 2024
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What is shitcoin? Where does the name come from

Shitcoin is a cryptocurrency that has virtually no value.
Developers often create these tokens in an effort to make instant profits, using them as a quick way to make money by "shaving" users who "fly" into the coin.
Developers of some shitcoins position their coins as innovative, but in practice these promises are meaningless and, as mentioned, boil down to a lust for profit. Nevertheless, fast money interests not only creators, but also investors, because such low-capitalized coins can indeed show significant growth in a short period of time, but not everything is so rosy.

What coins can be considered as shitcoins?

Shitcoins are essentially coins without clear prospects, and their value is often not backed by anything. How do you realize that a coin is a shitcoin?

In fact, almost every unsupported token can be called a shitcoin. Some altcoins are quite interesting and could be quite promising, but faced with financial difficulties, ineffective marketing or regulatory restrictions, they turned into those "obscene" coins or simply - shitcoins.

Meme cryptocurrencies are often referred to as shitcoins because of their joke nature. Memcoins can quietly stand alongside fundamental assets, for example, Doge is in the top 10 in terms of capitalization, has a developed community and has found a use, and the recent hype around Pepe again proved that the hype can be stronger than the fundamental under the right conditions, because the capitalization of the Pepe shitcoin exceeded the capitalization of many fundamental projects.

In general, shitcoins are commonly referred to as coins that:

  • Are low-liquidity and have low trading volume;
  • lack practical and technological value;
  • often have a value of less than $0.01;
  • Shitcoins are more often listed on DEX in the first place. Although their presence on CEX platforms cannot be ruled out;
  • information about the developers remains unclear and questionable.

What should you pay attention to when investing in shitcoins?

  • Market phase. You should not invest in assets at unfavorable times. Often, shitcoins start firing together at a certain point.
  • Is it too late to buy? It is important to assess whether the asset is overvalued. To evaluate, you can look at the hype around the project, capitalization and additional criteria such as listings on major CEX exchanges - often this is the event that marks the end of growth for shitcoins for obvious reasons.
  • How strong is the trend of a given shitcoin.
  • The value of the shitcoin. It's important to make sure that the price of a shitcoin is reasonable. Shitcoins that are too expensive can be a risky investment. Don't buy a shitcoin just because it has recently increased in value. Many shitcoins rise in value quickly and then fall in value just as quickly. It's important to do your research before buying a shitcoin.
  • How strong is the community formed around shitcoin.
  • Support from influencers and opinion leaders, such as in the case of Doge.
  • Marketing and promotion. Shitcoins that are well promoted have a better chance of success. It is important to make sure that the shitcoin development team has a marketing and promotion plan.

Can only new shitcoins grow, or can old ones grow too?

Generally, the growth of cryptocurrencies, including shitcoins, can apply to both new and old projects.
However, new tokens can grow faster due to the hype. Also important is the capitalization of a particular shitcoin, because the larger it is, the harder it is to grow, for example, the capitalization of Doge is now $21,993,033,123, and it is difficult to imagine the growth of Doge at 20x, because in this case its capitalization should be about $439 billion, which is too much for such an asset in the current market realities. At the same time, a conditional shitcoin with a capitalization of $50 million has a much larger margin of safety, but the risks here will be much higher.

Examples of famous shitcoins

Some of the most famous and popular memcoins are Dogecoin (DOGE) and Shiba Inu (SHIB).

Dogecoin (DOGE)

What is shitcoin

Dogecoin (DOGE) was created based on the popular Internet meme "Doge" featuring a funny Shiba Inu dog. Billy Markus and Jackson Palmer launched Dogecoin in December 2013 with the goal of creating a cryptocurrency that was more accessible and humorous than more serious coins.
Dogecoin was based on Litecoin technology but with a few changes, including a faster block creation rate and a larger total number of coins, which encouraged mass adoption. Many people believe that Dogecoin only became popular because of the hype, but that's actually not the only reason. Dogecoin stands out due to its ideas, values and the formation of its own subculture, which made it a unique phenomenon in the crypto world. The developers set an issue limit of 100 billion coins and randomly paid out the reward for mining to users, thus emphasizing the playful nature of the project.

