Crapcoins vs Promising Coins. Short Guide: How to tell the difference?

[Kergekoin]

Theres has been a truckload of coins incoming lately. Im open to additional suggestions, but this is my guidlines. How to tell if the coin looks promising or not.
For the sake of fairness, i will never mention any coin name in this post.

Promising coins have. (in random order)

1. Decent looking OP. No amateur graphics. No Google translated text.

2. Active development. Quick engagement to solve problems. Developer posts are polite and informative. Capability to ignore trolls and take control over announcement topic without deleting the posts.

3. Source code. No plain clone with code practically unchanged.

There are plenty of guides in forums of "how to clone an altcoin". However, those guides are not exactly complete. They leave out some rather important parts, which dont brake the code, but will give you a hint if developer has done full research about the code or not.
I will give only one hint, since i dont want to spoil "the crapcoin spotting game" entirely. Take a look at main.cpp and main net pchMessageStart. If you are familiar with many coins source code, then it might be also good idea to review how GetProofOfWorkReward (and GetProofOfStakeReward) is solved and does it differ from its parent code or majority of coins in any way?

4. Does it have functioning testnet and testnet parameters in source code are published? This is rather obvious mistake, which many old souce code coins and simple clones forget or are unable to provide. They get main net working and launch without thinking about how they attract developers and test major updates in future.

5. Transparency. There is nothing wrong about having premine, if transparency is provided. This is rather personal opinion, but the point is that honesty should win more trust than 0 premine claim.

6. Algorithm? Crapcoin does not magically transform in to promising coin by changing its algorithm. Many people fall in to this trap. Promising coins can succeed with any algorithm. There are plenty of ways to provide equality for miners. The most obvious way is having multipool. Take a look at announcement subforum. X11 is a hot topic. Now take a look about how many promising X11 coins are there? The answer may surprise you. Of course this also applies to scrypt coins.

7. Instamine coins. Again. This is only personal opinion, so please dont slap me for this. Long story short - Coins with less than 3 months mining period = profit for very small circle of people. And who wins the most? Developers of those coins.
Yes, often there is a nice junk of profit if you engage those rapid coins early, but i believe that this trend is about to die soon. There are simply too many of those coins on the market. Soon no one will care to buy and if there is no buy pressure, there will be no profit for anyone.




Conclusion:

 Do not be ignorant and naive. Do your own research. Invest smart. Everyone can get lucky once or twice, but real profit will come from serious coins with smart and dedicated teams behind them.


Feel free to add your points and opinions. I will edit this post when there is broad consensus that it is a good idea.

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[hvezdasmrti]

Promising coin = hidden empty promises¨
Crap coin = leaked empty promises

 

[Kergekoin]

Add active development....

Check if the dev can even maintain his internet connection and be online for some hours per day.

Somewhat covered in  2. but its a fair point. Active updates and development progress is important.
Edited 2. with this.
Thank you.

[RJX]

Nice guide, I learned stuff.

[Kergekoin]

Nice guide, I learned stuff.

Thanks! and You welcome!

[Cryddit]

Graphics are approximately meaningless to me.  

A coin which can survive has at least the following properties.

1.  The dev is not anonymous.  If a coin has an anonymous dev, it's about three times more likely to be a scam than not. Further, if the dev is not anonymous, there are things you can legally do if it does turn out to be a scam and if the dev is anonymous there aren't.  

2.  It doesn't halve its remaining coin supply more often than it can double its value.  That's kind of hard to predict, but at this point I think the double-value time for cryptourrency is up to about a year, maybe two.  It'll get longer until it catches up to double-value period for the rest of the economy, which is 7 to 15 years depending on the industry.    This is important because whenever the block reward goes down, the hash rate goes down in the same proportion; and when the hash rate gets too low, the blockchain becomes vulnerable to an attack which can destroy its value completely.  Expect any coin that mines out its coin supply too fast, to collapse.  I think even Bitcoin is going to be too fast in the long run; there'll come a point when its double-value time is slower than its block-reward halving time and alts will start sucking up the hashing power making bitcoin vulnerable to attacks. 

