Meme coins. Please don’t. They have no purpose.
The world of cryptocurrency has seen its fair share of ups and downs, with some coins going on to become massive successes while others fade into obscurity. One recent trend in the crypto space is the rise of meme coins (also called shit coins), with Dogecoin being one of the most notable examples. These coins often gain popularity due to their humorous or satirical origins, but it’s important to understand that they lack any real utility or use in the blockchain ecosystem.
But first things first, what is a meme coin?
A meme coin is a type of cryptocurrency that is created based on a meme or internet culture. They often have a humorous or satirical origin and are designed to be lighthearted and fun. Unlike traditional cryptocurrencies, meme coins lack any real use case or utility, and their value is largely driven by speculation and hype. They are often created as a joke or a parody, with little consideration given to issues such as security, scalability, or decentralization. Examples of meme coins include Dogecoin, Shiba Inu, and SafeMoon.
During the last bull cycle, meme coins like Dogecoin saw explosive growth in value. In early 2021, Dogecoin went from a market capitalization of less than $1 billion to over $90 billion in just a few months. This staggering increase was largely fueled by celebrity endorsements and viral social media posts, as well as the general hype around cryptocurrencies at the time. Other meme coins, such as Shiba Inu and SafeMoon, also saw significant gains during this period.
However, it’s important to note that the success of these coins is largely driven by speculation and hype rather than any fundamental value. Unlike other cryptocurrencies such as Bitcoin or Ethereum, meme coins have no real use case or function within the blockchain ecosystem. They are essentially just digital tokens with no inherent value or purpose, other than the meme culture that surrounds them.
This lack of utility means that meme coins are highly volatile and subject to sudden drops in value. As we saw with Dogecoin, the price can skyrocket one day and crash the next, leaving many investors with significant losses. This volatility is a result of the fact that meme coins have no underlying assets or financial backing, and their value is entirely based on market sentiment.
Utility when it comes to cryptocurrency coins.
Utility in the context of cryptocurrency refers to the practical use case or function of a coin or token. A cryptocurrency with utility is one that has a clear purpose or value proposition beyond simply being a store of value or speculative asset. For example, a cryptocurrency may be designed to facilitate fast and inexpensive transactions, to enable decentralized applications, or to provide a means of exchange for a specific industry or community.
Having utility is important for a cryptocurrency project because it gives the coin a reason to exist and a potential user base. It also makes the coin more attractive to investors, as they can see a clear use case and potential for adoption. In addition, a cryptocurrency with utility is more likely to have long-term value and stability, as it has a reason for continued use and demand.
Utility can also contribute to the broader adoption and growth of the cryptocurrency ecosystem. For example, if a cryptocurrency is designed to enable fast and inexpensive cross-border payments, it could potentially disrupt the traditional banking system and provide greater financial access to people around the world. This could lead to broader adoption of cryptocurrencies and ultimately contribute to the decentralization and democratization of finance.
Lack of security and stability
In addition, meme coins lack the security and stability of more established cryptocurrencies. They are often created as a joke or a parody, with little thought given to issues such as security, scalability, or decentralization. As a result, meme coins are vulnerable to hacking, manipulation, and other forms of fraud, which can cause even more instability in their value.
Ultimately, the rise of meme coins highlights the speculative nature of the cryptocurrency market. While they may offer short-term gains for some investors, they lack the fundamentals to sustain long-term growth and stability. It’s important for investors to do their due diligence and carefully consider the underlying value and utility of any cryptocurrency before investing their hard-earned money.
Why are meme coins so popular?
Meme coins are popular for a variety of reasons. One of the primary reasons is their association with internet culture and humor. Meme coins often have catchy names and logos that appeal to younger generations who are interested in internet culture and memes. This can create a sense of community around the coin and drive viral adoption on social media platforms.
In addition, meme coins are often marketed as a way to “get rich quick” and capitalize on the hype surrounding cryptocurrencies. Their low price and high volatility can make them appealing to investors who are looking for a quick profit, especially during bull cycles when the overall market is experiencing significant growth.
The rise of celebrity endorsements and social media influencers also contributes to the popularity of meme coins. When a well-known personality endorses a meme coin, it can create a sense of legitimacy and credibility around the project, which can drive further adoption.
Overall, the popularity of meme coins can be attributed to a combination of humor, hype, and celebrity endorsement. However, it’s important to remember that these coins lack any real utility or use case in the blockchain ecosystem, and their value is largely driven by speculation and market sentiment. This makes them highly volatile and risky investments, and investors should carefully consider the risks before investing in them.
