The origin of the term “meme coin” can be traced back to 2013 when Dogecoin – a cryptocurrency created as a joke to poke fun at other cryptocurrencies – exploded onto the scene. Dogecoin quickly established its own following due largely to the currency having a much lower barrier of entry when compared to Bitcoin.
Meme Coin Features
There are several features of meme coins that everyone should be aware of. Meme coins are cryptocurrencies that often have a very high or unlimited supply which makes for a more affordable “investment”, they are extremely volatile due to their heavy reliance on social media trends and certain community circles, and they are seemingly useless.
For instance, Dogecoin has an unlimited supply of coins and it seems as though investing in it means investing in Elon Musk’s tweets, or the whims of Twitter and Reddit, more than anything else.
So at the very most, they are assets based purely on speculation and in no way provide any solutions to any existing problems.
Meme coins are also often created by anonymous creators; however, there are exceptions to this rule, such as in the case of Dogecoin. Because they are usually very cheap to create there has been an ever-increasing influx of these coins created, and this is especially after the 100x Gamestop stock pump in late 2021 caused by Redditors.
In a sort of response to the wild price increase of the stock, a trend caught on which pushed Dogecoin to an all-time high of $0.73 (a 2,000% increase in just 5 days) and injected further investments throughout the meme coin world as a whole. This was of course exacerbated by the many ignorant celebrities who became involved in promoting these coins to the public.
They are often traded on DEXs or decentralized exchanges, such as PancakeSwap. That platform has been home to numerous scams throughout 2021 and since DEXs are peer-to-peer, there is even less recourse for those who are scammed than there is in other avenues.
One of the most notable scams was Safemoon; however, in this case, it wasn’t only sold on DEXs, and crypto investors were able to file some class action lawsuits in an attempt to regain some lost investments.
Lastly, most of these meme coins are owned by a small select group of people who often own incredibly large and market-moving quantities of them. This is yet another factor to consider if one is considering an investment in these types of “assets” and only adds to the susceptibility of these coins to various pump-and-dump schemes.
There are going to be those who make a great deal of money from these investments but everyone should note that the vast majority will, in fact, lose money more often than create any gains. Due to the speed at which these markets can swing it’s very easy to be the one left holding the bag. The large swaths of crypto-ignorant investors who were banking on their coins rising in price will end up with tokens that are worth far less than what they had initially invested.
Still, the narrative that meme coins are a great way to potentially make that quick money is still not only prevalent but still going strong as well and the fact that more and more people are becoming interested in crypto means that there are always going to be those who don’t know any better.
The simple idea that one can change their whole life by investing a few dollars in one of these coins has permeated the imagination of many. It’s similar to winning the lottery or attempting to cash in on a gold rush, but what most don’t realize is that the odds of doing so are just as remote.
Should you Invest?
For anyone who wishes to invest in cryptocurrency in order to store wealth for the long term, meme coins are definitely not appropriate in the least bit. When investing in crypto there are several important things to note before you take the leap.
The number one thing that everyone must do before investing is DYOR or do your own research. People need to be spending a decent amount of time deep-diving into projects to determine whether or not they have long-term sustainability and utility.
As boring as it might be, you should also read the white paper which will give you a better idea of what you’re dealing with. If the whitepaper seems to use a lot of buzzwords and is incredibly lengthy and hard to follow, you should be suspicious at the very least and do even more digging.
Remember: whitepapers are documents that attempt to lure prospective investors, so if it seems as though it’s scattered and hard to understand, maintain severe caution. You don’t want a whitepaper drowning you in smoke and mirrors.
There are those who trade meme coins who are more self-aware about the game that they’re playing. They know the risks of what they’re doing and enjoy playing with the fire. At the end of a meme coin’s rise and inevitable fall, only those rare few who have timed their trades properly will make any money, and literally, everyone else loses.
No wealth can be created without innovation or utility, and this zero-sum game is merely wealth that is transferred like a bad game of hot potato between participants.
Investors should always keep the long-term in mind. There are way too many people who have their minds set on fast riches and unfortunately, most of them will burn out quickly, as the path to crypto wealth is riddled with bad actors willing to take everything from you with a single click.