I came in too late to the crypto market. I admit it. For weeks now I’ve been putting my under-powered mining rig to work, collecting pennies worth of digital coins of various denominations. At first, I did so mostly aimlessly. There’s a whole sea of crypto coins out there. So many that most of them just get utterly lost in the noise. Clearly I wasn’t going to be able to turn $500 into millions just by parking it in Bitcoin. Even if bitcoin rose to $300,000/per, I would still only have a mere $50,000. A nice chunk of change, but not millions. When I started getting into it, I was totally new to investing in general, and totally new to crypto currencies. And since I knew I was too late, I had an obsessive desire to identify a coin that might have the potential to be worth something.
So many ShitCoins
Most coins that are out there aim to make one or two guys rich with little emphasis on fairness. The “ICO” is becoming an infamous acronym whereby companies seek to fund themselves without dealing with SEC regulations (although the SEC is threatening to crack down on them as of recently). Through my stumbling around, I’ve learned of a few ugly tricks employed by these, young, mostly worthless coins.
Trick #1: Premining
The creators of a new coin will often times take advantage of the fact that nobody has heard of the coin (yet) by mining the coin initially for themselves (sometimes in secret) before releasing it to the public. By doing this, a bunch of the coin ends up in the hands of a few individuals who then have the power to manipulate the market. People with tons of buying/selling power are often referred to as “whales” in the market, because when they put in buy/sell orders, the price fluctuates violently for everyone else. You could be riding a nice incline in price, only to have a whale decide to take profits… immediately causing the price to plummet to near-zero on a young coin.
Trick #2: The Pump ‘n Dump
This trick can be done with any coin, but it can also be used by the developers of a new coin. The creators of the coin may start making big announcements to the public that “something big is about to happen”. They might even flat-out lie about some BS… Announcing big changes, new exchanges, new pools, new press “coming soon”. The idea is to cause the price to rise enough so that the original holders can dump their massive shares of it and move on to something else. Sometimes they get right back to creating a whole new coin.
Trick #3: Would-be trademark infringement
“Bitcoin” is a pretty nice name. It rolls of the tongue nicely. It says what it is, computer money. But, since Bitcoin is owned by no one, there’s nothing stopping someone from infringing on its trademark and its community-accepted logo… even to the point of creating outright fraudulent/counterfeit versions of it in the marketplace. At the same time there are thousands of coins out there that just don’t have great names. By now many people have heard of “Ethereum”… but why the hell didn’t they pick a name that is less esoteric? With Bitcoin being a recognizable brand, yet not a real trademark registered by any sort of organization. Some coins have gone so far as to name themselves in such a way in order to capitalize on the confusion caused by similar coin names with the newbs. For starters, there’s “Bytecoin”, with a very similar “B” logo. But there’s also other currencies that “forked” from Bitcoin that didn’t even bother to pick a new logo. “Bitcoin Unlimited”, “Bitcoin XT”, “Bitcoin Cash”, “Bitcoin Classic”, are guerrilla projects, on some level, and are aimed at capitalizing on marketplace confusion. There’s also Ethereum and Ethereum Classic which is a whole other fork story.
Trick #4: Marketing
Some people out there are unwilling to accept coins with weird names. As a result, some coins have even gone so far as to rename and rebrand themselves to be better positioned in the market. DashCoin used to be “DarkCoin” from and then renamed itself purposely to be confused with Dash, a completely different currency. Or maybe I’ve already got the two Dashes confused? (Wikipedia help me!)
The first thing you should look at when picking a young currency is market cap. Market cap is quite simple the value of all available coins put together. Bitcoin typically has a market cap off about 65 billion USD as of this writing. All other crypos are measured relative to Bitcoin. For a young coin to be truly young it needs very little market cap with room to grow combined with community enthusiasm. Ask yourself… “How much market, relative to BTC do I expect this coin to have?”. Interestingly, some fairly garbage coins have market caps in the 250 million range. Signatum, when I bought it was under 1 million. Now it has about 10million. This tells me that it might have a 25x growth potential easily.
But I’m order to get there, it needs to capture the attention of a noisy market.
