Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.

What are shitcoins?

Learn what shitcoins are, how they work and whether you should invest in them.

The cryptocurrency market has exploded in popularity; however, as with every great success, there are always people looking to exploit less experienced people. While the majority of cryptocurrency coins serve a purpose for either an associated blockchain or decentralised application, there are some cryptocurrencies that hold no real value. A coin that offers no real value is often referred to by many in the cryptocurrency community as a "shitcoin".

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade.

What is a shitcoin?

Shitcoin is a derogatory term that is commonly used to describe cryptocurrencies that serve no discernible purpose. Although the term is best used for coins that hold no value, it can also be attributed to any cryptocurrency based on personal opinion.

They can be a copy of another well-known coin or they can be a brand new project. There is no specific definition.

How do shitcoins work?

Since Satoshi Nakamoto introduced Bitcoin in 2009, interest in cryptocurrencies has skyrocketed. The success of Bitcoin has led many businesses to examine the advantages of blockchain technology. Many projects have created associated digital currencies. These cryptocurrencies, commonly known as altcoins, often incentivise many of the basic principles set out by Bitcoin.

Typically, the development team behind a coin will announce how many tokens they will make available. For example, Bitcoin's whitepaper states that there will only ever be a maximum of 21 million Bitcoin (BTC). Likewise, Ethereum's whitepaper states that Ether's (ETH) supply cannot exceed 18 million coins per year.

Such supply limits create scarcity. Investors know that a coin's supply will become limited after a certain point in time. Issuing more tokens than initially promised would dilute the value of investor holdings. When the supply of a cryptocurrency is fixed, its value should be dependent on demand.

As shitcoins serve no meaningful purpose, there is often no genuine demand for the token. The token's value is dependent on pure speculation. Shitcoins are digital currencies that people believe to be valuable simply because they exist.

What are the key signs of a shitcoin?

It is often easy to identify a shitcoin because many follow a specific pattern. When a shitcoin is first launched, the token may attract some interest, but its price remains relatively low. As interest peaks and investors jump in, prices spike high and fast. This is almost always followed by a nosedive in price. The sharp fall in price is caused by investors selling their coins to profit from short-term gains. This pump and dump process is often associated with shitcoins and can leave many investors stuck with worthless tokens.

Shitcoins usually have low market capitalisations (market cap). The low market cap makes it easy for a small number of investors to manipulate prices, raising them with very little effort.

The most obvious sign of a shitcoin is a lack of a well-defined function. Bitcoin was built for a decentralised payment network where financial transactions are secure, trustless and censorship resistant. Ether, the coin native to the Ethereum blockchain, is used to validate transactions and secure the network. Binance Coin, the token native to the Binance Exchange, is used to reduce fees on the Binance platform and power the associated Binance Chain blockchain. Shitcoins do not have such clearly-defined purposes.

Discerning a shitcoin is easier when looking into the background development and associated project (if one exists). Is the project a copy of an already-known cryptocurrency platform? Does the project have an associated whitepaper? Is the whitepaper copied from a different project? If there are contentious answers to any of these questions, the cryptocurrency could well be a shitcoin.

What research should you do before buying a cryptocurrency?

Although knowing the tell-tale signs of a shitcoin is important, knowing what to research before purchasing a cryptocurrency is just as important.

The following tips will help investigate any cryptocurrency project to determine whether it falls within the "shitcoin" category.

1. Thoroughly examine the project's whitepaper

When it comes to identifying shitcoins, a project's whitepaper is the most important resource.

The first thing you should look for is the availability of a whitepaper. If the cryptocurrency doesn't have a whitepaper, it is likely a shitcoin.

Second, look at how the whitepaper is written. It might seem trivial, but it is important that a whitepaper is written in flawless English. If you spot instances of low-quality English or numerous typos, you should question the legitimacy of the cryptocurrency. A high-quality cryptocurrency would invest in a well-written whitepaper.

Third, examine the promises made by the development team. Most people don't read the technical points of a project's whitepaper. Shitcoin creators know this and will, therefore, embellish the project's vision, roadmap and use cases. However, the underlying technology for achieving these proposals will never be explained. For instance, the whitepaper might promise that a project is "the next global payment system" but then fail to explain how that will be achieved.

Overuse of visuals is also another red flag. A whitepaper is intended to be the technical details behind a project. It is not supposed to be an easy read. When a whitepaper is overly visual and lacks technical solutions, you may want to be wary.

