GuestEver since the extraordinary success of Dogecoin, memecoins have grown to become increasingly popular in the cryptocurrency space. The insane all-time highs displayed by these coins are hard to ignore. But as a professional crypto trader, should you even care about meme coins?
Meme-coins aren’t your regular cryptocurrencies due to their insane volatility. However, this doesn’t mean you should avoid them. If a meme coin seems like a good buy after sufficient research and analysis, there’s no harm in trying them out.
In this article, I’ll explain what memecoins mean. Also, you’ll learn the main differences between memecoins and regular cryptocurrencies and why you should care.
What are Meme Coins?
Meme coins or tokens refer to a cryptocurrency or any other digital asset based on a popular joke or meme on the internet. Memecoins started with Dogecoin, launched in 2013 as a parody of a Shiba Inu dog, a popular internet meme at the time.
Meme coins are known for their extreme volatility. Recently, Dogecoin climbed by 14,000% to reach its all-time high, only to fall by 60% almost immediately after.
This sudden rise in prices can be attributed to the overnight popularity due to endorsements by celebrities, while the prices fall when public interest in the coin begins to wane.
So majorly meme coin price prediction is determined by a large number of people or a single celebrity who just want to joke around
There are more than 5,000 known meme-coins today, with more springing up by the day. A recurring theme across most meme coins is that they only exist to entertain crypto traders, nothing more.
Also, unlike regular cryptocurrencies like Bitcoin or Ethereum, memecoins usually have an overwhelmingly huge supply cap. Taking the most popular memecoin, Dogecoin, as an example again, the supply is technically unlimited.
Compare this to the maximum supply of a coin like Bitcoin or Ethereum with maximum supplies of 21 million total and 18 million per year respectively. Another memecoin with a massive supply cap is Dogelon Mars, with more than 555 trillion coins in circulation already and a maximum supply of 1 quadrillion.
Why are Meme Coins So Popular?
While Dogecoin was the first meme-coin introduced to the crypto sphere, it has been overtaken by another: Shiba Inu, at least in market cap. As of this writing, Shiba Inu has a total market cap of about $30.9 billion, with Dogecoin not too far behind.
Frankly, a $30 billion meme is a very expensive joke. Many people have also seen these figures and have rushed to invest in various emerging meme coins, but how did we get here?
To understand why they grow so popular in so little time, it’s important to understand the primary goal of memecoins. Meme-coins usually have no ambitions. Not to replace fiat currency or improve the current state of blockchain—nothing.
But since they’re inspired by memes, they have entertaining vibes to them. Just as memes are the default way for internet users to entertain themselves, memecoins can be said to do the same job, but financially for crypto traders.
Whenever a meme starts to go viral online, enthusiasts buy the meme coin to show support for the meme, just as in the case of Dogecoin. The fact that these coins are incredibly cheap, sometimes costing even less than a cent, does help matters.
With Shiba Inu costing just 0.000048, you’ll be buying thousands of coins to even spend a single dollar. These factors make it incredibly easy to market Memecoins to anyone, even those that aren’t traders.
Whenever an internet sensation or celebrity speaks, tweets, or posts about a meme coin or even its underlying meme, fans will start buying it. This rush usually leads to an instant increase in the coin’s price, encouraging even more people to buy into the coin.
Advantages of Meme Coins
As I hinted earlier, memecoins aren’t created to serve any purpose. They’re intended to have no utility whatsoever, but they wouldn’t be so popular without any benefit.
It turns out that meme-coins can be advantageous if you look at the bigger picture.
Here are some of the benefits of memecoins, although most were not intended by the creators themselves.
- They’re a more practical replacement for fiat currencies:
Which of these statements sound better: “the price for the food is 0.00012 Bitcoin,” or “the price for the food is 200 Dogecoins.” If you think the second would be more practical, that’s because it is, and that’s one of the unintended advantages of meme coins.
Meme-coins were made to have excessive supplies to make them look unnaturally funny. However, these large supplies make them a more practical currency for a planet housing 8 billion people.
Many post-Bitcoin cryptocurrencies, most notably Ethereum, are now designed with this in mind. However, we still have our meme coins to thank for this unintentional but genius design perk.
- They can be profitable:
The sudden success of certain meme-coins can only be likened to stupidity. Imagine getting a 14,000% profit on your investment; the mere thinking of it certainly feels crazy.
If a 14,000% gain on your investment sounds unbelievably crazy, you would’ve gained 900,000,000% on your investment if you bought Shiba Inu at its ICO. Therefore, it needs no telling that meme coins can make you rich in the blink of an eye, but the reverse may also be the case.
Risks of Investing in MemeCoins
We can agree with the fact that meme coins can make great replacements for fiat currencies, and they can also make you rich. However, those advantages don’t make them risk-free investments. Before stocking your trading portfolio full of meme coins, here are some risks that come with investing in them.
- They can lose you insane amounts of money:
Up until this point, I’ve generally portrayed meme coins in a positive light. However, while some of the best meme coins can potentially make you insane ROI on your investments, they can also make you lose excess money honorably, no thanks to their insane volatility.
Meme coins can cause you to lose money in two ways. Firstly, buying meme coins at the peak of their popularity is a great strategy for losing money, as they’re bound to fall, and secondly, buying into scams. Here are real-life examples for each of these hypothetical scenarios.
In 2021, Dogecoin rose by over 14,000% to reach its all-time high. However, if you bought at the all-time high, your investment would’ve depreciated by over 60%.
If you’re afraid of losing money, sticking to the regular cryptocurrencies may be an excellent idea. However, if you’re willing to buy in on memes, you must be willing to pay the price, which may be too expensive sometimes.
- They typically have a poor structure:
When Bitcoin was introduced back in 2008, it introduced a new blockchain innovation, all explained in the excellent whitepaper for the coin. But who writes whitepapers for memes?
Frankly, whitepapers are for guys that mean business. Memecoins are not made to mean business but to be a joke. Since you only have to explain bad jokes, the idea of writing whitepapers for meme coins doesn’t sound smart.
While that sounds logical, it poses a glaring problem. Random people can come up with scam projects, get people to buy into them, and do a rug-pull, causing thousands of investors to lose money suddenly. Whenever anyone mentions this, the recent Squid Game coin project comes to mind.
Best Meme Coins List
There are 5,000 meme coins out there right now, according to Coinbase, and with this steady growth, this number will only keep increasing. Listing all of them here is pretty impractical.
Some of the best top meme coins with the highest market caps right now include
All of these coins have seen steady success, albeit with some pretty insane highs and lows.
It’s important to note that this is not financial advice by any means. We’re not listing these coins as good investments, and you should always do your due diligence before buying into any digital asset.
Conclusion
Meme coins may seem like simple jokes, but they’re making some people billionaires. With coins like Dogecoin moving near the $1 mark, it’s pretty easy to see why it’s impractical to ignore these coins.
If you’ve been looking for a meme coin resource to up your knowledge, this is one. This article shows you everything you need to know about a meme coin and some that you don’t. You should now also know the difference between meme coin and crypto.
Should you care to invest in a meme coin? That decision is totally up to you. If it sounds like a good investment after appropriate analysis, then why not?
Techibytes Editor
Damilare Adams
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