There are basically 4-types of marketing strategies employed by coin makers. 1) Niche Marketing, and 2) Get Rick Quick Marketing and 3) Serious currency marketing 4) bad Marketing
1) Niche marketing: DogeCoin was possibly the first niche coin I remember encountering. It was a new currency created by changing a few lines of the Bitcoin open source. Mostly it was a proof of concept. It included internet star-dog “Frisbee Doge” as its mascot. The creators of the coin were pretty up front about the fact that they had basically no plans to create a market for Doge… and therefore it isn’t worth much in the marketplace, if anything., but some people bought a little bit of it just because they liked the dog. Following in Doge’s footsteps, many other coin creators saw opportunities to create currencies to suit the personalities of would-be buyers. There’s Animecoin, PotCoin, DopeCoin, RonPaulCoin, Shrooms, LibraryCoin, GameCoin, NyanCoin, Weed, TittieCoin, WarCoin, Unobtanium. Most of these coins are basically worthless. Although Unobtanium is trading at $57… it is worth noting that its circulating supply is very small. It is intentionally difficult to mine in order to live up to its gimmicky name.
2) Get Rich Quick Coins: Don’t ever think that you’re going to get rich quick from any of these coins. They are complete shams, generally premined, and any coins you buy on the marketplace are basically just going straight to the pockets of the creators. The Creators of “Money” ($$$) went particularly overboard with their marketing, posting fantasy pictures of hot women, sports cars, and stacks of cash all over their marketing materials.
3) “Serious” coins: I put “serious” in quotations there because although these coins want you to take them seriously, they aren’t necessarily serious coins. Most of them are merely knockoffs of Litecoin or Bitcoin. But they always want you to believe that they have some new technology that makes them better in some sort of enigmatic way. Marketed primarily towards wanna-be computer nerds, these coins promise new hashing algorithms, ability to scale, new consensus algorithms, “Proof Of ____ algorithm is new a revolutionary and solves all the market problems regarding scale, transaction time, and transaction fees…. plus its new dynamic difficulty algorithm is guaranteed profitable (and fair!) for miners as well as 100% secure!” There’s even a coin out there that uses a “proof of capacity” algorithm that requires you to fill your harddrive with hashing garbage as part of the mining process.
If they are particularly savvy they will pick a name that suggests that this coin could become a major player in the world economy, but most of them seem to be marketing themselves towards computer nerds.
Some of them actually put some effort into rethinking the whole idea of cryptocurrencies. Gnosis claims to be able to rent out your computing power as a render-farm, for example, kinda neat stuff… but why build that into a cryptocurrency? I dunno. Similarly, Sia, rents out your harddrive space and pays you in SiaCoin… but not exactly in a profitable sense. Ether has been hard at work trying to prove to the world that it isn’t a shitcoin, by being a platform for all kinds of smart contracts, but I don’t really think it has a long-term future.
So it is in this environment that I come across Signatum. A coin which promises everything:
- Notable, Authoritative, trustworthy Developers
- Fairness in the launch process (no premine)
- Some kind of new, fancy algorithm, “Skunkhash Raptor”
- Support on at least one exchange (Cryptopia) with rumors that Bittrex is interested in listing it.
- Huge mining rewards of 2500 tokens until block 30,000 (get in early before it halves!)
- Proof of Work and Proof of Stake after a certain amount of time
- Earned interest!
- 2 minute (actually 1 minute) block time
It all kinda seems to good to be true…. and young. When I heard of the coin it was just 2 weeks old. It had a market cap under $1-million and had not reached block 20,000 yet.
I started mining right away… why not? Since then, Signatum has risen from $0.019 to a peak of $0.16 in just a few days and its market cap has risen to over $11,000,000. Is this the real deal? I don’t know, but if it is, it has some room to grow.
I am a little bit concerned about a few things with this coin. Namely that the coin’s insiders likely were able to take advantage of the first few blocks and acquire upwards of 2.5 million SIGT. Those initial insiders seem to be bombing the price now as it trades around 13 cents. A “fairer” launch might have allowed for the initial block reward to INCREASE, starting from 0, gradually after the coin was announced to get the general public time to react. But it is what it is I guess.
On some level SIGT smells like another scam coin, making promises that they might not ever have the intentions to keep while putting forward a facade of trustworthiness… but for the moment, people are making money off it, and none seem to care.