Comment by justboxing | Hacker News Reader

Comment by justboxing | Hacker News Reader

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TL;DR: What attributes qualify a crypto to be a Sh* t Coin?

Serious question, not trolling. I am asking as there's a sea of shilling and mis-information out there and it's getting very difficult to figure out what's real and what's pump-and-dump / shilling, painting the tape, washtrading type scam.

My question is, What makes a "Sh* t" coin a "Sh* t" coin? I'm getting varying answers depending on source. Is it the current price (like fraction of cents) or is it a coin that has a landing page site with a "White paper" but no usage, or something else?

I thought Ripple ( XRP ) was onto something when they claimed that they have "partnered" with 100+ Banks, Financial institutions to provide liquidity and fees saving in cross border transfers.

Further research unearthed the fact that they do not have a SINGLE real customer, and that all the ones they hype on reddit r/Ripple and on CNBC are "Trials" / Pilots of their xCurrent and xRapid blockchain based software.

So does this make XRP also a Sh*t coin?

At the very least a coin should function as a coin. Over the last two weeks I evaluated the user experience of several coins based on the following steps.

1) Buy the coin on an exchange. 2) Install the wallet from the coin's official website. 3) Get a text based pass phrase or private key so that I can restore the wallet at any time from a paper backup. 4) Transfer money from the exchange to the wallet. 5) Restore my wallet on another computer using step 3 and verify money from step 4 is present. 6) Transfer some coins back to the exchange.

Ripple only passed steps 1-3. It failed for step 4, in the sense it was a bad user experience, because you find out the wallet will cost you 20 XRP which you can never get back ($40+ when I tried it). It failed step 5 because the website suddenly stopped letting you download their wallet, which is still in Beta, even if you agreed to all the popup warnings asking you to accept the risks.

Some other results...

ADA/Cardano: I tried installing their wallet 5 times on 3 different computers (macOS and Windows 10) and just got random errors or hang ups. I got one wallet to work out of 5 attempts and was never able to restore that wallet from my pass phrase.

ZEC/ZCash: The macOS GUI wallet often crashes immediately. When it didn't crash it was easier to find a "donation" address than my own public (send to) address.

PIVX: Fails step 3.

Verge: The video at the top of their website to "learn more" before installing the wallet is beyond words bad -- I couldn't bring myself to perform step 2.

NAV: Great, passed all steps. Just not sure how it will compete against Monero long term.

Monero XMR: Looks good so far. But my exchange (Binance) charges about $15 for each transfer to my wallet. Transfers for most coins cost under $1.

ARK was absolutely the best experience. Passed all steps first try and took very little time. I really loved the UX and UI.

Binance is famous for overcharging for withdrawals — the fees you paid to withdraw XMR aren’t a property of XMR, but of Binance.

I did not know that. Thanks!

Binance CEO Changpeng Zhao recently stated that they have only 20 support agents handling over 25,000 tickets every day. That's nuts. Why wouldn't they hire more? Minimum wage?

> Binance receives more than 25,000 support requests (tickets) every day, with a 20 agent support team, that means each agent can only spend 20 seconds or less on each ticket. Unfortunately, as a result, we have a backlog.

Source: https://www.linkedin.com/pulse/binance-q2-changpeng-zhao/

Re: PIVX I think you can just run `dumpprivkey` in the console.

Which Ripple wallet did you use?

What makes you think this would be a property of the crypto instrument itself, and not of the entire concept of entirely unregulated trading in purely speculative virtual currencies? The people starting cryptocurrency projects don't even need to be aware of manipulation, let alone desirous of it, to have the "shitcoin/buttcoin" property. Any set of traders in any instrument can manipulate it.

Where do you get that? Ripple seems to really have a few dozen banks as clients. The main issue with it is that the XRP token is not what actually powers their banking products, but an additional (possibly slightly cheaper) system which may not have any value after all.

Shitcoins are the ones that put up a fancy website, a babble-filled whitepaper, maybe have an ICO, but their economic model makes no sense (blockchain for dentists anyone?), or they have no product at all and just clicked a few buttons to generate an Ethereum/Waves/etc token. Thus their ‘currency’ is likely to have zero utility. They still go up on wild speculation, because why not.