Meme Coins Part 2
Understanding Meme Coins
Meme coins, a cryptocurrency genre, are loosely defined by their enthusiastic online communities that support the growth of these digital currencies. They are often associated with animated character or animal meme images. During the recent cryptocurrency boom, notable coins that gained meme status included Dogecoin and Shiba Inu. This category extends to lesser-known currencies like Baby Doge and Dogelon Mars. While Baby Doge and Dogelon Mars receive less media attention, they still maintain nine-figure market capitalizations.
Meme Coins: High Volatility
CoinMarketCap, a cryptocurrency website, lists more than 300 currencies in its Meme Coin section. However, many of them are not actively traded and hold little to no value. Notable meme coins like Dogecoin, Shiba Inu, Dogelon Mars, and Baby Dogecoin are the only currencies within this category with a daily trading volume exceeding $1 million. It’s important to note that these meme coins are generally considered risky and highly volatile assets.
While ether is necessary for executing transactions on the Ethereum blockchain, most meme coins do not offer additional utility beyond collecting and trading. Furthermore, some meme coins are not true coins but rather tokens that operate on another blockchain. For instance, Shiba Inu is an ERC-20 token operating on the Ethereum blockchain.
Concerns Surrounding Meme Coins
In some segments of the media and the investing world, meme coins have been characterized as elaborate pump-and-dump schemes. These allegations should serve as a warning to potential investors, urging them to approach these markets with extreme caution.
Pros & Cons of Meme Coins
- A fun way to learn about cryptocurrency and blockchain technology.
- The potential for profit when values rise.
- Opportunities for participation in an active investing and trading community.
- High risk and volatility.
- Accusations of being involved in pump-and-dump schemes.
- Can be technologically complex for some users.
How to Purchase Meme Coins
You can acquire meme coins through cryptocurrency exchanges. Centralized exchanges like Coinbase, Gemini, Binance, FTX, and Kraken enable direct buying and selling between users on their online platforms. Decentralized exchanges like PancakeSwap require the use of a cryptocurrency wallet, allowing you to maintain custody of the currency outside of an exchange.
Creating Meme Coins
While creating a cryptocurrency is technically feasible for anyone with the necessary knowledge, transforming a coin or token into a popular meme coin is an arduous task that has only been successfully accomplished by a few.
Popular Meme Coins
According to CoinMarketCap, the top four meme coins in terms of market capitalization are Dogecoin, Shiba Inu, Baby Doge Coin, and Dogelon Mars. Other meme coins in this category include Shiba Floki Inu, Doge Killer, Kishu Inu, Samoyedcoin, Shiba Predator, and many more.
Lets talk a little about one of the famous ones…Dogecoin (DOGE)
Dogecoin was the best-performing meme coin in the last bull run. Dogecoin was created in 2013 as a joke by software engineers Billy Markus and Jackson Palmer, based on the popular “Doge” internet meme. However, during the 2021 cryptocurrency bull run, Dogecoin experienced a massive surge in price, driven in part by celebrity endorsements from figures such as Elon Musk and Mark Cuban.
At its peak in early May 2021, Dogecoin reached an all-time high of $0.69 USD, up from just $0.0046 USD at the beginning of the year. This represents a stunning increase of over 14,900% in just a few months. However, this was short-lived, and the price of Dogecoin quickly crashed, falling to below $0.20 USD within a few days.
A modest $100 in $DOGE purchased in January of 2021 for $0.008 would have been worth $7,100 in May of that year at $0.56. Wow! A 7,000% gain. The problem is that, at that point, euphoria sets in, and everyone keeps talking about going to the moon, so then that person never takes any profit and leaves it all in, only to see it go all the way back down. But hey, as of October 2023, that $100 would still be up 700% and worth $800…
Personally, I purchased Doge at 0.02, then sold it at 0.10, then bought it again at 0.20, and sold it at 0.40, then bought it again at 0.50, and watched it go to 0.75 as Elon Musk hosted SNL, and then watched it go all the way down. And like an idiot, kept losing with many others all the way down. Be careful.
Other meme coins also saw significant price increases during the bull run. For example, Shiba Inu (SHIB), a Dogecoin-inspired meme coin, experienced a surge in popularity in late April and early May 2021, with its price increasing by over 1,500% in just a few days. SafeMoon (SAFEMOON), another meme coin, also saw a significant increase in price during the same period, with its price increasing by over 8,000% in just a few weeks.
However, it’s important to note that the price increases for these meme coins were largely driven by speculation and hype, rather than any real use case or utility. As a result, their prices were highly volatile and subject to sudden drops in value. Investors should exercise caution when investing in meme coins, as they are often considered to be high-risk investments.