If you are a novice in the cryptocurrency industry, you should have heard about shanzhai coins. Shanzhai coin is a common name for all currencies except Bitcoin. Shanzhai currency is also called substitute currency, competitive currency and dual currency. Because Bitcoin's technology has certain limitations and cannot meet various requirements, and the programming code of Bitcoin is also open, some people modify the program based on Bitcoin's source code to create a new virtual currency. So, what exactly is counterfeit currency? Is counterfeit currency worth investing? Next, let's have a look.
What are counterfeit coins?
In fact, there is no uniform statement about "counterfeit currency" in the industry. It first refers to all currencies except Bitcoin. Since Bitcoin is the originator of all virtual currencies, and all other virtual currencies are developed on the basis of Bitcoin, their consensus mechanism, encryption system or script system are adjusted on the basis of Bitcoin, resulting in different features and functions.
Therefore, in the early years, only Bitcoin was called "orthodox", while all other currencies were called "counterfeit".
However, up to now, some of the original "shanzhai coins" have become "mainstream coins". The most typical is Ethereum. Ethereum has shown the world the power of smart contracts, which are far superior to Bitcoin both in function and efficiency. Therefore, it has established its position next to Bitcoin in the virtual currency industry.
After development and innovation, this part of the original "counterfeit currency" has unique advantages and functions that Bitcoin does not have, so their status has gradually been recognized and their "mainstream" identity has been established.
Advantages and disadvantages of counterfeit coins
Shanzhai coin is essentially a currency. It tries to improve Bitcoin in some way by dealing with some defects or problems that Bitcoin has been trying to overcome since its creation. There is a kind of counterfeit currency called stable currency, which can achieve the original goal of Bitcoin, that is, to use cryptocurrency for daily transactions. Some counterfeit coins have seen high growth in market value because they have been used in real use cases, such as ETH of Ethereum or ADA currency of Cardano. In portfolio management, counterfeit currencies allow diversification, which means they bring investors a variety of opportunities or choices through which they can see investment returns.
For example, shanzhai coins do not have as many markets or market values as Bitcoin, and Bitcoin is the dominant currency in this regard. As there are thousands of choices, it is estimated that the investment decision for counterfeit coins is much more difficult. Compared with the price of Bitcoin, the price of counterfeit coin is more volatile, because its value can be dramatically increased or decreased. There are many counterfeit coins that can not complete the initial task and have little value in the end, causing heavy losses to investors.
Is counterfeit currency worth investing?
As mentioned earlier, counterfeit currencies are built based on Bitcoin, so naturally, these cryptocurrencies have many risks related to Bitcoin. However, in the past few years, we have seen a large number of counterfeit currencies listed in the cryptocurrency market, and attracted groups of retail investors, crazy to bet on their price trend to accumulate short-term profits. In addition, many sophisticated counterfeit coins, such as Ether and XRP, and even Bitcoin competitors.
Some counterfeit coins have ambitious projects behind them. They bring more use cases than Bitcoin. For example, Bitcoin is mainly used for value storage and trading, while Taifang has introduced the role of smart contracts, which has shaped the decentralized financial (DeFi) unit of cryptocurrency.
However, with the exception of Ethereum, Solana and other top 100 projects by market value, most counterfeit coins are not really well-known.
This means that if you catch a counterfeit currency at the initial stage of development and public attraction, you may see a sharp rise in the price of currency in the future. However, there are risks and disadvantages in purchasing counterfeit coins.
New counterfeit coins seem to be everywhere, which makes it a challenge to choose the best counterfeit coins you should invest in. Counterfeit coins also have a higher level of risk, because smaller counterfeit coins may be a fraud, or they may just be abandoned or live up to their expectations. It is possible for everyone to experience the bull market of counterfeit coins in 2022, however, this is all a guess.
In other words, when diversifying your investment portfolio and mastering the whole cryptocurrency field, the counterfeit currency is definitely worth seeing.
Speaking of this, I believe you have a certain understanding of what is counterfeit currency and whether it is worth investing. In general, I remind all investors here that although investing in cryptocurrency is a very popular project, the currency circle market is volatile and unpredictable, and investment is accompanied by certain risks. You must have a comprehensive understanding before entering the market, and do not invest blindly.