3.  It isn't an IPO where you're supposed to "buy" coins for some other form of money.   A few of those are honest, but most turn out to be scams.

4.  The dev actually knows how to fix problems in the software.  This is hard to judge straight out of the gate.

5.  There's a point.  To put it gently, in order for it to be reasonable for someone who's not scamming to release an altcoin, there has to be something wrong with Bitcoin and they have to believe that they can do better.  In order to believe any altcoin has a long-term future, there has to be something wrong with Bitcoin and that altcoin has to be able to survive where Bitcoin cannot.  Anytime there's an alt, ask what it does that bitcoin cannot do.  Then ask, does that enable it to survive where bitcoin cannot?

6.  Don't be taken in by talk of philanthropy.  Money, when functioning as money, has no morals whatsoever, good or bad.  It flows in the reverse direction of the profitable allocation of resources.  Any money that attempts to do anything else will cause market distortions that cripple the economy it's working in and ultimately cause it to function less well than its competition.

7.  If there's a premine, be sure that the devs are absolutely honest about the premine.  If they claim that it'll be used for the good of the community, then the community is entitled to know how every last dime of it gets spent. 

8.  If there is any difference at all between the block reward structure they advertise and the one they implement, stay away. 

[Lauda]

How about a developer who has more than 10 posts and is not a member or lower?
People should consider this. Crapcoins take up 90% or more of the whole cryptocoins.

[neuroMode]

Graphics are approximately meaningless to me.  

A coin which can survive has at least the following properties.

1.  The dev is not anonymous.  If a coin has an anonymous dev, it's about three times more likely to be a scam than not. Further, if the dev is not anonymous, there are things you can legally do if it does turn out to be a scam and if the dev is anonymous there aren't.  

2.  It doesn't halve its remaining coin supply more often than it can double its value.  That's kind of hard to predict, but at this point I think the double-value time for cryptourrency is up to about a year, maybe two.  It'll get longer until it catches up to double-value period for the rest of the economy, which is 7 to 15 years depending on the industry.    This is important because whenever the block reward goes down, the hash rate goes down in the same proportion; and when the hash rate gets too low, the blockchain becomes vulnerable to an attack which can destroy its value completely.  Expect any coin that mines out its coin supply too fast, to collapse.  I think even Bitcoin is going to be too fast in the long run; there'll come a point when its double-value time is slower than its block-reward halving time and alts will start sucking up the hashing power making bitcoin vulnerable to attacks. 

3.  It isn't an IPO where you're supposed to "buy" coins for some other form of money.   A few of those are honest, but most turn out to be scams.

4.  The dev actually knows how to fix problems in the software.  This is hard to judge straight out of the gate.

5.  There's a point.  To put it gently, in order for it to be reasonable for someone who's not scamming to release an altcoin, there has to be something wrong with Bitcoin and they have to believe that they can do better.  In order to believe any altcoin has a long-term future, there has to be something wrong with Bitcoin and that altcoin has to be able to survive where Bitcoin cannot.  Anytime there's an alt, ask what it does that bitcoin cannot do.  Then ask, does that enable it to survive where bitcoin cannot?

6.  Don't be taken in by talk of philanthropy.  Money, when functioning as money, has no morals whatsoever, good or bad.  It flows in the reverse direction of the profitable allocation of resources.  Any money that attempts to do anything else will cause market distortions that cripple the economy it's working in and ultimately cause it to function less well than its competition.

7.  If there's a premine, be sure that the devs are absolutely honest about the premine.  If they claim that it'll be used for the good of the community, then the community is entitled to know how every last dime of it gets spent. 

8.  If there is any difference at all between the block reward structure they advertise and the one they implement, stay away. 

Sounds like you should take a long hard look at Myriadcoin

[Kergekoin]

There are plenty of pro and against arguments for anonymity. So i am not going to add that.
Lets keep guidelines rock solid in means that there are no cons for any of points stated in OP.

Being a con or pro is also subjective to person, but lets try to find the points where we agree.

[jabo38]

I agree that the OP has pointed out many important things to consider.  They are all things I consider to when investing.  If I can't get good answers for all the above questions, I feel like I am on the wrong side of a scam. 