How did Doge become popular?
Memcoin was the first of its kind such project, due to which it caused a positive reaction in the crypto world. In just a few weeks, the R/Dogecoin channel on Reddit gained 20,000 subscribers, and the coin's price rose 300% to $0.0002.
However, the main reason why the coin became so popular was the community's response to the hacker attack in December 2013. Back then, the R/Dogecoin community decided to chip in and make amends to the victims of the attack. The campaign was called SaveDogmas, and users managed to raise 15 million Dogecoin. This was only the first case of charity from the Doge community. News about such campaigns began to spread in the media, and the whole world learned about the coin. For a while, the volume of transactions in the network of the coin even exceeded a similar figure in the network of BTC and other major cryptocurrencies.

What happened next?
In September 2018, Ilon Musk first expressed interest in the project: with his tweets, he pamped the cryptocurrency's exchange rate more than once. Once he even expressed the idea that Dogecoin could become the official currency of Mars, which gave the project even more attention. There is speculation on the Internet that Ilon bought Dogecoin in large quantities at undervalued prices during the bear market, becoming a large holder of the coin.

shitcoin

And in 2022, he announced that everyone can now buy some Tesla products for Doge.

What coins can be considered as shitcoins
Examples of famous shitcoins

Following this news, the coin rose by 18%.
Many cryptans do consider Doge a shitcoin, but in fact, although the coin is not particularly useful, it is one of the top 10 coins in terms of capitalization and has a strong community that has managed to build around the coin.

Dogecoin

Shiba Inu (SHIB)

DOGE

Shiba Inu (SHIB) is a cryptocurrency created in 2020 by a community inspired by memes and Japanese culture. Its main symbol is a breed of Japanese Shiba Inu dogs.

The official website of the Shiba Inu project presents the token as a "Dogecoin killer", with a set goal to surpass the total capitalization of Ilon Musk's cryptocurrency. Their "woofpaper", a humorous version of the whitepaper, describes Shiba Inu as an experiment in organic decentralized community building.

The main idea behind Shiba Inu was to build a decentralized ecosystem and community and allow users to participate in the ecosystem through mining, staking, and other mechanisms. SHIB tokens were issued in large numbers, and the developers focused on creating engaging and interesting opportunities for token holders.

ShibaSwap was created, which is a decentralized exchange that provides users with the opportunity to exchange various tokens and participate in shaking.

Shiba Inu

Ilon Musk for Doge and Vitalik Buterin for SHIB?

The creators of Shiba Inu claimed that they were the first to give up token ownership to founders and developers. They sent 50% of the tokens to the Uniswap exchange and blocked them, while the remaining 50% went to the wallet of Vitalik Buterin, the creator of Ethereum. The creators of the project emphasized that the fate of Shiba Inu is closely linked to Buterin's loyalty, but it is important to note that all this may be a cover behind which may hide one or another form of manipulation of the asset.

The meme token has quickly gained popularity, accompanied by a significant rise in price. In four days, the value of Shiba Inu increased 25 times. In response to this growth, Shiba Inu went public on the OKX and Huobi exchanges. The trading volume at that time reached $500 million and soared to $8 billion after the listings.

However, Buterin failed the project by donating Shib 50 trillion to the India Covid-Crypto Relief Fund. This led to a more than 50% drop in the price of Shiba Inu from its peak.

As in the case of Doge, SHIB does not solve any important problems in the field of crypto-assets, but thanks to the gathered community, the coin is among the top 20 cryptocurrencies with the largest capitalization.

SHIB

Can pumps and dumps of shitcoins predict future movements in the markets

Pumps and dumps are sudden rises (pump) or falls (dump) in asset prices. They are often the result of manipulation, massive fund movements by large investors, or external factors, making them difficult but possible to predict.

Dumps can be caused by collusion of a group of investors, manipulation, news or a large accumulation of margin positions. Dumps, on the other hand, can occur due to massive asset selling caused by panic or a change in overall market dynamics.

The bottom line is that it is much harder to do a dump or dump on large crypto assets than on small-cap coins. Bitcoins are more susceptible to such movements than other assets. Due to temporary demand for the asset (hype), a dump can occur and the price of the asset can increase many times over, often such movements are manipulative.

