You may have heard that you can make a lot of money buying and selling cryptocurrency. There are bit-coins and alt-coins, and what’s that one called… etherium… or something like that. It kind of sounds like picking the best cryptocurrency seems kind of like picking the best stock. Maybe you’ll get lucky and get rich. All just gotta do a little research, invest a little money, and get a diversified portfolio of cryptos. The trouble is, it’s all a shitcoin casino.
The thing you need to understand about the shitcoin casino is that nobody actually believes that any of these crypto tokens have real value. The goal of the casino is to get your bitcoin. The goal of other traders is to get your bitcoin. Bitcoin is the end goal of all of this. You can skip the line, just buy bitcoin, and ignore everything else that’s going on.
All those crypto “experts” you see on Twitter and YouTube are either making money shilling you dog shit coins they get paid to promote, or they’ll get rekt in a year or two and you’ll never hear from them again.
Bitcoin was a one-time invention, and there is not going to be a next bitcoin. There is bitcoin, and there are shitcoins.
…if bitcoin really takes off I can see lots of get-rich-quick imitators coming on the scene: gitcoin, nitcoin, witcoin, titcoin, shitcoin… Some of them are sure to attract users with promises like “Why use bitcoin, where you can only generate 50 bitcoins every few months? Use shitcoin instead, and you’ll get 51 shitcoins every 2 minutes”.
Gavin Andresen, Bitcoin Talk, 2010
The shitcoin casino, as this article is titled, is the entire crypto ecosystem of trading useless tokens for other useless tokens in the hopes of making a profit. These coins have colorful and fun names like Sushi or Zilliqa, Polymath or Rune. These tokens may or may not have some kind of intended use case, but are rarely used for anything other than trading.
Thanks to the gamification of buying and selling cryptocurrency by crypto exchanges, most people don’t stop to think about the underlying asset they are trading. Coinbase. Kraken. FTX. Bitmex. Okcoin. Robinhood. Binance. Bybit. These are all shitcoin exchanges, but are just one layer to the shitcoin ecosystem. There are also decentralized protocols like Sushiswap, Uniswap, and Pancakeswap that allow you to trade an even wider range of shitcoins which are even too shitty for the regulated exchanges.
I have no beef with gambling, but crypto trading needs to be called out for what it is. When you buy shitcoins, you aren’t investing. When you play the crypto guessing game, you are gambling.
As you sift through the colorful chips at the shitcoin casino, the question to ask yourself is this: What is the purpose of this coin, and will I use it for that?
The reason Bitcoin exists is to separate money and state. Its purpose is to protect your wealth from inflation with uncensorable, peer-to-peer digital cash. The vast majority of “cryptos” out there are just private companies issuing securities in the form of tokens. These coins are completely useless outside of being able to sell them for fiat gains.
In the short term, some coins will gain value, but long term, everything will trend to zero.
Before you continue reading, I’ve uploaded the logos for 150 different cryptocurrencies that have experienced some level of trading volume in the past decade. As you scroll past the images, do you recognize any of them? Think about whether or not you would be able to choose one of the few that would increase in price significantly. Would you know when to sell it? Would you know if it was worth $0.001 or $10.00?
Then, consider that there are actually more than 10,000 different crypto tokens, and you can start to see why even having a “diversified portfolio” of cryptocurrencies is a crapshoot.
Welcome to The Shitcoin Casino!
8 Reasons To Avoid The Shitcoin Casino
1. Centralization
The #1 issue with shitcoin is that they are centralized. The entire reason bitcoin achieves its goal of becoming unforgeable, censor-resistant, global money is because it’s not controlled by a single entity. That creates resiliency and reliability. People can count on bitcoin existing in 100 years because it can’t be manipulated by any company or government.
With shitcoins, they are often associated with a single specific founder, as is the case with Cardano, or a foundation, as with Ethereum. These coins often come with a premine to enrich the founders, and there is a small group of people who exercise control over the protocol. The same type of control is not possible with Bitcoin.
Rejection Of Centralized Proposals In Bitcoin
For example, in 2021 a company proposed changes that would allow for personal information to be tied to bitcoin ATM withdrawals. Of course, this proposed change was mocked and ignored, and there was no chance of bitcoin node operators around the world adopting these changes.