To help spot a terrible whitepaper, it is a good idea to become familiar with excellent examples. Solid whitepaper examples include Bitcoin, Ethereum and Cardano. Notice that these whitepapers contain the following:

  • The project's vision.
  • An overview of the problems the project aims to solve as well as the solutions the project will implement and why those solutions have been chosen.
  • Details on the technical implementation.
  • A credible roadmap for delivery.
  • A specification of the associated cryptocurrency's initial coin offering (ICO).
  • Technical information about the cryptocurrency's purpose, type, mechanism and tokenomics.

2. Look out for initial coin offering red flags

Initial coin offerings (ICOs) are a way for investors to gain early access to a cryptocurrency token. However, if an ICO offers a significant discount (more than 30%) for early investors, there is a risk that the cryptocurrency is a shitcoin. Allowing early investors to purchase coins at low prices gives them the opportunity to dump coins slightly above the ICO price and still make a profit. If a development team has faith in their cryptocurrency, there should be no need for a strong incentive to drive token sales.

Even if tokens are not sold directly after an ICO, offering a cryptocurrency at a very low price can result in a large proportion of tokens sitting in the hands of a few people. This is a guaranteed way to bring governance problems and political to a project.

Another ICO red flag is the lack of a product, demo or code. Although ICO's ask you to put your trust in the promise or vision of a development team, it is better to trust a team that shows what they are doing instead of one that only offers a whitepaper. Even for those not interested in tech, it is worth looking on the project's GitHub repository to see if it's active. If there are any demo products, they should be evaluated before any investment is made.

Researching the project's team members can also prove to be invaluable. What are their credentials and experience? If they have been involved in other crypto projects that have failed, it would instantly be cause for concern. Do they have a public social media presence? Inactive profiles are not encouraging. Are there any pseudonymous names like Satoshi Nakamoto used? The leadership team behind a project should not be anonymous. There is no reason for a project team to be anonymous unless they have something to hide.

Are shitcoins a good investment?

Shitcoins are generally terrible investments. They require huge risk and very rarely offer rewards. The majority follow pump and dump schemes where only a few "insiders" really understand the price dynamics. With no real value, after a pump and dump scheme, other investors are left with worthless cryptocurrencies. There is no denying that small-cap altcoins can produce high returns, but only if an investor gets extremely lucky and sells at the right time. There is a high chance an investor can lose all of their initial investment.

Where to buy shitcoins

As mentioned previously, shitcoins are extremely subjective. Any altcoin can be declared a "shitcoin"; therefore, it is difficult to give specific guidelines for where they can be purchased.

Most hold a small market capitalisation and are, therefore, not as common on larger cryptocurrency exchanges such as Binance or Coinbase. Exchanges such as these require coins to be officially listed, which means the project undergoes a thorough vetting process. Very few shitcoins make it that far.

Alternatively, lower market cap coins may be acquired through a decentralised exchange (DEX), where there are no restrictions on what coins can be listed.

Well-known shitcoins

Although subjective, here are some of the more well-known shitcoins within the cryptocurrency market:

  • Dogecoin (DOGE). This is a meme-based cryptocurrency that was designed around a comical picture of a Shiba Inu dog called Doge. Much of the coin's success has been the result of influencer encouragement and hype.
  • BitTorrent (BTT). BTT was a token built around the file-sharing platform BitTorrent. The platform was already functioning and existed without a token, which has led many to place BTT in the "shitcoin" category. The token supply is 1 trillion.
  • Dent (DENT). DENT is a cryptocurrency used to purchase mobile phone packages. However, many believe the application does not require blockchain technology and actually functions better without it. It is seen by many as a way to "cash in" on cryptocurrency success.
  • TRON (TRX). TRX was developed to power the Tron blockchain. However, some have questioned Tron's legitimacy as the whitepaper appears to be plagiarised.
  • Shibu Inu (SHIB). Following on from Dogecoin's success, SHIB was developed as a token simply named after the Shiba Inu dog breed. It serves no purpose and is not associated with any blockchain or decentralised application. The maximum supply of tokens was set at 1 quadrillion.

