{"id":8013,"date":"2020-02-01T00:27:19","date_gmt":"2020-01-31T22:27:19","guid":{"rendered":"https:\/\/forklog.media\/?p=8013"},"modified":"2020-02-02T03:25:12","modified_gmt":"2020-02-02T01:25:12","slug":"how-to-spot-a-shitcoin","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/how-to-spot-a-shitcoin\/","title":{"rendered":"How To Spot a Shitcoin?"},"content":{"rendered":"

There is no shortage of coins and tokens in the crypto-industry. How many of them are any good is the question.\u00a0<\/span><\/p>\n

<\/p>\n

Evaluating the economics, technology, and marketing of just one project is hard. There are thousands of projects out there. It\u2019s impossible to come up with a universally applicable method to tell good projects from bad ones.<\/span><\/p>\n

Yet, somehow people get by and manage to navigate among all the options in the cryptocurrency market. How?<\/span><\/p>\n

When there are too many things to choose from and the time is limited, people, animals, and computers sometimes use heuristics\u2014problem-solving approaches that aren\u2019t necessarily optimal or rational, but they work well enough in most cases and save some time if you\u2019re lucky.<\/span><\/p>\n

Below is the approach Jeff Fawkes, a cryptocurrency investigator, uses to figure out if the coin is not worth looking into whatsoever. Note that this is the author\u2019s personal opinion, use it as an addition to your own research.<\/span><\/p>\n

Is the code open-source, and was it peer-reviewed?<\/span><\/h2>\n

No cryptocurrency has its code closed for the audit. Money isn’t something that programmers are willing to lose because of code uncertainty.\u00a0<\/span><\/p>\n

The code openness leads to peer reviews, bug search campaigns, bounty hunts, as well as the increase of trust from the public. If the source code is closed, it usually means that the developers have something to hide.<\/span><\/p>\n

Does it have a team of developers?\u00a0<\/span><\/h2>\n

Ever tried googling the main names behind the project? Try adding words like \u201cscam\u201d or \u201cselective scamming.\u201d<\/span><\/p>\n

Sometimes \u201cfraud\u201d and \u201cinvestigation\u201d are good keywords, too. You can find out that the decent product that you want to invest in is a brainchild of a former fraudster or a team of professional crooks.<\/span><\/p>\n

There must be at least several active devs, plus a bunch of those who help clean up the code. If there are no devs and no activity in the project\u2019s GitHub branch, then the coin is almost certainly garbage. Don’t think that the abundance of Twitter or Facebook followers is a good metric to determine the coin’s quality. Real GitHub activity is the only decent indicator that everything is running smoothly.<\/span><\/p>\n

Was the code stolen from elsewhere?<\/span><\/h2>\n

It must be no good then.\u00a0<\/span><\/p>\n

Does the coin have notable followers? What do they do?<\/span><\/h2>\n

Sometimes, the altcoin creators attract people from Hollywood for promotion. New traders look at famous people and assume that the offering is legit. Who would think that Steven Seagal will participate in a strange ICO? However, this is exactly what <\/span>happened<\/span><\/a> with the \u201cBitcoiin\u201d ICO.<\/span><\/p>\n

Remember that celebrities are more likely to be good at showbiz, not IT. They almost certainly have no idea what the tokensale is about.<\/span><\/p>\n

Does it use PoS or DPoS instead of the PoW mining algorithm?<\/span><\/h2>\n

Is the major portion of the money supply in the hands of the original company or a handful of people? Maybe a low-level altcoin. But it depends.\u00a0<\/span><\/p>\n

Are there enough nodes on the blockchain?<\/span><\/h2>\n

There are not many nodes on shitcoin blockchains, so those systems are easy to attack. Another shitcoin property is mining centralization. This also makes those systems very prone to hacks. If everything is centralized, no \u201cmillion TX per second\u201d or \u201c5x more blocks\u201d actually matter. And remember that a decent blockchain system takes months or even years just to code.<\/span><\/p>\n

Highly dependable on a small circle of well-known developers who work in the same third party company?<\/span><\/h2>\n

It\u2019s either a garbage altcoin or a highly centralized one. The perfect situation is when all the developers are independent because this lowers the chances of any conflicts of interest. When the majority of some coin developers are the members of a third-party company, they might have the desire to alter the development to achieve personal profit.<\/span><\/p>\n

Does the CEO have trouble with the SEC, CFTC, or another financial regulator?<\/span><\/h2>\n

In most cases, if a startup founder receives a hit from the SEC or CFTC, the project may fall apart. There are several cases of ICO founders going to jail. If you hear news of the founder going to prison, google all other companies affiliate\u0432 with him and try avoiding them in the future.<\/span><\/p>\n

The coin’s developers are connected to ICO scammers or Ponzi charlatans?<\/span><\/h2>\n

You need to make sure that the project’s CEO is not involved in digital crimes. And find out whether the project you study has contracts or is somehow affiliated with known scammers. Sometimes, even good people support scammers. However, you need to be careful and not put everyone into the same \u201cevil\u201d category. Also, if big pockets known for financial fraud are manipulating tokens and coins, or participating as advisors, promoters or speakers for Ponzi ICO’s, you should stay away.<\/span><\/p>\n

Follow us on<\/b> Twitter<\/b><\/a> and <\/b>Facebook<\/b><\/a> and join our <\/b>Telegram channel<\/b><\/a> to know what\u2019s up with crypto and why it\u2019s important.<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"

There is no shortage of coins and tokens in the crypto-industry. How many of them are any good is the question.\u00a0<\/p>\n","protected":false},"author":6,"featured_media":8014,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"","cryptorium_level":"","_short_excerpt_text":"","creation_source":"human_written","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[198],"tags":[20,30,319,549,596],"class_list":["post-8013","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion","tag-altcoins","tag-cryptocurrency","tag-ico","tag-scam","tag-tokens"],"aioseo_notices":[],"amp_enabled":true,"views":"695","promo_type":"1","layout_type":"","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/8013","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=8013"}],"version-history":[{"count":2,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/8013\/revisions"}],"predecessor-version":[{"id":8017,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/8013\/revisions\/8017"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/8014"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=8013"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=8013"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=8013"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}