We also saw the proposed blocksize increase defeated by bitcoin node users around the world simply by refusing to run the code. This is despite overwhelming support from large miners and big companies in the space at the time. Had bitcoin been running like a typical shitcoin, the founding partners and large companies would have done whatever what they wanted, since shitcoin enthusiasts don’t run their own nodes.
Shitcoins Are Securities
In my opinion, and in the opinion of many others, this basically makes shitcoins securities, in that a company is issuing tokenized units, from which you expect to benefit financially if their organization is successful. Whether centralized shitcoins are unregistered securities is yet to be seen, but having your coin shut down by the SEC, or having the protocol purposefully restructure to comply with laws should be acknowledged as a risk.
Centralization is a huge attack surface for anything trying to break the status quo and become “money”. Centralization makes shitcoins vulnerable to attacks from companies, governments, and insiders.
Related Content
2. Code Bugs
Also related to centralization is the issue of code bugs. All protocols are susceptible to bugs, including Bitcoin. The difference between bitcoin and shitcoins here is twofold.
The environment in which bitcoin experienced initial bugs was much different than today. When Bitcoin was invented, nothing else like it before had existed. Nobody was interested in cryptocurrency. If a bug was found, only a small group of Bitcoin enthusiasts were aware. They had the time to fix it before anything catastrophic happened. For example, one time an inflation bug was exploited in Bitcoin. Once it was discovered, they simply forked the code and everyone moved on. It was in 2010, when the market cap of Bitcoin was something like a million dollars, instead of the 800 BILLION dollars that it is today.
At that time, users of bitcoin knew what they were in for. Nobody was buying $100,000 worth of bitcoin or storing their life savings in bitcoin. It was an experiment. There were going to be hiccups. They were in it for the tech. Early participants were contributing more than just asking, “When moon?”.
All Eyes Are On Crypto (Financial Incentive To Hack)
The world is a different place now. People are investing massive chunks of their money into brand new cryptocurrency protocols in the hopes that they’ll discover that one coin that has 10,000% gains over the next year. When a new coin launches – BOOM – it hits the hype cycle.
The folks who are buying and promoting this stuff are not writing or testing the code. They are not even running a node. It’s just another crypto. Beyond that there’s not much brainpower dedicated to it. I realize that there are many bitcoiners in 2021 who don’t run a node, or only hold bitcoin and don’t contribute anything other than buying and talking about bitcoin. However, that’s now how it started. Nobody was into Bitcoin for the money in 2009 because it was worth nothing.
This is why bitcoiners often say that Bitcoin’s invention was path-dependent, meaning that the circumstances in which Bitcoin was created can never be replicated. The very fact that Bitcoin now exists, means that no other cryptocurrency can supplant it.
Bitcoin is a path-dependent, one-time invention; its critical breakthrough is the discovery of absolute scarcity—a monetary property never before (and never again) achievable by mankind.
Robert Breedlove, The Number Zero and Bitcoin
Bitcoin Has The Majority Mindshare
The second thing to consider is how much mindshare is dedicated to bitcoin. Bitcoin is, by far, the most widely adopted cryptocurrency in the world. It’s so big that no single person can keep track of everything going on. Over the past 3 years (2018-2021), I’ve really seen the market segment itself into niche groups, and the rabbit holes go so deep that it’s impossible to keep up. This is good.
It means that there is a division of labor, and people specializing in bitcoin-focused trades, making the bitcoin ecosystem more robust. There are individuals and companies looking at bitcoin’s code RIGHT NOW. They want to fully understand the tool they’re working with. They need to make sure it’s reliable because they depend on it.
A great example of this is when Tesla engineers privately disclosed an exploit in BTCPay Server which was subsequently patched. Tesla found this bug because they decided to accept bitcoin at that time. Had they not started participating in the bitcoin ecosystem, that but may not have been discovered until much further down the road. This was a bug in a Bitcoin app, not Bitcoin itself, but the principle is the same.
Bitcoin-Only Companies Working On Bitcoin
Companies working directly with Bitcoin would include custodial services like Unchained Capital, or Strike which allows global fiat-to-fiat exchange using Bitcoin payment rails. They’ve got eyes on Bitcoin’s code because their business depends on it. Companies are also sponsoring Individuals to work on bitcoin. For example, Jon Atack was awarded an $80,000 sponsorship from Compass Mining, and Jeremy Rubin was awarded $50,000 from Bitmex to continue contributing to Bitcoin Core.