The major issue i have with ripple is that they essentially minted all of the coins themselves and then are selling them off as time progresses. Its completely missing the point of decentralized cryptocurrencies! Anyone buying ripple is the greater fool. There is no way for users to contribute to the ripple network other than trading amongst themselves. If ripple decides to shut shop, thats the end of ripple. Also the small number of master nodes means easy targets for DDOS attacks...

I would put all ponzi scheme "coins" into the shitcoin pile.

https://www.reddit.com/r/CryptoCurrency/comments/7r6chx/here...

Any coin I can't personally see a use for is a shitcoin to me. Unless it does something innovative that excites me to write stuff for, I'm not interested. By that definition, most coins are shitcoins, but there's no objective shitcoin test anyway.

Not to mention that nobody really uses any coins right now because of all the hype, so it's not a great time for people who want cryptocurrency usage to eventually be widespread.

99% of the coins are vaporware backed by marketing hype and fake news and because the majority of the worlds population is technologically inept, it means they can get away with selling off their shitcoins to the masses...

I agree. A good question to ask is: would you buy this coin if you could never ever sell it ?

Unfortunately, money in itself is that thing you would never have if you could not sell it. That is the noticeable exception of purely exchange value items.

Plenty of people want to acquire USD independently of the fact that it can be exchanged for EUR, for example.

> Plenty of people want to acquire USD independently of the fact that it can be exchanged for EUR, for example.

It's doubtful that any of those people would want to acquire USD if it couldn't be traded for bread, gasoline, or anything else. People want USD, precisely because it can be traded for items.

So if you crash in an island, you will not grab food from the wreckage, but wallets?

Ah, very astute, and it hits the nail right on the head. Thanks for that, that's what I'll use when people ask me what to buy.

The answer is not black and white. Most coins are filled with all kinds of illegal activity like wash trading that would never happen at such a scale on a real stock exchange. There are little to no regulations. So pretty much everything in the cryptocurrency sector is being manipulated heavily by people who've invested in the founders' coin or by the founders' themselves.

Most of it comes down to the common sense test: ponzi. Did the founder give themselves 50% of the lions' share of the coin supply? Is the code just a copy of something else but changed to give the founder extra coins or abilities? The list goes on. Pretty much everything out there is a mixture of both. No founder wants to be poor if people will accept these diluted offerings. After all, you take $1 from everybody, and no one screams and shouts, yet you become one of the richest people in the world. Same principle applies with initial supply dilution in some respects.

Short answer - It depends.

Long answer - It takes lot of research before you can label something a shtcoin. How to do that research is one of the longer blog posts pending in my draft folder.

Starting point can be the ownership aspect of a coin. There are coins which are pre-mine or instamine. Shameless plug and a badly written blog post:

https://blockchaintechblog.com/2017/09/02/ico-token-explaine...

Ethereum is one of the biggest example. During it's launch developers owned ~12% of the supply.

Now, pre-mine is not exactly bad. Developers need money for things like listing. HitBTC, consider to be one of the worst exchanges, cost 25 BTC per listing.

But, on the other end of spectrum you have Veritaseum where the developers still own 95% of the coins. People might support it but in my book it is a shtcoin even at $373 per coin.

Many in crypto consider Ripple king sh*tcoin and I and many others don't even consider it cryptocurrency.

"A defining feature of a cryptocurrency, and arguably its most endearing allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation."

>So does this make XRP also a Sh*t coin?

Yes.

It’s whatever coins people are buying that isn’t the one you want them to buy so you can buy a Lambo.

If your intent is to eventually buy a Lambo, then you're probably the kind of person who is duped by shitcoins. "Investing in depreciating assets, that's an interesting strategy." - Carter Thomas

A knowledgeable crypto friend of mine says that the primary factor is the extent of the pre-mining.

Are you ready for a great counterexample to your "knowledgeable" friend's claim?

Look at Ethereum on CoinMarketcap.com.

Next, find Counterparty.io on CMC. You'll have to scroll to page 2.

What you'll notice is Ethereum is worth over $100,000,000,000 today while Counterparty is worth about $100,000,000. It's a difference of 1000X.

Importantly, Counterparty wasn't premined whatsoever (wow!!11). Conversely, 70%+ of all ETH which will ever exist was explicitly premined by the Ethereum Foundation and investors in the Ethereum ICO. At this point, in retrospect it would've been WAY better for the founders of Counterparty to premine the coin and ICO it to smithereens. At least then they'd have millions in capital to hire people with, while the founders would be heavily vested in the coin.

