What are scam coins?

Scam coins, often referred to as fraudulent cryptocurrencies, can be particularly damaging for investors. Here's a brief overview based on insights from trusted experts:

1. Characteristics of Scam Coins:

   • Questionable Supply Metrics: Many scam coins have a vast number of tokens in circulation, with no cap on supply, meaning it's highly inflationary and lacks value stability.
   • Centralization: Often, there's only one node controlling the coin, making it completely centralized and vulnerable to manipulation.
   • Uneven Distribution: A small percentage of holders may own a significant portion of the supply, which can lead to price manipulation. For example, it has been noted that 1% of holders can control up to 30% of the total supply of certain scam coins 1 .

2. Notable Examples:

   • Squid Game Scam: This scam capitalized on the popularity of the "Squid Game" TV show. The creators made a meme coin that required an additional token (marble tokens) to trade the main tokens. However, the marble tokens were never available, leading to a situation where the squid tokens were untradable and worthless. Once investors realized they couldn't sell their tokens, the scam coin's value plummeted to zero 2 .

These examples highlight the deceptive tactics used by scam coin creators and underline the importance of thorough research before investing in any cryptocurrency.