These examples are just the tip of the iceberg, and there are even companies solely dedicated to working on Bitcoin 2nd-layer technologies like Lightning and Liquid. It’s absolutely possible to work on Bitcoin as a full-time job.
As it currently stands, no other cryptocurrency captures even comes close to the amount mindshare as Bitcoin. That means more chances to catch problems early, whether that be in current implementations or proposed changes in the future.
3. Utility Tokens Are Useless
In 2017, the ICO Boom was the flavor of the week, and we witnessed the emergence of “utility tokens”. Utility tokens were usually cryptocurrencies built on top of smart contract protocols like Ethereum, NEO, and Tron. Most were using Ethereum and the ERC-20 standard. This allowed anyone to create their own “money”, usually referred to as tokens on top of Ethereum.
The ICO utility token narrative exploded. The idea was that there would be a unique money for a specific utility, for example a token just for grocery shopping. Every imaginable product or service suddenly had a relevant token attached to it, sometimes more than one.
- Potcoin – buying & selling weed using blockchain
- Vice Industry – paying and earning in the adult industry
- Dentacoin – paying for dental services, including insurance
- Filecoin – exchanging money for decentralized storage capacity
- Basic Attention Token – micropayments for web content
- Golem – exchange money for computing power
- Explorio – for reading & writing travel reviews
- Garlicoin – just good for garlic memes
As if these weren’t silly enough, the ICO frenzy concluded with ridiculous things like UET and FOMO (Useless Ethereum Token + Fear Of Missing Out), Ponzicoin, and others. The ICO bubble eventually popped and has been replaced with other speculative trends in 2021, namely NFTs and DeFi tokens.
Utility Tokens Have No Utility
Utility tokens were supposed to have some kind of purpose to them. Normally, that meant you got access to some kind of product or service by owning the token. For example, potcoin would allow you to buy pot which verified its origin and age via blockchain. Dentacoin would be used to pay for dental services, though I’m not really sure why that needed to be on the blockchain.
The question so many people didn’t ask during those years was, why would I pre-pay for a service without knowing how often I was going to use it in the future? Why invest $10,000 into potcoin when I don’t know how much pot I’m going to smoke in the future? If the coin really did 1000x overnight, did I need 10 million dollars worth of weed? Likewise, I don’t really need to own 40 years worth of dentistry credits.
The next logical question is, why would someone buy a utility token from me, when they could just get it from a more trustworthy source? If I really needed blockchain-based dental services in the future, I’d just buy a token at spot price from the dentist, not peer-to-peer.
Filecoin Sucks Even Though It Sounds Like A Cool Idea At First
Though I focused on an easy takedown of dentacoin and potcoin, you can apply this to any utility token – even the more reasonable ones, like filecoin.
TBH, when I first heard of filecoin, I thought it was an awesome idea, and couldn’t wait to participate in the ICO. The premise was that you could rent out your excess computer data storage in exchange for getting paid in filecoin tokens. It was like Uber and ride sharing, but hardware sharing via blockchain. I never did buy any filecoin, but looking at it with fresh eyes now, I see multiple problems.
First off, I can’t predict how much I’d use a service like this in the future, so I don’t need to get in on the ground floor. I want to wait and see if it works, and then I’ll buy coins at spot price if I need them.
Secondly, why would the filecoins get more expensive in the future? It seems to be that if data storage is getting cheaper over time as it has done consistently for the past few decades, filecoin should get cheaper each year!
Thirdly, why do we need blockchain for this? Why not just do it on centralized company servers and pay people in bitcoin?
Overall, utility tokens are useless. If you want to have peer-to-peer digital money, Bitcoin already does that, and it can be used to buy anything you want. Not just garlic bread.
4. Survivorship Bias
You may hear reference to successful coins in the past which have returned astronomical gains for their investors. This is completely true! Some people have gotten extremely rich by buying and selling shitcoins. What this fails to take into account is the idea of survivorship bias.
Although a few cryptocurrencies have increased in value over a short period of time, the vast majority of coins over a long enough time period lose value, underperform other assets, or disappear completely. If you’re going to play the shitcoin casino, you have to look at your odds of winning.
What are your chances of buying the right coin, at the right time, holding for the right period, and selling at the right time? It’s highly unlikely. As you look at the coins below, notice that Bitcoin sits unwaveringly at the #1 position for the entire decade.
