Shitcoins are basically an umbrella term that is used to cover all the replicas and spin-offs of failed cryptocurrencies- or ones that are about to fail. As they usually have no identifiable purpose, these currencies do not have any basis for existence and lack all the fundamentals that could back them. Since this, in a way, makes their purpose undefined- unlike Bitcoin or Ethereum, these coins don’t have any form of longevity that could be associated with them.
What Gives Shitcoins Their Value
The most famous example of shitcoins would be Dogecoin, which was forked from Litecoin back in 2013 and was seen as a form of fun currency. It was created simply as a meme coin and had an appeal that was quite restricted to the dog breed of Shiba Inu that featured on the logo.
Now, while Dogecoin was seen as just a fun currency, one cannot deny that it gained major traction over the years. This is because such forms of cryptocurrencies derive value solely from their existence. As they are launched, the hype that surrounds the creation results in investors pumping in massive loads of money. Mass purchasing increases the price of the coins even further- especially in a brief period.
After a point, the investors decide to cash out in order to generate short-term gains, which leads to the shitcoins nose-diving in their prices. Once all the immediate gains seem to be realized, the price of these cryptocurrencies remains at the level as they were without showing any major movement. The pump-and-dump trend often leaves several amateur investors with a lot of worthless crypto coins.
One example of shitcoins being backed by the powerful would be Dogecoin- which is backed by the richest man on the planet- Elon Musk. Without his public backing of the cryptocurrency, the coin would not have any value.