Compare exchanges that offer altcoins

1 - 20 of 23
Name Product Deposit methods Fiat Currencies Cryptocurrencies
FTX Cryptocurrency Exchange
Credit card, Wire transfer, Silvergate Exchange Network (SEN), Signature SIGNET
USD,EUR,GBP,AUD,HKD,SGD,TRY,ZAR,CAD,CHF,BRL

260
cryptocurrencies

Sign up through Finder for a 5% discount on all trading fees. T&Cs apply.
FTX is an exchange built by traders for traders, with a range of derivatives markets such as options and futures with deep leverage, in addition to standard spot markets. Note: Not available for US customers.
WazirX Cryptocurrency Exchange
Cryptocurrency, UPI, IMPS, NEFT, RTGS
INR

263
cryptocurrencies

Enjoy fast verification and high speed trading on this well-known Indian cryptocurrency exchange.
Bit.com Cryptocurrency Exchange
Bit.com Cryptocurrency Exchange
Cryptocurrency
USD

29
cryptocurrencies

Start trading options, futures and perpetual contracts now! New users get up to $245 in trading coupons.
Changelly Crypto-to-Crypto Exchange
Credit card, Cryptocurrency
USD, GBP, EUR, CAD, MXN, HKD, RUB, NZD, SGD, JPY & 40+ more

156
cryptocurrencies

Access competitive crypto-to-crypto exchange rates for 150+ cryptocurrencies on this global exchange.
Binance Cryptocurrency Exchange
Bank transfer (ACH)
USD, AUD, GBP, EUR, RUB, TRY, NGN, UAH, PHP, CZK & 20+ more

367
cryptocurrencies

Finder Exclusive: Get 10% discount on your fees when signing up through Finder.
Trade an extensive range of reputable coins on this world-renowned exchange, popular for its high liquidity and multi-language support.

US residents: As of September 2019, US-based users can only trade USD on the American dollar onramp of Binance, Binance.US.
UK residents: In addition to normal crypto trading services, Binance offers margin lending. As this is a regulated activity which they are not authorised to offer in the UK, we advise you not to use this service. If you're interested in margin trading, see authorised providers.
Okcoin Cryptocurrency Exchange
Okcoin Cryptocurrency Exchange
Bank transfer (ACH), Epay, Credit or Debit Card, SEPA, Prime X
USD, EUR, SGD

69
cryptocurrencies

Get $50 worth of BTC when you buy $3000 or more in crypto.
Buy, sell and earn cryptocurrency with this user-friendly exchange and smartphone app.
KuCoin Cryptocurrency Exchange
KuCoin Cryptocurrency Exchange
Cryptocurrency, PayPal, Wire transfer, Credit or Debit Card, SEPA
USD, EUR, GBP, RUB, CNY, AUD, KRW, JPY, TRY, VND & 40+ more

566
cryptocurrencies

Finder exclusive: Sign up and use code 1xf56 for one month of VIP 1 benefits. Deposit/transfer more than 0.1 BTC to KuCoin within 7 days of registration for 1 month of VIP 2 benefits. T&Cs apply.
Browse a variety of coin offerings in one of the largest multi-cryptocurrency exchanges and pay in cryptocurrency.
OKX Cryptocurrency Exchange
OKX Cryptocurrency Exchange
Bank transfer, Cryptocurrency, iDEAL, PayPal, POLi, SEPA, Faster Payments (FPS)
USD, CNY, EUR, ARS, AUD, BGN, BRL, CAD, CHF, COP & 20+ more

305
cryptocurrencies

Earn US$10 in BTC when you refer a friend and they purchase $100 of cryptocurrency. T&Cs apply.
Listing over 290 cryptocurrencies, OKX offers its users a variety of payment methods and coins to choose from.
Gemini Cryptocurrency Exchange
Gemini Cryptocurrency Exchange
Bank transfer (ACH), Debit card, Wire transfer
USD, SGD, HKD, GBP, EUR, CAD, AUD, COP

106
cryptocurrencies

Get USD 25 in BTC when you trade USD 100 within 3 days of signing up. T&Cs apply.
Execute multiple trade types with no fees on cryptocurrency and wire transfer deposits on this exchange.
Gate.io Cryptocurrency Exchange
Cryptocurrency
USD, EUR, GBP, HKD, SGD, AUD, CHF, MXN

1068
cryptocurrencies

Finder exclusive: New users get $90 worth of Gate.IO points and an airdrop of $5 in GateTokens if trade volume exceeds $100 in their first week. T&Cs apply.
A feature-rich exchange with over 1,000 tokens including derivatives, yield farming and lending products.
Bybit Cryptocurrency Exchange
Bybit Cryptocurrency Exchange
Cryptocurrency, Simplex, Banxa, XanPool, MoonPay, Mercuryo, E-check, Legend Trading, Capitual
USD, AUD, CAD, EUR, GBP, NZD, HKD, JPY, SGD, PHP and more