Now look at the top 10 cryptocurrencies for 2021. With the exception of Dogecoin, Ripple, and Ethereum, 70% of the previous top 10 coins from the past 8 years have fallen off the map.
I started my bitcoin journey in 2017 and looking at the 2017 and 2018 lists from above, I feel a little nostalgic for the darling coins of those years.
IOTA was supposedly working with Volkswagen to develop self-driving cars. NEM was the next big smart contract platform. Litecoin was considered safe – it was the silver to bitcoin’s gold. Stellar Lumens was some kind of cross-platform payments platform if I remember correctly.
Steem was supposed to be a decentralized blogging platform, taking uncensorable content mainstream. Ethereum Classic had a real chance of flippening Ethereum. Both Dash and Monero were serious privacy coin projects that were going to compete with Bitcoin for private transactions. The Ripple army was strong.
None of that panned out. Those coins may still exist, but none of the projects actually delivered on what they promised, and everyone who invested got rekt.
2023 Shitcoin Update
As of 2023, 5 of the top 10 coins by market cap are USD stablecoins. Literally half of crypto is US dollars. I guess you could make a case for Solana, Litecoin, and XRP (previously Ripple), but if you measure your return in BTC instead of USD, the picture becomes clearer.
5. Measure Your Gains In BTC Instead of USD
You may be thinking, “Well, if I did my research, I might have invested some money into the top coins that survived.”
True, you had a 30% chance of choosing a crypto coin that lasted in popularity for 8 years. The three which survived in the Top 10 from 2013 to 2021 were Dogecoin, Ripple, and Ethereum. However, survivability is not the only thing to consider. When you look at your returns, then the question to ask is how much money you would have made compared to if you just bought and held bitcoin instead?
The chart is clear, even if you bought XRP back in 2013 and held it until today, you would have made more money if you had just bought and held bitcoin. In order to ride the Ripple wave right, you would have had to sell your XRP during peak mania in 2015 or 2017 for some incredible gains.
That’s assuming during this time period you aren’t doubling down during the bull market thanks to confirmation bias, or “backing up the truck” as Ripple continued to lose market share, market cap, and relevancy over the next 3 years after the final 2017 peak bubble.
With Dogecoin, you would have needed to hold a meme coin with no development activity for a decade, then sell after the massive pump in 2021 when the wacky CEO of an electric car company started to tweet memes about it. Dogecoin is still a joke, 10 years later.
What About The “Good” Shitcoins?
Ethereum is the only exception I’ll make here. I still think it’s a shitcoin, but at least it’s worth some type of serious analysis before you come to that conclusion. Even though Ethereum may have some use cases, and you’d be way up in fiat terms, you still would have performed better if you had just bought and held bitcoin instead.
Back in the day, I held some shitcoins myself. In addition to Ripple and Ethereum, I owned Bitcoin Cash, 0x, Litecoin, Monero, NEO, ZCash, and Ethereum Classic. I believed in the “multi currency” world of the future and wanted to have a diversified portfolio. I eventually sold everything for bitcoin because I saw the writing on the wall. It became clear to me that in the world of money, the winner takes all.
6. The Sunk Cost Fallacy
If you finally did your homework and want to give up shitcoining, that’s great. Too many people get stuck in the sunk cost fallacy, AKA gambler’s fallacy. The idea of the sunk cost fallacy is that you’ve already invested so much time or money into something, to give up now would be a waste. Dump your shitcoins and buy bitcoin.
In Shitcoin Land, when you buy a coin and it goes down, you will want to buy more. Not because its trading at a discount, but because you need to make up your losses with more gains. The train of thought goes something like this: My portfolio lost 40% of its value. Let me buy more of my worst performer, because it’ll probably go back up and make up for my losses. Double or nothing, right?
Why Not Just Wait For Alt Season In The Next Bull Run?
You may also be thinking, Well, even though my coins are down now, surely they’ll recover back to previous highs in the next bull run, then I’ll sell them! You can’t lose money if you never sell, right?
Unfortunately, that’s not true. You have to consider opportunity cost. If you invested $10k into a shitcoin and it lost 90% of its value in the past 3 years, you’d have $1,000 left. Would you rather buy $1,000 worth of bitcoin and have it double or triple in the next few years, or leave it in a dead shitcoin just in case it pumps 30% some time in the future?
