Oh, how the altcoin scene has evolved. In the span of a few months, we’ve gone from a coin or two released per month, to a daily release schedule. It can be overwhelming. With all these different coins available, which one is the best choice to invest in? Perhaps we should start off with what makes a coin a bad investment. If a coin has any of these characteristics, your money would be better put elsewhere.
1. Unjustified premine
The oldest method in the book. Here, a coin is released with a large chunk of coin set aside for the developer for one reason or another. They’ll try to justify it in some way, but it really just comes down to lining their own pockets at your expense.
Phenixcoin: Massive premine with poor explanation given.
Zenithcoin: 50% of all block rewards goes to developer, with no explanation given
2. Disproportionate amount of coins generated at launch
Also known as instamining. This method became popular after people starting to become wary of coins with a premine. Here, a coin is released with parameters such that the developer can mine a massive amount of coins after the coin has been released, before people can get their miners set up.
Feathercoin: 3 million coins generated during first 24 hours
Goldcoin: Massive amount of coins generated during first few hours
Bitbar: 2000 coins mined during first three hours. Two months after launch, this amount still represented 50% of all coins in existence
Mincoin: 868k coins mined during the first three hours. Two months after launch, this amount still represented 75% of all coins in existence
Alternatively, a coin could generate a disproportionate amount of coins in a given time frame.
Megacoin: 50% of all coins will be generated during the first 5 months. The rest will be generated over the next couple of decades.
3. Initially released in a remote corner of the web
Here, a person will “release” his coin on some obscure website, and begin mining for days with little to no competition before posting about it on bitcointalk; a very obvious attempt at masking a premine.
Pennies: “Released” via an obscure website days before a bitcointalk forum post was made.
4. Broken client at release
This could technically fall under developer incompetence, but I believe deserves it’s own section as many scams have been perpetrated this way. A coin will be released, but the client is either not provided or missing. Meanwhile, the developer mines his coin with little to no competition.
Mincoin: No GUI client provided for weeks after release.
5. Developer incompetence
My favorite metric to go by. A coin is only as good as the developer(s) behind it, after all. Is the developer active? Does he appear to have a good grasp of how the bitcoin protocol works? Are the parameters chosen for his coin realistic? These factors and others are pertinent to consider when judging a coins worth.
Fastcoin: Unsustainable parameters chosen
Gamecoin: Initial client released with a feathercoin logo, and FTC as the currency abbreviation.
Megacoin: Initial client released using same ports as Litecoin. Developer refused to admit this was a problem for weeks until he caved and issued a patch.
A very strong indicator of how a coin will fare. More than anything else, coins live and die by their name and logo. A poorly chosen name or a poorly designed logo is a death sentence.
Fastcoin: Exceptionally poor logo design.
Junkcoin: Name speaks for itself.
7. No Community
And finally, perhaps the most important of factors; the community. This applies only to established coins. Some time after release, there should be an active community of people not only supporting the coin, but developing relevant services for it. Coins that lack this weeks after released should not even be considered.
EZCoin: Aged coin with no relevant services or community to speak of.
A well thought out article, thank you. This will prove useful as I’m new to the whole coin scene. I have started to mine Primecoin now for a couple of weeks and am doing okay from what I can see. What are your feelings on that one?
It’s certainly one of the more interesting coins out there. Sunny King is a top notch developer, so it’s got that going for it. There are some conspiracy type theories regarding the coin though. Might detail an article about that at some point.
Personally, I love the primecoin network simply because of the scientific value it provides. The coins however, are a nice added bonus.
This is a great article, Hazard. If you were to analyse and rate even more altcoins for their respective legitimacy, you could get a ton of exposure.
There is a real need for good investment analysis. Investor/Traders like me would love to be able to have this insider info that you can provide.
You should probably consider setting up a way to sell your articles with micropayments. You might be able to make a lot more revenue that way vs. selling ad space. If you look at my website, I have been trying to start selling educational content for a dime per article.
I sold my stake in Bitbars after reading this article. I had more than 0.5 BTC in it. (!) I might have bought some megacoins too. *shudder*
I mean, people are free to donate to the address I posted in the footer.. I don’t have any immediate plans for “premium” type articles. Maybe sometime in the future.
Hi there Hazard. I just started learning about altcoins in the last month or so. Funny a few days ago someone on bitcointalk or somewhere bashed you so I immediately unfavorited your bookmark. Well after doing more research I see you really know what you are talking about and have a lot to offer. Thanks for the informative articles. Please keep putting out articles about your favorite new altcoins and why of course. Thanks again. p.s. Of course your site is back on as one of my top bookmarks!
I have my detractors out there… Mainly because I don’t fit in nicely with the agenda they have.
Hazard has agenda. Megacoin is one of the best out there and Fastcoin is fine.
Maybe you should volunteer which coins you personal made and how much of each you own before espousing whaich coins are bad.
You are a criminal?
My ‘agenda’ extends only so far as my dislike for shitcoins that claim to be amazing. I can prove to you, through blockchain data, that megacoin is premined trash… and let’s not even get into the shady marketing tactics they employ.
And Fastcoin? A picture says a thousands words. http://img594.imageshack.us/img594/2640/92499279.png
Well, they got the point, and the new logo looks good imo.
How does one find out the Answers to the 7 variables…
1. How do does one find out if a coin was premined?
2. Disproportionate amount of coins generated at launch..
Where does one go to find the “launch graph”
ETC. I hope you get the idea……
I would like to know aswell
I currently have MEC FST FTC and makes me pounder my choice
Megacoin seems pretty decent.
The Fastcoin developers need to put in a little more effort; A marketplace would be a good start. It will be interesting to see where all of this leads to.
Hazard has practically made a career out of maligning Bitbar.
At this point, nearly a year after the launch, he’s still maligning the coin and the current innocent owners of the coin. Instead of pursuing the perps, he continues to bash the purported victim. God, you’d think were in the middle of an ipo and he has something intelligent or useful to say. IT’S OVER, HAZARD! Give it a rest! We all know your opinion by now. It’s such a freakin’ personal issue with you, that it’s beginning to look embarasing for you.
I think it kills Hazard that after a year of bitching, people continue to find value in Bitbar, continue to buy it, continue to support it, continue talk about it, continue to mine it. He just can’t understand it, and its sad he can’t move on.
It’s funny because the bitbar article is actually one the lowest ranking articles (by hits) on this site. I’ve hardly “made a career” out of this coin in particular.
Only people buying this garbage are those who are ignorant of it’s past.