Why the practice of putting money into cryptocurrencies of almost zero value “in case they explode” is a speculation of the highest risk

The great growth of cryptocurrencies such as Bitcoin or Ethereum has led to the emergence of a market to create these types of coins that are hardly worth anything: it’s the shitcoins, cryptos that are really worth nothing and that have no mission other than to try to enrich their creators.

This would lead nowhere if it weren’t for the fact that some are playing to put money in this type of cryptocurrency in case they “explode” and get rich along the way. It is a very high risk speculation and the normal thing is that it is useless.

The theory of investing in shitcoins

The theory that leads some people to use this practice is that if they invest in cryptocurrencies that are hardly worth anything and they go up, they will do it a lot. If a cryptocurrency costs a penny, if it goes up to ten cents, we are already talking about multiplying the investment by ten, and not even the cryptocurrency has achieved anything of relevance. If it goes up to a few dollars profitability will already be brutal.

On the other hand, investors in these types of markets try, after making the investment, for the currency to gain traction, making noise on social networks about how disruptive this new currency is. The idea behind all this is to convince other investors but it is neither more nor less than a crude attempt to manipulate the market.

This strategy seems new but it is not. In the stock markets this was also done with the so-called “penny stocks”. Shares of companies that were hardly worth a few cents, that if they were able to “warm up” with hoaxes could go up. In The Wolf of Wall Street you can see that it is really the great hands of the market that were covered with this practice, not the unsuspecting retail investors.

Reality

The truth is that the plan may seem spectacular but the reality is very different. First, there are thousands of shitcoins. To have a chance that the plan works, you have to invest in many (diversify). On the other hand, to achieve a relevant profit you have to invest reasonable amounts, it is not enough to put one euro in each one since a return x100 would be spectacular but it would not add almost value.

In the end, the truth is that for this strategy to work, you have to invest a lot of money and there is little guarantee that it will work. It is, of course, a very risky strategy, purely speculative and intended, in most cases, to lose all the investment money.

Hunting the dividend as an investment strategy

You just have to see the returns of some shitcoin cryptocurrencies in periods of 7 days: not only do they not go up but they lose practically everything they are worth, as he tells us in his tweet @ORamosBets:

And not only that, but on the way there are directly scams, like cryptocurrency Squid Game, who taking advantage of the popularity of the Netflix series launched this scam that attracted unsuspecting and then they disappeared with the money.

Therefore, be very careful with this type of practice: the normal thing is that all the money is lost. And if we still want to try it, let it be with the part of the savings that would not affect us if they disappeared completely.


Source: El Blog Salmón by www.elblogsalmon.com.

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