I’m not making price predictions here, I’m just saying logically, a little bit is better than nothing. Sometimes, you have to cut your losses rather than double down on failure.
Below is a chart from a coin called TKY that I bought thanks to advice from a friend. It was supposed to be a blockchain solution to government ID in China…or something like that. Who knows? He told me it was supposed to be big according to insider ICO chatter.
Looking at the chart below, what do you think?
7. You Haven’t Done Your Homework
With all this talk about shitcoins, maybe you think that I’m just biased towards bitcoin, and you suspect I’m wrong. Maybe you think that Bitcoin is old tech, and a new coin will replace it like Facebook replaced Myspace. That’s fine if you believe that, but let’s see some receipts.
Most of the time when people have a favorite coin, their reasoning is very thin. People buying shitcoins are doing so because they read a few sentences on Coinbase or browsed Reddit for a bit and found a coin that sounded like it should do something cool.
Oh look, this one is cheaper and faster than bitcoin, AND there’s a rumor they are partnering with Alibaba for online payments in China!
This was my behavior in 2017, so I’m speaking from experience. I liked Monero because it was private. Litecoin was fast. ZCash had some kind of connection to Bitcoin but was private. 0x was supposed to coordinate decentralized crypto trading or something like that. Who really knows at this point, but the moral of the story is that I didn’t actually do any research. I was just trying to catch the next coin that would pop.
More Than You Think Is Just Fake News By Paid Promoters
What I didn’t realize back then is that a lot of the news and rumors are actually fake. Being a “paid shill” is a real thing. There are human shills, and there are bots. They post on all social media platforms. There are even fake press releases, and unverified claims that get picked up by mainstream news outlets. There are also just uninformed, yet confident idiots like the folks promoting Safemoon on TikTok.
If you’re going to get into a shitcoin, really get into it. Read about it. Run a node. Buy some stuff. Ask a question in a forum about a wallet you’re using. Get on a dev list and see who’s working on what. As a new coin advocate, you are on the vanguard. You’d better make sure you’re right.
If you’re going to be a shitcoiner, at least be a proper shitcoiner.
Matt Odell
With your shitcoin, you’re the trailblazer. Your shitcoin hasn’t proven itself on the marketplace yet, so prove to yourself that it’s actually worth something. If it’s too complicated for you to figure out, maybe just stick with the one digital asset that’s easiest to use because it has the longest history, most developers, and the biggest community willing to help you out when you need it.
Bitcoin is here and it works. If you think otherwise, the burden of proof is on you.
Learning About Bitcoin Takes Work
I love the saying that you buy bitcoin at the price you deserve because it’s so true. Though I can fantasize about buying bitcoin in 2011, the truth is, I didn’t deserve it at that time. I wasn’t into computer technology. I didn’t understand money or investing.
There’s no way I could have run my own bitcoin node, let alone figure how to manage my wallet on the original bitcoin client. My funds would have probably been stolen by all the malware on my second-hand laptop running a pirated copy of Windows XP.
I certainly wouldn’t have held all those gains for 10 years because I wouldn’t have “got it”. My brain just wasn’t ready to understand extreme ownership of my money. I needed folks smarter than me to go first and distill that information into digestible content formats like blogs, books, emails, videos, and podcasts.
All this stuff I’m writing about here on my blog – I learned from somewhere else. Someone else came up with these ideas, and they just made sense to me when I heard them. I wasn’t a bitcoin trailblazer, but I knew the truth when I heard it.
8. There’s No Network
For me, it was an easy decision to sell all my shitcoins and become a bitcoin maximalist. After a few hundred hours of research, it became clear to me that there wasn’t much substance to any of the crypto industry. There was bitcoin, and there was everything else.
I dove deep into bitcoin. I read books. I listened to podcasts. I watched videos. I set up wallets. I built a node. I joined some telegram channels and did some troubleshooting. There was meat on the bone. I was hooked. I had dipped my toe into the water, and I could tell it was deep. There was a massive network of Bitcoin enthusiasts who were deeper down the rabbit hole than me, and they were dedicating their time to creating a map for me. I still had a long way to go!
Then I started looking for info on my other favorite coins. I looked up stuff for Litecoin, Monero, and Ethereum, and discovered that there was almost nothing out there. Ethereum had one podcast and a technical book. Litecoin had nothing. I got some helpful tech support for Monero via Reddit, but that was it.
