My very first foray into the stock market came in the form of the pink slips—buying the hype of pump and dump penny stocks on Yahoo message boards. Lessons were learned, and hundreds of dollars were lost (at the time, a very large portion of my then-negative net worth). In my speculative spree of 2021, having chased meme stonks, dipped my toe into the top of the crypto market, and flirted with NFTs, it seems only natural that I come to the final boss of the speculation game with a close cousin of those OTC tickers: gambling on shitcoins.

What are shitcoins?

Shitcoins are exactly what the name implies—a term for worthless cryptocurrency altcoins that conveniently rhymes with Bitcoin and includes the word shit. What’s not to love? Whether you’d argue that all crypto is worthless, I’ll leave to you to decide. Shitcoins, though, are a smaller and even riskier version of the big names you know and love like Bitcoin and Ethereum. Personally, those large cap coins simply aren’t risky enough for a wannabe degenerate like myself.

The public was largely introduced to shitcoins via everybody’s favorite meme token, Dogecoin. Doge, thanks to plenty of free and inexplicable pub from the CEO of a car company, now holds a top 10 market cap in the crypto world. And therein lies the allure of shitcoin gambling. Since the Doge rally, several other coins have materialized out of thin air, usually with a celebrity endorser. A run on dog-themed Doge competitors flooded the marketplace, and other coins utilized predictably funny three or four letter words to draw attention. The creation of one such coin, SCAM, was recently documented in an excellent Vice article in which the coin’s creator had some hilarious insight. Here’s one of the more PG quotes:

“I named it SCAM. I wanted to call it SCAM just blatantly, but I wanted a cool name for it, so I came up with Simple Cool Automatic Money,” Dre told Motherboard. “That’s how people fall into scams in the first place, that’s what they think they are. So I named it, minted it for about $400 or .7 BNB at the time, minted 10 trillion coins, and told some people about it.”

Gambling on shitcoins

Similar to penny stocks, the psychological allure of buying something for less than a penny—and owning thousands if not millions of shares of that sketchy company or coin—is undeniable.

“If this thing can just get to a penny/10 cents/dollar, I’ll be rich.”

Yes, it’d be that easy. A penny is such an insignificant amount—how can this not reach those levels? It’s an easy mountain to climb, available via a measly 5,000% gain, give or take. In the case of Doge and several other shitcoins, this implausible scenario actually came to fruition. Which only serves to heighten demand and increase the creation of further shitcoins.

Shitcoins, unlike penny stocks, are not subject to any regulatory agencies (not yet anyway). As with all crypto, these coins are susceptible to bad actors and pump and dump schemes, with no consequence for the shill or huckster behind them. It’s a big reason why you see The Elon Musks and Dave Portnoys of the world, and lord knows what TikTok influencers, openly hyping up their “investments” without repercussions in a way that the SEC would pounce on with individual stocks. I inherently know all of this to be true. And I gamble anyway.

Riding the Dogecoin roller coaster

Let me be clear: shitcoins should in no way be part of your financial plan. If you’re going to get into the action at all, you should “invest” no more than you’re willing to lose on a weekend in Vegas. That said, I’ve of course visited the shitcoin casino for myself. After all, it’s my responsibility as a personal finance blogger to investigate these newsworthy phenomena on behalf of the masses. Do as I say, not as I do (Or do whatever the hell you want; it’s your money! But seriously don’t buy shitcoins).

My ride on the Doge coaster began a couple months ago, but it turns out I was too short on Doge to ride. I hopped on at around five cents in February. A week or two ago, Doge reached 70 cents. But instead of providing me with instant riches, my Doge ride only provided me with further evidence that I am simply allergic to making money off of these flash in the pan manias.

What happened? I got a little carried away initially, as gamblers do, and doubled down on my initial stake. This led to my having a little more money in a dog meme coin than I was comfortable with. As a result, I paper handed that thing for a small loss and admonished myself for participating in this ridiculous game at all. In the heat of the moment, the stress of losing any amount of money outweighed the potential for a quick buck. About a month later, the Doge tulip bulb that I had purchased went up more than 1000% from my purchase price. I hopped off the ride too soon. But a funny thing happened. I wasn’t bothered by this lost potential profit in the least. I realized that the unnecessary stress of my few weeks as a certified Doge HODLer was not worth the gains I could have realized.

Even if you’re “in on the ground floor,” there’s no way to distinguish the ground floor from the ceiling. You might sniff out one of these get-rich-quick opportunities as I did with Doge, and in all likelihood you’re going to bungle the situation just as badly. Well, maybe not quite as badly as I did.

What’s the next hot shitcoin?

Did I learn my lesson after my Dogecoin experience?

Of course I didn’t learn my lesson. What would be the fun of that? Instead, I threw a couple more speculative darts at the board. The Portnoy-backed Safemoon, the “Doge killer” Shiba Inu (SHIB), something called SUSHI. I don’t know, I blacked out.

I always think back to the Warren Buffett quote about people seeing their dumb neighbors get rich:

“People start being interested in something because it’s going up, not because they understand it or anything else. But the guy next door, who they know is dumber than they are, is getting rich and they aren’t.”

Hey, I’m just as dumb as my neighbor! And dumb money has made money in this strange and speculative bull run. If you weren’t aware of that, you can catch up with any of the multitude of articles about newly minted millionaires that glorify the luckiest of the degenerates. In the case of one particular Dogecoin millionaire, he accomplished that feat (on paper–he hasn’t sold) by putting a mere $250,000 in Dogecoin, and on margin! What are we doing here!?

I currently have less than a quarter of one percent of my portfolio in shitcoins, and frankly that is way more than I’d be comfortable losing in Vegas, so I’m breaking my own rule. Once again, got a little carried away. I plan on riding out the shitcoin summer and seeing where these ridiculous bets land. All in the name of good fun and a costly blog post.

Where to buy shitcoins

There are a few easy ways to buy shitcoins. One is to check your bank account, be perfectly content with what you have, and go about the rest of your life. But the best place to buy shitcoins is on Vanguard. It’s not as catchy as some of the others, but this VTSAX coin has returned 15-20% annually over the last 10 years. VTSAX to the moon!

If you really want to know, apart from Coinbase and Robinhood, the apps that I gave way too much of my personal information to are Crypto.com and, ominously, the Trust app. Yikes. That I had to use something called Pancake Swap to facilitate the purchase of Safemoon, which may or may not be a Ponzi scheme, does not inspire confidence either. Keep in mind this is not financial advice, but let me leave you with this: don’t buy shitcoins.

My speculative foray of 2021 has only reinforced that my index fund addiction is stronger than my gambling addiction. The ability to consistently outperform actively managed funds, all without the risk of frequently losing 50-75% of my investment in one weekend, is too good to be true. People will continue to get rich in a variety of ways that seem easy, and very well might be–for them. Many others will continue to get absolutely wrecked in pursuit of the same goal. I know which camp I fall into. Knowing my risk profile, I’ve already discovered that my FOLM (fear of losing money) is stronger than my FOMO. But make no mistake, FOMO is not an opponent to be taken lightly. Come to think of it, that’s an excellent name for a shitcoin…