In the crypto world, there are a lot of slang terms used to describe different things. If you’re new to all this, it can be a bit confusing. There are terms that may sound like a foreign language to a newcomer – rekt? wen lambo? HODL? – and terms that seem derived from common English but take on a whole new meaning in the context of cryptocurrency and blockchain technology.
Here, we explore the latter and take a look at the term “copycat” and what it means for those dealing in the cryptocurrency market space.
What Is A Crypto ‘Copycat’?
The term “copycat” essentially carries the same meaning as it does in any other context. It describes an entity that copies another person or group’s ideas, behavior, or appearance.
“Copycat” could also be used to describe a knock-off coin or knock-off NFT project that has many of the same characteristics that make another highly successful project so popular.
What Can A Crypto Copycat Look Like?
There are various examples of copycats in the NFT and cryptocurrency market. These projects are mired in controversy and serve as a cautionary tale to anyone looking to get into and trading with copycats. Here are some of the most recent examples:
Phunky Ape Yacht Club NFTs
Bored Ape Yacht Club (BAYC) – a collection of over 10,000 NFTs in the form of bored-looking apes – is perhaps the most popular NFT project in the world, with celebrities like Jimmy Fallon, Paris Hilton, Justin Bieber, and Eminem “aping in”. Today, the current floor price for an ape is 103.5 ETH or $318,207.08.
Enter the Phunky Ape Yacht Club (PAYC) and the aptly named PHAYC. These two projects are mere copies of existing BAYC photos but flipped horizontally so that the monkeys are facing left instead of right.
PAYC launched in December 2021 in “the name of decentralization” – a middle finger, so to speak, to the “rich douchebags” who have supposedly taken over the BAYC market and jacked up the prices. Shortly after, PHAYC launched its own project, a “limited NFT collection where the token itself offers no membership and no allegiance.”
As expected, the existence of the two companies caused a stir in the NFT community. Ironically, the two are dueling over which copycat project is the original ripoff.
Despite calling itself a satire, PHAYC has actually charged people to mint its apes, taking in approximately 500 ETH or $1.8 million in sales. Because of this, PAYC’s founder has accused PHAYC of being a “cash grab fraud project”. PAYC, on the other hand, has made about 60 ETH or $225,000 in sales.
On top of this, OpenSea has kicked both PAYC and PHAYC off of its marketplace for violating its copyright infringement rules.
The PAYC/PHAYC copycat controversy has been compared to the brouhaha involving the COVIDPunks copycat project in August 2021. COVIDPunks is described as a “COVID-themed parody project” of the highly popular CryptoPunks. Both projects consist of 10,000 pixelated avatars, with each one a cryptographically unique token. The main difference is that the avatars in COVIDPunks NFTs wear face masks.
All 10,000 COVIDPunks NFTs sold out within an hour of its launch. However, coinciding with Ethereum’s London upgrade that introduced a mechanism for burning Ethereum tokens, the COVIDPunks project led to the biggest ETH burning on the network.
Over 525 ETH tokens (roughly $1.5 million) were destroyed and the Ethereum burn rate was pushed to about 14 ETH ($40,000) per minute, while the emission rate fell to -4.7 ETH per minute. What this all means is that the overall supply of ETH coins was dwindling faster than tokens were being produced.
On top of this, the Ethereum network became so heavily congested with transactions due to the hype surrounding COVIDPunks that prices skyrocketed by 400%. Hundreds of transactions failed, and hundreds of dollars of transaction fees were charged without hope of refunds.
The term “shitcoin” is another word for a copycat cryptocurrency that has little to no value. Most shitcoins have no identifiable purpose or function, meaning that investing in a shitcoin may as well be a path down to a dead end.
One of the most famous shitcoins is Dogecoin, which is a copycat of Litecoin. Despite being created as a “joke” currency and considered a “meme coin”, its value continued to soar thanks to the endorsement of big names like Mark Cuban and Elon Musk, as well as mass purchasing of the coin.
However, shitcoins are heavily associated with pump-and-dump schemes, and Dogecoin itself has been compared to Ponzi schemes. Pump-and-dump schemes happen when early investors hype up a cryptocurrency and draw more people into purchasing the coin to drive up prices.
With prices “pumped” up, these early investors can quickly cash out on their coins, selling them to later purchasers and opting out as the price drops. Eventually, newcomers and novices will be left with worthless coins.
The Bottom Line
Copycat coins and NFT projects may seem funny and exciting, but they also come with a lot of risks, from copyright infringement claims to pump-and-dump schemes.
If you want to start your own legitimate NFT collection, Tokenfy can help. Check out our site today and learn how our NFT launchpad can help you kickstart your own NFT project today!