It’s All Just Price Speculation
There just wasn’t a lot going on regarding these coins outside of price talk and cheerleading. News was always speculating about what would happen in the future, or chart analysis of the price. There was no community. There was no network.
Doing a deep dive into your shitcoin’s network is a great way to see if there’s any substance to your coin outside of price action and basic setup tutorials. I suspect that you’ll hit a wall and find out there’s nothing else going on worth learning. It was this experience that made it clear to me that the future is bitcoin only, but you may come to a different conclusion.
OPINION: Trading Shitcoins For Bitcoin Is Dumb
Most transaction volume done with shitcoins is simply trading shitcoins with other shitcoin traders. It’s a useless activity, but some people make some really good money doing it.
Ethically speaking, I have no problem with this. People are going to do what they want to do, and if you think you can be a smarter shitcoin trader than the other guy, go for it. My issue is with the self-referential shitcoin logic. It just doesn’t make sense.
Here’s one great example in a tweet below. I hear this a lot from traders who justify their activity, while they freely admit that their ultimate goal is just to stack more bitcoin.
Shitcoiners Are Always Looking For The Exit
The reason to not buy doge or NFTs or yield farm is because there’s no value to the underlying asset. Owning these things, even for a brief time, is a tremendous risk. There’s another person on the other end of that transaction, and for every positive trade you make, someone else is getting rekt. One of these days, the person getting rekt could be you. On a long enough timeline, most traders lose money.
The reason bitcoiners tell people to not buy shitcoins is not because you can’t make money. It’s just that most people don’t. It’s risk management. You can preserve the purchasing power of your money with the best digital money in the world or step up to the roulette table and YOLO into some fucking dog meme or monocot token.
The whole industry is a house of cards because none of these shitcoins actually do anything.
Buy And Hold Doesn’t Work With Shitcoins
Furthermore, you cannot just buy and hold shitcoins to outpace bitcoin’s gains. 99.9% of all shitcoins have lost value compared to bitcoin over 10 years. In order to beat bitcoin, you have to actively trade shitcoins, hopping from one pump to the other, and hoping that you miss enough dumps so you don’t lose your stack.
For example, if you bought the top performer $DASH at the peak price of $1,400 in 2017, you’d be down more than 90%, even today, after $BTC has more than doubled in price since it’s 2017 ATH. The reason Dash never recovered is because it was useless. The reason Bitcoin recovered is because it actually does something.
All shitcoins trend to zero. Trading shitcoins for bitcoin is a game of hot potato, and the hot new trend “DeFi” is a great example. Though I do think that “decentralized finance” is an awesome idea, you have to look at the underlying asset to see if it has any value. Why trade Pancakes for Sushi or Alpacas for Bunnies when you’d never own any of this garbage? DeFi is just the crossroads between Tamagotchi pets, Pokémon cards, and Vegas poker chips.
Is Everything A Shitcoin?
Yes, everything except for bitcoin is a shitcoin. Even the “good” ones.
Depending on who you ask, shitcoin can mean a few different things. Some people say that shitcoins are just the shitty crypto projects and scams. Other people, typically dedicated bitcoiners, have figured out that everything is a shitcoin. You’ll even hear some bitcoiners joke that real estate and stocks are shitcoins too.
Of course, they are exaggerating in this case, because stocks and real estate are not cryptocurrency. However, as with all good memes, it uses humor to relay a deeper meaning.
A shitcoin is shitty money. A shitcoin is worse than bitcoin.
All roads lead to Bitcoin maximalism
Gigi
Shitcoins Are About Fiat Gains, Not Wealth
Most people invest in shitcoins not because they actually have value, but because they are searching for the next crypto ready to go parabolic. Their goal is fiat gains and clout. Nobody buys dogecoin because they seriously think that anyone will be holding and trading dogecoin in the future. It’s all about price speculation.
Bitcoin is something fundamentally different. Bitcoin is an unstoppable, new form of money for the digital age.
To be clear, I think people should build what they want to, and if it’s cool or useful, it will find a market. Nobody should be prevented from experimenting and creating. However, you shouldn’t say that your token is digital money. It’s really just a way to fund your startup.
Ethereum-based NFTs are a great example of backwards shitcoiner logic. You might say, well, if I want NFTs I need ether to buy them! That means Ethereum has a use case, so it’s a project that has value. I should invest in Ethereum because I think NFTs will be big in the future!
