In recent months, the movements around Dogecoin, which caused the value of this MemeCoin to skyrocket, have generated some interesting debates.
These discussions should help the average user, who is not yet familiar with the cryptocurrency ecosystem, become aware of the environment and some important risks.
It is impossible to determine yet, because there are as many supporters as detractors, that Dogecoin is a TrashCoin, far from it. We know that it was a project conceived almost like a meme, but that it has transcended and may have a place in the market in the medium and long term. It remains to be seen.
However, there are many junk cryptocurrencies with which we must be careful, both because some stay active and because new cryptocurrencies keep appearing.
What are trash cryptocurrencies?
As with almost everything in the cryptocurrency market, we are still adjusting terms and concepts today. What is clear to one person may not be clear to another. If not even the analysts themselves agree, it is difficult for us as users to do so.
However, there is some consensus. One is that a high percentage of launched cryptocurrencies turn into nothing. Another percentage are frauds, and another percentage are failed projects or small tests that lead nowhere.
It is not easy to calculate the total volume of trash cryptocurrencies. But, we would not be far from thinking that in a growing market with thousands of references (probably at this moment already over 6000), we are talking about more than 15% being trash cryptocurrencies. Therefore, it is indeed relevant.
There is no single profile of junk cryptocurrency. There are three main groups:
Failed projects
These projects have not come to fruition, either because their roadmaps have not worked or because they have not achieved the final backing. There are not proportionally that many, but, in a growing market, there are increasingly more of them.
This situation has a lot to do with the ease of creating cryptocurrencies from smart contracts on networks such as Ethereum. These contracts have made generating a cryptocurrency from standard automated platforms very simple, fast, and costs at most a couple of hundred dollars.
Memes
Memecoins could have a category of their own, although they are usually included as trash cryptocurrencies as they tend to be worthless and are no more than residual projects.
They are generally associated with specific communities, actions, or activities and die soon after.
The case of Dogecoin has indeed exceeded expectations, but it is not common.
Fraud
Beware that the launch of cryptocurrencies is a breeding ground for fraud. The number of abandoned projects after ICOs is increasing.
It makes sense because there is a kind of gold rush to find the next cryptocurrency that multiplies its value exponentially and acquire it on a grassroots basis.
That leads many people to participate in ICOs for projects that make little sense, if not outright fraud.