Shitcoins

For the uninitiated lets first establish what constitutes a shitcoin. There are several schools of thought when it comes to what constitutes a shitcoin.

If you ask some people, anything and everything that isn't Bitcoin is a shitcoin (these people are known as Bitcoin maxi's, stay tuned it won't be long until they adopt a recognizable style of clothing, I envision them as slightly more fashionable Mennonites, lovely people..the Mennonites).

Another take on Shitcoins is that anything that isn't Bitcoin, or Ethereum. When I started learning about crypto this was the more popular take. Essentially anything that was an ERC20 contract....or XRP.

My take on Shitcoins is much like former Supreme Court Justice Potter Stewart's famous quote about obscenity "I know it when I see it". A shitcoin is a hype driven coin devoid of inherent value that primarily serves as a way for people who bought early to dump on those who bought late. After you have been trading for a while you realize that we are surrounded by shitcoins, they aren't exclusive to ERC20's/crypto exchanges. My least favorite type of shitcoins are politicians, but I digress.

Why are Shitcoins so popular?

As usual I will talk about my own experiences. When I first entered the crypto space there were 3 coins to buy on Coinbase: Bitcoin, Ethereum, and Litecoin (shortly after Bitcoin cash hit the exchange, but that is fodder for another post). The first thing that I noticed as a new trader is that I could buy a lot more LTC at that time than BTC or ETH, so it seemed to me that buying LTC would give me a greater return. Not knowing anything about the space/trading this seemed reasonable at the time, and I am sure is not unique to me. In retrospect that instant set the frame of mind that I then approached crypto with for a long time.

Along with my newly acquired crypto coins I made a deep dive into Crypto Twitter. To say that this is a unique space is an understatement. What seemed like a place of wonder and opportunity back then now seems more like the Mos Eisley cantina. I jest, obviously, there are some really amazing people in that space: great traders, good analysis, and a lot of interesting people. That said, there are definitely some hostile alien species there looking to take you out back and beat your credits out of you.

Before long I learned that there were many more coins that you could buy from other exchanges. I chose Bittrex, made my very first crypto transaction, and set out to explore this vast wonderland of opportunity.

Beginners luck

I quickly observed how "cheap" these coins were relative to the Coinbase offerings. I had no clue about market cap back then, I just saw everything as it was denominated in USD, and thought "well if BTC can go to $20,000 so can this here XRP that cost $.25". I actually made profit on my first few trades, I can't remember all of them, but XRP and XVG were two of them (shortly thereafter Ripple became one of the most valuable companies in the world...for like a day....and I bought XVG right before a legendary Macafee pump, RIP John.). A couple of other small winners, and that was the last time I was profitable for quite some time.

Quick analysis

If we were going to discuss the prevalence of shitcoins I think it could be argued that my experience with crypto probably isn't much different than many new entrants post 2017. Obviously Coinbase has a lot more options now to the new crypto entrant, but I still think that idea of "This is cheap, so it is going to go up." is the primary driver of new entrants into the shitcoin space. This underlines the importance of proper onboarding and education for people who are interested in crypto in the first place. There is opportunity here for actual builders to make a difference.

The takeaway

I have made and lost several fortunes during my time in crypto. I have been as big a true believer in a shitcoin that has ever existed. I have been a part of, and even led communities that consisted of bright eyed optimist and the most cynical gamblers. For me, at this stage in my understanding I am largely avoiding them. When someone builds something that I think is cool, I at least have a level of understanding at this point that helps me evaluate whether or not they are a scammer or someone who are trying to do something cool. Unfortunately the good projects get lost in the noise.

This is one of the reasons I am so heavily invested in Stacks as a project and community. For me this grand project of having smart contracts on Bitcoin seems to be what I was always looking for, even before I could actually articulate it. The community is full of talented people who are churning out actual product. If we can agree that Ethereum itself is not a shitcoin, then obviously Stacks is also not a shitcoin. Few would ever say that Bitcoin is a shitcoin, and seeing as though Stacks allows for smart contracts on Bitcoin then the case for it being a vitally important part of the ecosystem is self evident.

I have some great shitcoin stories to tell, and I will....just not today. Until next time, Jack.

The Explorer featured here was my very first one!

*The easiest way to DCA your Stacks here