Value Derives From The First Layer, Not The Second
What a lot of newcomers to the space don’t realize is that NFTs were available on Bitcoin many years ago, and bitcoiners have already gone through the pump and dump of trading cards. NFTs clogged the mempool, made fees expensive, and the market collapsed. You see the same thing playing out on Ethereum right now (Aug/Sept 2021), where fees are $50/transaction and people are wondering how to get NFTs to layer two.
On top of that, now you have competing chains like Solana and Binance, where you can simply copy/paste images onto another blockchain. Why would Ethereum have value as a result of NFT trading when you can copy those same NFTs to a competing chain? The underlying asset doesn’t derive value from the 2nd layer. The 2nd layer derives value from the underlying asset.
Bitcoin derives its value from its network security and reliability. Just two weeks ago Ethereum experienced an unexpected chain split. Today as I write this, Solana experienced 7 hours of downtime and will be manually restarted. If I can’t rely on these two high-value, popular chains for security and reliability, what are they good for? I believe these chains will lose value over time as people realize they cannot be used as a reliable and secure store of value.
Bitcoin is digital money. Everything else is a shitcoin.
Final Thoughts
A cool podcast worth listening to is The Shitcoin Insider. It’s a side project, so there are not many episodes and they post infrequently, but they break down how some of these shitcoins work, including both “good shitcoins” and straight up scams.
Also, there are a growing bitcoin-only exchanges you can use to buy bitcoin instead of jumping into a shitcoin casino. Bitcoin is the same regardless of where you buy it, but it’s nice to support bitcoin-only companies. I think those are the companies which will have the biggest staying power in the industry. I recommend using bitcoin-only services for whatever you do, when you can.
Beyond that, I’ll reiterate this advice from earlier: Bitcoin is the only digital money worth owning, and if you think it’s not, the burden of proof is on you. If you can’t do more than a week’s worth of research before YOLOing into your shitcoin position, then you probably shouldn’t own anything other than bitcoin.
Further Education
- Shitcoins are Garbage (Article)
- Resisting The Siren Song Of Altcoins (Substack)
- Only The Strong Survive
- Binance Mishandled Funds And Violated Securities Laws
- SEC Sues Coinbase For Running Unregistered Security Exchange
Frequently Asked Questions
What Is The Best Shitcoin?
There is no “best” shitcoin, which is why it’s called a shitcoin. If you secretly believe that you’ll make a side bet and some random coin will 1000x in the next bull run, understand that there are millions of people making the same bet as you, and this is what’s driving dumb liquidity in the crypto market.
To get rich in shitcoins, you not only have to invest in the right 1-of-10,000 coins, you have to buy a large amount, get in early, and get out early, then stop gambling on crypto completely to keep your wins. Of the most unlikely events to happen, getting rich on crypto bets is one of the most unlikely things. It’s a zero sum game, and you’re more likely to end up being exit liquidity for big crypto insiders than making life-changing money.
Is Shitcoin A Real Coin?
Yes, there is a shitcoin that’s actually called Shitcoin (STC), as well as other feces-themed cryptocurrencies like Baby Shitcoin and Poopsicle. Needless to say, these are probably (definitely) poor investments.
Is Penny Crypto The Same As Shitcoin?
All penny cryptos are shitcoins, but not all shitcoins are penny crypto. Penny crypto describes cryptocurrencies which can be bought for less than a penny. This looks like an attractive buy opportunity to some inexperienced investors, but this is known as “unit bias”. Because an alternative, bitcoin-like coin is very cheap, it appears that it has the possibility to take the same trajectory as bitcoin. People buy penny crypto because they believe it’s more likely that a coin worth 1 penny will reach $1 (100x) than a bitcoin worth $10,000 will reach $1,000,000. This is faulty logic, but it’s a driving factor behindpenny stock investing as well as shitcoin investing.
Is Eth A Shitcoin?
Yes, Eth is a shitcoin. Its proof-of-stake mining process is centralized and the majority of decision power is held by a group of insiders who bought coins as part of a premine. Code is developed and pushed by a core group of developers, and the average person cannot run their own node.
What Is Considered A Shitcoin?
Any token with a centralized team of builders, that is not proof of work, and does not allow for average people to run nodes on inexpensive hardware is a shitcoin.
What Is Bitcoin Made Of?
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