Not to be confused with shitcoins, these are cryptocurrencies launched with the goal of attracting investors only to be sold for massive profits in a short time.
In the public consciousness, cryptocurrencies have become known as quick-rich schemes. After all, Bitcoin's price has risen by over 12X from 2017 to 2021. As such a lucrative investment vehicle, Bitcoin minted many millionaires and even billionaires. And where there is a success, there is copycatting.
Scamcoin is one such attempt. If you buy Bitcoin now, in August 2021, its price would have to go to €70k or €80k range to gain merely a 2X gain. It may take years for that to happen or not at all. Therefore, developers of scamcoins count on people thinking there will be some other cryptocurrency like Bitcoin. One that is dirt-cheap to buy, only to grow to even 100X later.
This is the basis of the scamcoin - the promise of a new cryptocurrency that will become "the next big thing." Developers of scamcoins tend to use technical jargon to describe brand-new technology that was never tried before. Moreover, they promise new utility for the coin, resulting in record profits for the coin holders.
Scamcoins are quite reminiscent of classic ponzi schemes. As developers hold most coins upon launch, they count on initial investors to spike its price. In turn, these investors will hype the scamcoin in order to make a return on their investment, and so on. At the right moment, when scamcoin developers gauge that the coin has reached its ATH - All-Time-High price - they will sell their own massive supply of tokens.
Given the fact that every year a new crop of people enters the crypto market, there is never a shortage of scamcoins. In the first half of 2021 alone, 2,655 new cryptocurrencies were created. Although most are legitimate, many are not.