The world of cryptocurrencies has witnessed a wave of community coin creation, often using popular names like Elon Musk, Tesla, and Andrew Tate, or even memes like Pepe. Unfortunately, these coins often have no real connection to the individuals or entities they refer to, which can lead to potential confusion and misguided investments. While it may seem challenging to prevent the creation of such tokens, there are ways users can protect themselves from falling prey to these dubious offers.
Understand the challenge
It’s no secret that anyone can create a token in minutes, thanks to the widespread availability of resources and tutorials on platforms like YouTube.
This accessibility has enabled the proliferation of memecoins and speculative tokens. This phenomenon attracts a certain subgroup of users, mainly those interested in quick profits rather than the technical aspects of cryptocurrencies. The lack of knowledge about how easily these tokens can be created makes it crucial for the public to understand the potential risks.
Below are some indicators that are often a long-term problem for the token holders:
- Honeypot — a potentially deceptive token that may be unsaleable due to the structure of the token contract or contain malicious code.
- Blacklist — indicates the possible absence of a blacklist feature in the contract, which, if any, could interfere with normal trading for certain addresses.
- Buy/Sell Tax — an automatic redistribution fee applied to transactions.
- Creator owns more than 5% liquidity – the creator of the token contract has a significant amount of tokens, which if sold can affect the price of the token in particular.
- Contract audit — verifies that a smart contract has been certified by a trusted third-party source so that it is ready to use and designed to protect users.
Using analytic software like Dextools.io can help investors reduce the risks associated with making contracts, but it is not enough to create a completely safe trading environment. Therefore, the need for a unified standard for coin minting is distressing in today’s crypto space.
The role of uniform standards
To address the issues associated with random coin generation and deceptive tokens, a unified standard for social and community coin minting is necessary. By establishing this standard, the space can ensure that social tokens have a genuine connection with their respective social handle holders. This connection creates an environment where investors can make informed decisions based on the actions and reputation of the token creator, rather than being guided solely by catchy names or celebrity endorsements.
Some of the most important aspects of the standardization process are:
- Standardized smart contract framework — creating a secure, comprehensive smart contract structure that addresses common token minting issues.
- Promoting transparency — making smart contract codes public and maintaining clear, immutable transaction records.
- Implementation of auditing procedures — enforcing rigorous third-party audits on all tokens to ensure code standard compliance.
- Community Involvement and Governance — Foster community participation in improving and developing standardization procedures for tokens.
- Education and Resources – providing educational resources to help users understand token standards, aiding in informed investment decisions.
Benefits for all stakeholders
Implementing a unified standard for minting social tokens benefits all parties involved. For investors, it provides a level of transparency and accountability that is currently lacking in the memecoin space. They can assess the reputation, track record, and engagement of the social handle holder before investing in their associated token. This approach reduces the chances of falling victim to scams or deceptive projects.
Moreover, social token makers also benefit from this standardized model. They can establish a stronger bond with their community by using their social handle as a representation of their token’s value. It encourages responsible token creation, where the creator’s actions and reputation become an integral part of the token’s success and growth and are governed by the community and not just the token’s creator.
While it can be challenging to prevent the creation of random community coins, it is possible to create an environment that offers clarity and protection to investors. By implementing a unified standard for minting social tokens, we can ensure that social tokens have a genuine connection with their creators, while minimizing the risk of scams and misguided investments. As investors, it is vital to be aware of these challenges and seek out tokens that adhere to these principles, protecting themselves from the pitfalls of the crypto world.
Ivars Indriks is a serial entrepreneur with a knack for building and scaling startups. He has a proven track record of building and selling successful ventures including four social networks, mobile apps and casual social networking games. He is currently CEO and product architect at Hundrx, a company focused on developing Web3 layers for social networking and using decentralized social tokens. With a strong background in engineering and growth hacking, Ivars is committed to pushing a new metric standard for evaluating the power of social capital for mass adoption.
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