Have you ever heard of Shiba Inu or Dogelon Mars? If not, don’t worry; you are not alone. These are a few of the most popular meme coins. While most of these coins serve no other purpose than to entertain and titillate, some do have a little utility, and some have made some people millionaires overnight! This post will discuss what a meme coin is and how they play a part in the exciting tapestry that is the wild world of crypto.
What Is A Meme Coin?
First things first, what is a meme coin? The term meme coin can mean different things depending on who you ask. Still, generally speaking, it refers to cryptocurrencies that are based on social media jokes or other things of interest occurring in the overall zeitgeist. There are currently over 120 meme coins, according to Coinmarketcap, with some of the most popular meme coins in the market, including Shiba Inu and Dogecoin.
Do They Have Utility?
While the vast majority fall by the wayside, some do have intrinsic value in the way that you can use them. For example, the most famous meme coin, dogecoin, is used by many for a wide range of things. Some of these include using them in dogecoin casinos, tipping people on Reddit of all things, and even as a genuine payment method in some establishments. Nevertheless, they tend to have far less utility than some of the more mainstream options like Bitcoin and Ethereum.
What Is the Difference Between Meme Coins and Mainstream Cryptocurrencies?
Meme coins are usually developed for fun and humor, with little to no real-world application. They are also typically used as a way for people to attempt to make money as quickly as possible. On the other hand, Mainstream cryptocurrencies have more practical usage and can be traded on exchanges such as Binance or Coinbase (although you can often find meme coins here as well). These cryptocurrencies are typically backed by a company and can be exchanged for other currencies or goods in the real world. In essence, meme coins are not often accepted as payment, while mainstream cryptocurrencies are accepted as payment in many places. The difference between the two types of coins is that meme coins are created to be humorous, while mainstream cryptocurrencies have real value.
Furthermore, mainstream options are typically based on their underlying technology and the blockchain they have developed. In simple terms, a blockchain is a public digital ledger that is decentralized, distributed, and encrypted to secure data and verify its authenticity. Blockchains store transaction data permanently, unchangeably, auditable, and anonymously. Aside from cryptocurrency, blockchain technology can also be applied to supply chain management and smart contracts. Most meme coins piggyback on the blockchains of more established tokens, providing them with little value outside of pure speculative trading.
Are Meme Coins Worth Investing In?
The answer to this question is a little trickier than it first seems. Although most of them have little to no intrinsic value, they have been shown to create speculative bubbles that have made significant fortunes for some lucky (or smart) individuals. On the other hand, while a rapid spike in value can make you a paper millionaire, there still has to be people willing to buy your asset to put real value into it.
For example, if you buy one million of a random meme coin for $1000, that would value it at $1 per token. If this meme coin has no value but somehow makes headlines and jumps in value to $2 per token, you have suddenly doubled your investment. But if the coin has no intrinsic value and has only shot up in value because of something a celebrity says, then why would anyone want to buy an inflated version of it? While there are definitely uninformed people who will buy, you can’t bet on it, and you could find yourself with on paper, but no real money to show for it!
How Can You Spot A Meme Coin?
It is relatively straightforward to spot a meme coin as they usually have an extremely high or unlimited supply. Moreover, many of the people or organizations behind them will publicly “burn” vast amounts of them to drive up the price and exclusivity in the hopes of increasing its value.
What Are The Risks Involved
Some meme coins like Dogecoin have been around for a while and were developed by pretty reputable crypto alumni. However, newer ones have many risks, as you can never be sure if they will be a pump and dump scheme. The most notable example of this is the recent scandal involving the Squid Game (SQUID) token, which went from over $2000 to zero almost overnight, and many people lost more than their shirts on it.
Meme coins are an interesting development to emerge from the cryptocurrency world and have definitely had their fair share of the press. While some are perfectly acceptable if you treat them for what they are, most others are too risky to get involved.