But this didn't happen, and since then we've learned real world investors don't care at all about fairness in coin distribution. It isn't like any coin, to include Bitcoin, is "fairly distributed" by any reasonable definition of fair. Something like 90% of all BTC is controlled by less than 10% of all Bitcoin holders, meanwhile billions of people don't own any BTC whatsoever.

Of the top 10 coins on CMC, 70% are premined: Ethereum, Ripple, Cardano, NEM, Neo, Stellar and IOTA. Of the top 20 coins, 75% are premined.

IMO the only conclusion we can draw from this is cryptocurrencies are de facto bearer share companies, and investors in these companies actively seek out coins where the founders of the company scoop up a good amount of the pseudo-equity for themselves. It vests the founders in the project, and gives them a source of funding, if indirectly.

While I for one really do wish your "knowledgeable" friend was correct, alas.

Pre-mining is unpopular because when the first Bitcoin forks appeared, it became the modus operandi of scammers abusing the markets and the honest miners burning resources to operate the network.

I think it is a complete different story when a project has a pre-mine that is held by a formed legal structure with a fiduciary duty to spend the resources on the project's development. Obviously in pure proof-of-stake systems, a "pre-mine" is de facto the only path you can take.

Fairly distribute tokens is a problem that lacks a completely satisfying solution. It should be noted that "fairly" doesn't mean "evenly".

A fair distribution is one that lets the demand shape the final supply of tokens. In other words, you let people take the position and degree of investment they want to take without manipulating the supply to force pressure the demand.

Writing this comment gave me pauses, I hope that I conveyed my points clearly. Let me know if you need me to clarify anything.

> Obviously in pure proof-of-stake systems, a "pre-mine" is de facto the only path you can take.

It's very possible for project founders to forego a premine, even in pure proof-of-stake systems. All they need to do is determistically distribute coins in proportion to the funds raised in an ICO. Ofc, this would mean the project founders themselves have to fund their own ICO with their own money, and so in practice this is exceedingly rare.

I have a feeling certain people consider ICOs to be premining by definition.

Premining has a very simple technical definition: premining is the act of hard-coding the distribution of coins into a distributed ledger prior to the ledger's public debut.

Unfortunately there are plenty of prolific high-ranking members of the cryptocurrency community who accuse coins which are explicitly NOT premined by any technical definition, of being premined. Many of those coins can only be accurately described as "ninjamined" or "cripplemined" or "instamined".

Admittedly, some do consider ninja/cripple/insta-mining as being on the same spectrum of a premine, in that the end result is essentially identical. But this is a bit of a slippery slope, in that it opens up all coins to "premining" accusations, and then the simple technical definition above loses all meaning.

For example, many have speculated Satoshi Nakamoto must've been running a network of 20-50 Bitcoin mining servers prior to the launch of Bitcoin, given the blockchain evidence we have of Satoshi's hashrate maintaining consistency from Block 0 onwards. Is this a ninjamine? If a ninjamine = a premine, then Bitcoin is arguably premined by this definition. So you can see it's not very meaningful to diverge from purely technical definitions.

Ethereum epitomizes the technical definition of premining: their ICO raised BTC on Bitcoin's blockchain, and the founders of Ethereum initially hard-coded all ETH owed to their Bitcoin-based ICO backers into their blockchain prior to its public debut. The Ethereum Foundation premined still more coins on top of this.

But this doesn't necessarily mean all ICOs are premined, although I don't personally know of any ICO which doesn't exhibit some amount of premining; at minimum the project founders usually scoop coins in a premine on top of an ICO, Ethereum-style.

If you have a genesis block with a hard-coded initial allocation of tokens, to me that counts as a premine.

Now I agree that you can make that premine "fair" and that there is some semantic cleaning to do.

So then is AAPL stock a shitcoin because it was 100% pre-mined (the founders started with 100% of the equity)? That logic make no sense.

> So then is AAPL stock a shitcoin because it was 100% pre-mined (the founders started with 100% of the equity)? That logic make no sense.

Of course not. Judging by the fact 75% of the top 20 coins on CMC are premined, the only people who have an issue with founders premining the coin are delusional.

