Various terms have also been coined with the advancement in crypto markets. The inventors of a specific currency assign some names, while some are famous because of their specific characteristics. This guide will explore modern terms like a store of value coin and some pejorative terms like meme coin, Shitcoins, and altcoins. Besides this, we will also share the major differences between them.
What are Store of Value Coins?
Before checking what store of value coins are, we must clarify what store of value actually means.
What is the store of Value?
If the value of an asset increases over time and does not depreciate, that asset would be called a store of value asset. If its value decreases, it will not be regarded as a store of value.
The owner can benefit from the asset by selling it either at the same price you bought it or at a higher price. The store of value is related to the assets’ real value and sometimes to the asset’s liquidity.
Fiat currencies are considered a store of value despite declining purchasing power over time. The reason lies in its liquidity and a very slow pace of its purchasing power. Precious metals like Gold and Silver make a nice example of a store of value. Since they have a limited supply, the value remains intact even for longer periods.
Example of Store of Value Coins
The store of value is the characteristics of a currency. Any coin is a store of value coin if it meets certain conditions.
- It must be highly liquid
- It at least maintains its value
- It does not depreciate
The criteria are strict, and these days only a few of the coins can meet them. However, one school of thought states Bitcoin as a store of value coin. It is also called “Bitcoin Gold.” The supporters argue that the limited supply of coin capped at 21 million, and store of value, makes it precious. Besides this, it also meets the liquidity criteria and value maintaining criteria. Other coins like bitcoin can also perform as a value coin store if they meet the criteria.
The Argument on Store of Value Coins (Bitcoin)?
One school of thought is sure to state bitcoin as a store of value. But there are many glitches in this stance. Many economies have not legalized bitcoin/cryptocurrencies. The price of bitcoin is not stable as it is very volatile and has not been widely used in daily routine transactions; some of the concerns still need detailed explanations. The upcoming years are crucial in this regard.
What are Shitcoins?
It refers to cryptocurrency that has little or no value and digital money that does not have immediate, visible use in the digital currency world. These currencies are often devoid of any discernible purpose, lack a rationale for their existence, and are not backed by any fundamentals. Because their function is unclear, these currencies, in contrast to Ether and Bitcoin, do not have a long-term value associated with them.
Shitcoins are very weak in fundamentals, and there are not too big projects to back them. They drive value from their existence. In other words, investors make quick money on such coins. When Shitcoins launch, they get a wrong bull instantaneously and falls in a short period once the big fishes cash out.
What makes the Price of Shitcoin Move?
Shitcoins face price movements even when a brand or celebrity tweets. For example, the price movement of Dogecoin shooks up right after the tweet of Elon Musk, who announce using Dogecoin as a payment method in the near future. The price was increased with the single tweet and not on the real demand-supply thing. Before investing in any cryptocurrency, one must make sure that it is not developed by shady developers, has undefined functionality, is backed by generic projects, has few holders, and has a dry liquidity pool. All these depict a Shitcoin after all and can cause you serious loss.
What are Meme Coins?
A meme coin is generated by an internet meme and has sarcastic characteristics. Compared to mainstream cryptocurrencies, they are sometimes referred to as “dismissive” since they are typically produced as a joke. However, the cost of these coins has skyrocketed in recent years. Dogecoin, Shiba Inu, and Dogelon Mars are a few examples of meme coins.
Is it a good idea to Invest in Meme Coins?
We are not in proponent to give you any financial advice. However, if they stay from extreme volatility, meme coins are not a good idea to invest in. Besides this, as far as the projects are concerned, it has been observed that Meme coins do not aim to worthy long-term, meaningful projects to make their audience keep intact for a longer time. Fake meme coins act like a balloon as the prices rise instantly, and once it reaches the peak, the investors pull their capital out, making the balloon blow out. A prudent trader must build abilities to trace a fake meme coin to avoid financial loss.
What are Altcoins?
Coins other than Bitcoin are Altcoins. This is referred to as alternative coins to Bitcoin. Since Bitcoin has spearheaded the blockchain since its inception and dominates a major market share, it was taken as the benchmark for other coins. The coins minted after Bitcoins are referred Altcoins.
There are about 16,500 cryptocurrencies as of January 2022, according to the price-tracking website CoinMarketCap. Bitcoin takes up about half of the entire crypto market valuation, while Ethereum makes up roughly a quarter. Altcoins hold the remaining market share (approximately 40 percent).
You must not confuse Altcoins with substandard meme coins or Shitcoins. Altcoins still is superior to the newest blockchain ventures. You can rate the 10-15 coins that occupy the major market cap after Bitcoin, as Altcoins for a broader concept.
Mining-Based, Stablecoins, Security Tokens, Meme Coins, and Utility tokens are an example of Altcoins.
How are Altcoins Different from Bitcoin?
The Altcoins are different from bitcoin in a way that:
- Bitcoin is the first in the list, while Altcoins are 2 or later
- Bitcoin works on (Proof of Work) PoW mechanism while various Altcoins on Proof of Stake (PoS)
- Bitcoin consumes more energy as compared to modern Altcoins like Ethereum
Regardless of the coin it is, all based on blockchain, there is a risk factor involved. Before investment, you must check the coin’s credibility, its functions, and projects. To avoid high volatility, wait for the time period and let the coin complete its business cycle.