185
cryptocurrencies

Disclaimer: Highly volatile investment product. Your capital is at risk.
Buy, sell, trade and earn hundreds of cryptos on this full-featured global trading platform.
AAX Cryptocurrency Exchange
AAX Cryptocurrency Exchange
Alipay, Bank transfer, Cash, Neteller, PayPal, Qiwi, WeChat, Western Union, UPI, IMPS, Paytm, Faster Payments (FPS), PayNow, Swish, Payme, SWIFT
AUD, CAD, CNH, CHF, EUR, GBP, HKD, NZD, SGD, USD

111
cryptocurrencies

Get 50 USDT when you sign up through Finder, make USD 10k+ trades and deposit USD 500 worth of crypto. T&Cs apply.
Make fast transactions including spot, futures and P2P trading with this cryptocurrency exchange.
Crypto.com App
Credit card, Cryptocurrency, PayPal, TransferWise, SEPA
USD, AUD, CAD, CHF, EUR, GBP, NZD, SGD, JPY, ZAR & 9+ more

255
cryptocurrencies

Buy 240+ cryptocurrencies, earn up to 14.5% p.a. on holdings, pay with your crypto for cashback at stores, get loans and more with this complete crypto-finance platform.
Bitfinex Professional Trading Exchange
Credit card, Cryptocurrency, Bank Wire
USD, EUR, GBP, JPY

190
cryptocurrencies

Cryptocurrencies are a highly volatile investment product. Your capital is at risk.
Spot trade all of the major cryptos on this full-featured exchange and margin trading platform.
Paybis Cryptocurrency Exchange
Paybis Cryptocurrency Exchange
Bank transfer, Cryptocurrency, Neteller, Skrill, Credit or Debit Card
EUR, GBP, USD, AUD, CAD, PHP, SGD, CHF, HKD, JPY & 30+ more

405
cryptocurrencies

Buy Bitcoin and other popular cryptocurrencies with credit card or debit card on this digital cryptocurrency exchange.

US residents: Restricted in the following states - NY, CT, NM, WA, HI, AL, VT, FL, AK, NV.
CoinSwitch Cryptocurrency Exchange
Credit card
USD, JPY, RUB, EUR

386
cryptocurrencies

CoinSwitch allows you to compare and convert over 250 cryptocurrencies across all exchanges.
Liquid Cryptocurrency Exchange & Margin Trading
Liquid Cryptocurrency Exchange & Margin Trading
Bank transfer, SEPA
USD, JPY, EUR, SGD, AUD, HKD

132
cryptocurrencies

Promo: Get 10% off your trading fees. T&Cs apply.
Disclaimer: Highly volatile investment product. Your capital is at risk.
Liquid is a unified, globally-sourced trading platform that bridges the worlds of fiat and crypto.
Uphold Digital Money Platform
Uphold Digital Money Platform
Bank transfer (ACH)
USD, GBP, AUD, EUR, CAD, CNY, JPY, SGD, INR, NZD & 10+ more

108
cryptocurrencies

Buy, send and convert from 27 currencies in seconds, all on one platform.
Huobi Cryptocurrency Exchange
AdvCash, Cryptocurrency, Wire transfer, SWIFT
GBP, USD, AUD, EUR, INR, BRL, KHR, CAD,CNY, NZD & 15+ more

329
cryptocurrencies

Huobi is a digital currency exchange that allows its users to trade more than 190 cryptocurrency pairs.
Bithumb Cryptocurrency Exchange
Bithumb Cryptocurrency Exchange
Cryptocurrency
KRW

197
cryptocurrencies

A global platform where users can make KRW and cryptocurrency deposits to purchase up to 15 popular cryptocurrencies.
loading

Compare up to 4 providers

Final word

Shitcoins are risky investments that most cryptocurrency enthusiasts should steer clear of. For investors with large risk appetites, shitcoins may present an opportunity to make large profits. When investing in shitcoins, use the tips we have discussed in this article and ensure you fully understand the short-term and long-term potential of the coins. Once comfortable with the risks, invest small amounts and take profits regularly to avoid making a loss.

Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

Latest blockchain news

More guides on Finder

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy Policy and Terms.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site