Even if you did want to launch a coin with no premine in today's market, due to the insane amount of interest in cryptocurrency, it's virtually impossible for founders to mine their own coin en masse (per Satoshi). In the absence of an explicit premine, industrial scale miners effectively "premine" the coin in lieu of the founders premining the coin.

And typically, coins that claim they aren't premined have a checkered history of ninjamining or cripplemining or instamining etc; while the founders tout "no premine" to noobs, in reality they just played games to get around the (pointless) stigma of it.

Verge is one of the biggest path-finding shitcoins around. One of their selling points is "no pre-mine", but in terms of community, technology, dev team, and so on, it has little to no value in the context of other projects. Eerily, new coins are emulating Verge's model, most notable of which, at the moment, is Tron.

A great heuristic that will cut a lot of the chaff is: how organic/productive is their community, and is the technology there/actually possible? A more formal method is SpacesuitX which is a method of breaking projects down into categories and rating them based on personal research. http://SpacesuitX.org

If you confuse cryptocoins with stocks and shares in Companies with real world assets and obligations like Apple you're in for a dear surprise.

Cryptocoins are reproducible software databases. Production and minting of the supply is trivial.

> If you confuse cryptocoins with stocks and shares in Companies with real world assets and obligations like Apple you're in for a dear surprise.

> Cryptocoins are reproducible software databases. Production and minting of the supply is trivial.

Educate me then; because when it comes to tech stocks, and especially pure software based tech stocks like TWTR which pay no dividend that I'm aware of, I'm unsure what investors really think they're getting which is meaningfully different from cryptocurrency.

When you invest in Bitcoin, you're investing in Greg Maxwell and the usual suspects of Bitcoin-land. When you invest in Ethereum, you're investing in Vitalik Buterin and the usual suspects of Ethereum-land. Maybe it's a bit more dynamic than this given the lack of official titles and the ability for new actors to come and muscle out old actors, but ultimately there's always a mutually shared profit motive and organizational structure behind any given cryptocurrency.

The coins you buy are effectively bearer shares on steroids, because they're exactly like traditional bearer shares in spirit and in form.

IMO it isn't very useful to pidgeonhole cryptocurrency as a mere software database, when investors are in practice investing in the teams backing the software (see: above). The leadership/management team behind the coin develops the coin's ecosystem, and spearheads user adoption. It's basically like a startup.

To this end, one standout example is the cryptocurrency Decred, which features a passive income stream component for investors along with a shareholder voting component. Decred's coins can be thought of as publicly traded shares in a company like Stripe, only in bearer form and built on the blockchain.

The more applications built on top of Decred, the higher the transaction volume on Decred, the more valuable Decred becomes. Is this really so different from how tech stocks work?

> and especially pure software based tech stocks like TWTR which pay no dividend that I'm aware of, I'm unsure what investors really think they're getting which is meaningfully different from cryptocurrency.

They're getting a claim to part of the companies assets, which will be liquidated and distributed if it goes bankrupt (after paying the debtors). They can overpay for that right, of course, but they're not getting 0 out of the deal.

There's no "investing" in crypto-assets.

Investing means you would make money from the activity of an underlying enterprise, but with cryptocoin software you're simply buying a number in a database that someone else already created. With each new block the supply inflates more. Sometimes the supply is premined. Often blockchain "startups" tokenize their service, which would be like if Gmail started asking for payments in gift cards but worse because the service or product doesn't even exist yet.

Most of these database tokens were created for little to no effort (see the 10,000BTC pizza).

Risks like Bitfinex/Tether [1] collapsing, or the unregulated exchanges manipulating prices along with those large stake holders cashing out could easily evaporate the price far below what the last few weeks have seen.

Market confidence could be lost and it would be incredibly hard to regain because database coins have no inherent value beyond the hope that you'll find another buyer.

[1] https://medium.com/@bitfinexed/latest

https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/

https://www.youtube.com/watch?v=6r04gfWfRkE

Unless you're trying to claim that AAPL is supposed to be decentralized I don't think they're comparable at all.

By all means make a "Ripple Company" and own 100% of its stock, but if you grab a massive supply of the tokens for yourself you can't claim to have an interest in decentralization.

It’s all shit coins now. Block chain will probably come back someday but it’s all interconnected and will probably be worth nothing after the crash.

I think it's safe to assume any cryptocoin is a pump-and-dump scheme without evidence it's somehow resistant to that.

Hindsight.

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