Identify One Altcoin From the Rest

For beginning investors, the possibility of falling for rug pulls or buying some worthless shitcoin is a latent risk. This happens because of the desire to make a profit in a short time; by betting on projects without real foundations.

Shitcoins are digital currencies that people believe are valuable just because they exist. They generally have low market capitalizations, which allows a small number of investors to manipulate prices with little effort. Shitcoins have no significant purpose, after an unjustified increase in price they tend to collapse in a very short time. This phenomenon is known as pump and dump or pumping and discharge.

It is very important, however, to differentiate altcoins from shitcoins. In simple words, altcoins are the cryptocurrencies that emerged after the birth of Bitcoin, which several provide value to the ecosystem, the best known altcoin is Ethereum. Thanks to this project co-founded, among other people, by Vitalik Buterin, Charles Hoskinson and Gavin Wood, we have seen the emergence of smart contracts, decentralized finance or Play to Earn video games.

It is very important that traders have a good education before investing in any project. Therefore, studying and reviewing whitepapers is probably the best way to identify shitcoins.

This document published by the development team must explain the objective of your project, cryptocurrency or blockchain through its different aspects.

Unfortunately, most people don't stop to read the white paper of the projects they invest in. And the creators of shitcoins know it.

That is why they project an innovative image and announce that they will solve big problems, but they do not explain what the technology that would allow them to achieve it will be.

Excessive use of images is also another red flag. In most cases, whitepapers are not easy to read. For the same reason, creators of shitcoins tend to share documents that are too visual and have little value content.

One of the reasons why shitcoins are a lousy and risky investment is the possibility of falling into a rug pull.

In short, these scams occur when the developers of a project decide to abandon it or disappear from one day to the next.

Also known as Carpet Pulling, they make it impossible for people who bought tokens to sell them on an exchange, usually decentralized.

To avoid falling for rug pulls, people should pay attention to the liquidity pool of the project and the distribution of the tokens.

If the vast majority remains only in a couple of wallets, it is advisable to take precautions as this demonstrates an obvious centralization, which is quite common in this type of case.