An example of a manipulative bump would be Ilon Musk's tweets about Dogecoin, after which the price of the coin skyrocketed by tens of percent in the moment.

While pumps and dumps can provide short-term profit opportunities, they are often high risk and are not sustainable trends. Predicting future movements in cryptocurrency markets requires a comprehensive analysis of fundamental and technical factors, as well as consideration of news and events in the industry.

the risks associated with listing large shitcoins

The growth of bitcoins is often a negative signal for the markets. Historically, during the growth phase, there is an unspoken algorithm where bitcoin is often the first to rise, followed by highly capitalized altcoins and last to rise, which has happened many times in the market - this is due to the distribution of money in the assets.

It is important to realize that these unspoken rules can easily change, and similar movements in the past do not guarantee the same performance in the future.

What are the risks associated with listing large shitcoins on leading exchanges?

Listing large shitcoins on leading exchanges can be dangerous for several reasons:

  • High volatility: listing on major exchanges usually leads to increased attention on tokens, which can cause spikes in volatility. This can lead to sudden price changes, both up and down.
  • Price manipulation: on larger exchanges, there is a risk of price manipulation, especially with tokens that have low liquidity. Interested parties can take advantage of this to conduct "pumps" and "dumps".
  • Growth Phase Finale. Statistically, we often see a slowdown or final growth phase exactly after listing on large centralized exchanges. It's important to realize that things can change quickly, and listing on an exchange is not an objective reason to make decisions.

Shitcoins only grow during certain phases of the market?

Shits are often undercapitalized, making them quite volatile and manipulative. Shitcoin growth usually occurs against the background of the overall market growth, but it is not uncommon to see how some such assets can show strength against the background of general market weakness.
There is an unspoken rule that says that during the growth phase, mastodons (BTC, ETH) grow first, then large altcoins, and lastly, shitcoins start to show strength. However, in the current market it is the exact opposite, as shitcoins, and memcoins in particular, are currently the new trend of the crypto market. It is also important to look at which sectors of altcoins are showing more strength during the overall growth phase - catching the trend can give you better terms.

Advantages and disadvantages of shitcoins

Low cost and potentially high returns attract investors' attention, but there are risks associated with these prospects. Let's take a look at what advantages and disadvantages shitcoins have.

Advantages of shitcoins:

  • Low cost: an investor can buy a fairly large number of coins for a small amount of money.
  • Potentially high profit: if a shitcoin manages to attract enough attention, it can make 1000x as well.
  • Attractiveness: shitcoins often attract attention because of their joke or meme nature, which can attract a community of investors.
  • Experimental opportunities: some investors see shitcoins as experimental assets that could be profitable if developed successfully.

Disadvantages of shitcoins:

  • High risk: shitcoins are often associated with high risks due to low liquidity, high volatility and often speculative nature.
  • Lack of fundamental value: many shitcoins have no clear value, use or innovative features, making them less attractive investments.
  • Scam: many shitcoins were originally created for the purpose of fraud. Often, after investors enter such assets, the developers "pour into the glass" on the hai, thereby driving the price down to zero.
  • Limited liquidity: due to the lack of listing on major exchanges, shitcoins can face liquidity problems, making it difficult to buy or sell them.
  • Development uncertainty: many projects creating shitcoins do not provide sufficient information about the team, technology and development strategy, increasing uncertainty around their future.

Whether or not to invest in shitcoins is up to everyone, but when making such an investment, you need to consider the risk that it is quite possible to lose all of your investment.

Can everyone create their own shitcoin?

Absolutely every user with an internet connection can create their own shitcoin in 30 seconds. At a time when meme coins have gained popularity, digital artist Jonny Shenkman showed in his tweet how you can create your own shitcoin in a few clicks.

How to create your own shitcoin?

In order to create a shitcoin in a matter of minutes, Contracts Wizard, a program created by OpenZeppelin, a cryptocurrency cybersecurity firm, is used.

Shitcoins

Contact Wizard provides the ability to easily create code for an ERC-20 token with a few simple steps. Users can choose from a variety of features, customizing their token according to their needs.

Once the code is created, the Remix app is used to compile the token's smart contract and deploy it on the selected blockchain network. In Jonny Shenkman's video, he chose to deploy his EASY_MONEY (EZ) token on the Ethereum test network.

