You've just stepped into crypto, and odds are someone in a chat group has already pitched you a "100x shitcoin" or "the next 100x, get on early." It sounds tempting — who wouldn't want to risk a few hundred dollars for a shot at multiplying it dozens of times.
But first you need an unpleasant fact: the vast majority of these small coins end up worthless, and plenty are designed from the start to take your money. This article won't teach you to catch 100x coins (no one does that reliably). It teaches one thing only — recognizing "this thing has a problem" before you spend a dollar.
- A shitcoin is a coin with nothing real behind it, propped up by story and shilling alone.
- A low-quality scam token is a no-name small coin of unknown origin — most are short-lived, pumping fast and dying fast.
- A rug pull is the team running off with the money, draining the pool, and the coin going to zero instantly.
- 6 red flags: anonymous team, no real product, promises of overnight riches, liquidity that can be pulled, highly concentrated holdings, and a community that only shills.
- The safest move for a beginner is to mostly stick to major coins with years of operation and large user bases, and keep any "gamble" money to an amount you can lose entirely without it mattering.
First, sort out what each term means
These words get used interchangeably, but they differ — and getting them straight helps you judge.
| Term | Plain-English meaning |
|---|---|
| Shitcoin / air coin | A coin with no real product or value behind it, pumped purely on concept, story, or celebrity. Not necessarily a scam, but its price runs entirely on sentiment — and falls the moment sentiment fades. |
| Low-quality scam token | A catch-all for no-name small coins of unknown origin, often appearing suddenly on a DEX (decentralized exchange), with lifespans measured in days or hours. |
| Rug pull | An outright scam: the team yanks the money or liquidity that buyers brought in all at once and runs off, leaving you holding a worthless token. |
Put simply, a shitcoin may have no value, a low-quality token is likely short-lived, and a rug pull is openly out to scam you. The three are often different faces of the same thing.
6 red flags — the more it hits, the more dangerous
Flag 1: The team is fully anonymous, no one is traceable
A project doing serious work usually puts founders' identities and track records out in the open, so someone is accountable if things go wrong. Scam tokens are almost uniformly anonymous — just a few cartoon avatars and handles — so when it blows up, they simply walk and you don't even know whom to chase. Anonymity alone doesn't prove a scam, but it means the cost of running away is extremely low.
Flag 2: No real, usable product whatsoever
Ask one plain question: besides "going up," what does this coin actually do? Many projects have nothing to show but a flashy site and a whitepaper full of big words — no real users, no usable application, no revenue, value resting entirely on the fantasy of "it'll be huge someday."
Flag 3: Promises of overnight riches, guaranteed profit
"Guaranteed to moon on launch," "principal-protected annual yield," "miss this and wait ten years" — seeing language like this, you can basically judge it as a problem outright. Crypto is wildly volatile, and no legitimate project can promise you returns. This kind of patter targets greed and fear of missing out (FOMO), so you'll buy on impulse. The SEC has repeatedly warned that "guaranteed returns" is a hallmark of fraud. The full pig-butchering version of these lines is dissected in this piece.
Flag 4: Liquidity the team can pull at will (no lock)
This is the core mechanism of a rug pull. On a DEX, a coin can be traded because someone put money into a "liquidity pool" (this coin plus some USDT or ETH). If the money in that pool can be withdrawn by the team at any time, they can run off whenever they like. The instant you buy, they drain the pool, the price drops to zero, and you can't sell even if you want to. This is exactly how the infamous Squid Game token (SQUID) collapsed in 2021 — buyers literally couldn't sell.
Flag 5: The token is highly concentrated in a few addresses
If 70% or 80% of a coin is held in the founders' or a few whale addresses, then a handful of people control the price. They can pump it or dump it at will, and you're just the one left holding the bag. A healthy coin should have relatively dispersed holdings. The good news is you can check this yourself — we'll do it in the next section.
Flag 6: The community only shills, never discusses tech, brooks no doubt
Get a feel for its Telegram or chat group: is it wall-to-wall "buy buy buy," "listing tomorrow," "diamond hands don't sell," or are people seriously discussing tech, product, and risk? A scam token's community is usually nothing but frenzied shilling and gain screenshots, and the moment you raise a doubt — "is the liquidity locked," "who's the team" — you're ignored at best, kicked and cursed at worst. A community that can't tolerate questions is itself the answer.
We picked a new coin recently being spammed in a chat group and did one thing only: opened the block explorer for its chain, pasted in the contract address, and clicked the Holders tab. The result spoke for itself — the top address (excluding the liquidity pool) held more than half the circulating supply on its own, and the top five together held the overwhelming majority. In other words, if any of those few addresses decided to run, the price could collapse in an instant. We didn't buy; we looked and closed it. The whole thing took under three minutes, needed no special tools, and you can do it too. This one step is more reliable than any "inside tip" from anyone in the chat.
How a beginner checks holder concentration
You don't need to read code. Just follow these four steps.
- Step one: get the coin's contract address — usually on the project's official site or the token page on a market-data site. Don't take it from a stranger's DM link.
- Step two: open the block explorer for the relevant chain — Etherscan for Ethereum, BscScan for the BNB chain.
- Step three: paste the contract address into the search box, go to the token page, and click Holders.
- Step four: see what percentage the top addresses each hold. One or two addresses holding the bulk means highly concentrated, which means danger.
BN1606, 20% trading-fee discount) and get familiar with the rules on major coins first. For which coins to learn first, see our piece on the difference between BTC, ETH, and USDT.
Why beginners should mostly stick to major coins
It's not that major coins don't fall — they swing and trap people too. The difference is that major coins don't go straight to zero because a team ran off with the money. When you lose, you lose on the market, and there's still a chance to recover; once a low-quality token rugs, it's principal-to-zero with no one to even chase. For someone just starting out, who hasn't built judgment yet, those two risks aren't in the same league at all. The era of OneCoin and BitConnect — multi-billion-dollar exit scams dressed up as "the next big thing" — is exactly what this gap looks like at scale.
Frequently asked questions
What is a rug pull?
How do I judge whether a new coin is a scam token?
Can a beginner check a token's holder distribution?
Narrow your range, and the danger drops by half
A beginner's most cost-effective anti-scam-token strategy is to limit trading to major coins and a regulated large exchange. Open your account at a large-user-base exchange and your odds of touching a pure scam coin fall sharply — and you can spend your energy on what actually matters.
Invite code: BN1606 (20% trading-fee discount)
Crypto prices are highly volatile, and small coins carry a risk of going to zero. This site shares information only and is not investment advice.