In addition, I would also say that the best new altcoin isn't even a "coin".  Coins were very cool in 2012 and 2013 drafting behind the main and real coin bitcoin.  By now, changing the algorithm, having a good front page, answering questions nicely, and not having a premine still by itself doesn't mean much.  Doing all those things doesn't really add much to the game that a dozens of other well thought out and advertised coins have already done. 

To me, the new and real altcoin, which isn't even a coin anymore goes far and above just being a coin.  Something that doesn't just use a blockchain for simply registering transactions of a single coin.  Bitcoin was already doing that back in 2009.  Any altcoin that is just trying to introduce a new blockchain that has a different mining or algrorythm isn't really adding much, and is basically 5 years late to the game.  And especially anything based on some other niche characteristic like fad, people, person, animal, country, ect screams scam to me.  The one exception to this is Doge which was meant to be the exact opposite of these, the alt coin that was just making fun of any other niche coin because they were so ridiculous and doing so it became valuable for being cool. 

I'll give a couple of examples of new coins that aren't coins. 

Ripple.  As far as utility goes for sending payments around the world, its technology is magnitudes slicker, quicker, and with more options than bitcoin, let alone any altcoin.  Will it make it?  I don't know, it is pretty late to the game and doesn't seem to get a lot of love from forum members.

NXT. This group of developers, and yes there are real developers working very hard everyday, are trying to not just beat bitcoin, but take over everything.  They want to make NXT do anything and everything related to financial transactions.  Will it make it?  The code was kind of rough at first and it is being updated, but it is hard to know if it will really be able to deliver on being a cryptocurrency that does all things.  Right now its utility is pretty low, but plans are to make it by far the most useful of any coin.  This isn't just talk.  There are real people writing code and testing it right now. 

Ethereum. This doesn't even want to be a coin that does everything.  Coins and mining are so 2012-2013.  It wants to be a universal platform that by itself doesn't do anything, but on top of it anything that any developer wants to build can build freely.  Again, we aren't just talking about a coin, but any kind of financial transaction imaginable.  This is some ways is the rival to NXT, but it doesn't even have an alpha out yet so right now is only hype.  Vaporware at best.  Its strengths are that is has a very large group of highly committed big name professionals working under a centralized leadership with a unified game plan.  (completely the opposite of NXT)  Those big players for Ethereum have gone all in.  They are betting everything on it.  You might want to too, IF IF IF they pull it off. 

So, yes, when it comes to a new altcoin, don't even bother with anything that is just a "coin".  Look for something that is written with code from scratch by real people trying to do something in a completely and totally radical way. 

[orpington]

Unfortunately, promising coins end up actually being crap coins. Thats the real short guide.

[MicroGuy]

I think the age of the coin should also be taken into consideration.

If a coin is still be actively developed a year or more after launch, I think that factor is worth consideration.

[CoinMin3r]

Me still in learning phase.So this post may help me to go through.

[supergrega]

Unfortunately, promising coins end up actually being crap coins. Thats the real short guide.

True. At the end it is a gamble on many levels.

[mkasiak]

Me still in learning phase.So this post may help me to go through.

Read also this: http://www.noblemovement.com/downloads/TheStateofAlternativeCryptocurrency-D1.pdf - it is very useful reading for beginners.
And good luck!

[Lauda]

I think the age of the coin should also be taken into consideration.

If a coin is still be actively developed a year or more after launch, I think that factor is worth consideration.

A coin such as Goldcoin? 
Yes you are absolutely right about this too. If we look at the map http://mapofcoins.com/ (even though they haven't really updated for April yet), we have over 200 coins that are less than a year old. Keep in mind that this is a list of coins, some are dead.

[Kergekoin]

jabo38 has very good points.

Is Bitcoin source code limited so that you cant develop on top of it? I dont know if it is.
The point is. Theres no need to invent the wheel twice if you can take the source and develop it further.

Sooner or later people will start to realize that coins with no innovativity are bad choice even for quick pump and dump. With all those coins,  there will be no pump to dump for!