This way, with just a few clicks, every user can create their own blockchain coin.

HYIP > Fundamental

As written earlier, shitcoins usually carry no value, and often become popular precisely because of the hype. An example is the cryptocurrency Pepe Coin, which appeared in April 2023.

Advantages and disadvantages of shitcoins

The developers were inspired by the popular meme "Pepe the Frog". The cryptocurrency was launched on the Ethereum blockchain. Since its public launch, Pepe Coin has rapidly become one of the top 50 most actively traded cryptocurrencies. Pepe Coin was designed to amplify the influence of meme culture in the world of cryptocurrencies.

The team behind the original smart contracts and liquidity pools of Pepe Coin remains completely anonymous.

An interesting fact is that unlike DOGE, which took almost four years to reach a capitalization of over $1 billion, Pepe Coin was able to achieve this result in just three weeks after launch.
And while many fundamentally strong crypto assets couldn't exceed a capitalization of $500,000, Pepe reached $3.08bn.

shitcoins

Pepe Coin was able to achieve such success primarily because of the cultural phenomenon and meme in the form of Pepe the frog that has existed since 2005.

How to invest in ETH shitcoins

As in the situation with any assets, you should reserch before investing, because not all shitcoins can shoot up. An example of a strategy for investing in shitcoins:

Turning to onchain analysis: you can use a technique to find wallets of successful traders using tools such as Etherscan, Zerion and Arkham.

By analyzing these wallets, you can find recurring coins and start buying them, allocating a certain small amount of money, for example, $100 for each purchase.

A mistake that may come your way: buying tokens without a set price that have not shown growth and have no liquidity in the pools. Liquidity is an extremely important indicator and without its presence, investments can be immediately categorized as unsuccessful.

That is why you should focus on tokens with a set price and growth potential.

Shieldcoin trading on Ether can be profitable when using onchain analytics and wallet analysis, especially when there is no trend for meme coins. When such a trend appears and a bull market begins and gas prices rise, it is best to avoid trading on Ether.

Is it worth investing in shitcoins? Is it possible to make money on them? Opinion of CRYPTOLOGY experts

Investing in shitcoins, as in any cryptocurrency, carries risks. Shits are often characterized by low liquidity and lack of clear technological value. Earning money on them is possible and usually very attractive, as you can make a good X on them, but such an investment requires careful risk assessment.

These cryptocurrencies, unlike the well-known koins, are not available on the leading exchanges and are often available only on small unregulated platforms (we do not take into account memcoins like Doge, Pepe, etc.). That is why investing in such tokens one should be ready to lose the invested funds.

In addition, shitcoins are often fraudulent. Therefore, it is recommended to refrain from such investments if you do not have enough experience in this type of speculation. In addition, you should always conduct a reserch before investing - understand who is behind the project, how strong its community is and whether there is a HYIP around it, because such coins, as a rule, grow on a HYIP.
Is it worth investing in shits? Yes, if you are aware of your actions. If you understand what you are investing in, how much you are ready to lose, at what price to fix the income and other things, then yes, you can try. However, the importance of psychology should not be minimized, as not every investor is able to observe such high volatility with a sober mind, not to mention the competent work with emotions: greed and fear. In addition, it is very important to "guess" the moment for investing, as it is not a good idea to fly in the last carriage, you risk to be left with zero on your balance. It will be much more competent to skip such a project and wait for a new opportunity, because once having made the Xs, the shield can go down and never return to its hai.

Frequently asked questions about shitcoins

What is shieldcoin?

"Bitcoin" is a term that is commonly used to refer to cryptocurrency that lacks any real value or utility. These coins are often created to quickly enrich developers or as a form of joke in the cryptocurrency world.

What to look for when analyzing a project?

First of all, it is worth paying attention to the practical value of the token, the technological basis of the project and its application. Also important are liquidity, reputation of the development team, transparency of information about the issuer, and security of the smart contract.

Is it possible to make money from shieldcoins?

It is possible to make money from shieldcoins, but investing in shieldcoins is particularly risky, so you need to take all the risks and realize that you can lose the entire amount of your investment.

Who can create their own shieldcoin?

Any user can create their own shieldcoin in a few clicks using the Contracts Wizard program.
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