Meme coins have taken the world by storm over the past few years. This can be attributed to several reasons, not least of which is the potential of creating vast wealth from seemingly small investments. This post will cover some of the top reasons for wanting to get in on the craze, as well as some potential risks involved.
What Are Meme Coins?
Meme currencies are notoriously volatile and are largely community-driven; they can quickly gain popularity thanks to online community recommendations and FOMO (more on that later). A meme currency’s other characteristic is that its supply is often enormous or limitless. The supply of SHIBA Inu (SHIB), for instance, is one quadrillion tokens, whereas the supply of DOGE is uncapped and is currently over 100 billion tokens. Meme tokens don’t have a mechanism for burning coins (other than by the developers themselves), so their low price is attributable to their ample supply. In fact, many of these tokens can cost less than $1 and, in some cases, fractions of a cent! So with all this in mind, why would anyone possibly want to invest their money into meme coins?
FOMO
FOMO is an acronym for “fear of missing out.” It is a feeling of anxiety and worries about not being able to do all the things one would like to do. This term has become popular in the last few years, especially among young people. It is often used on social media platforms to emphasize the pressure of keeping up with what others are doing. When it comes to meme coins, it is easy to see how people might become carried away when they see someone making millions from a thousand-dollar bet. While this is not a great way to invest money, many people see it as a way to escape their boring lives, no matter how small the possibility. In other words, you could compare it to buying a lottery ticket. You know someone has to win, and hope that it will be you one day.
They Have Some Application
Some meme coins have avoided being considered worthless by creating utility for themselves. While the vast majority fall by the wayside and never progress beyond their status as a joke, others like Dogecoin and SHIB have managed to stay the course. In the case of Dogecoin, it is now possible to use Dogecoin casinos where you can deposit using DOGE instead of fiat currency. In the case of SHIB, they seem to have developed a cult following and managed to ride that wave far enough to come up with some admittedly interesting plans.
Potential Profits
While most meme coins aren’t a good investment, some do have the potential to increase massively in value from a relatively small investment. The standout example is DOGE, whose value seems to shoot up every time Elon Musk mentions it. The first time this happened, many people made considerable money overnight (as long as they sold before it dropped again). Over the course of a year, this has happened several times, culminating in the announcement that you can use DOGE to buy Tesla merch. It is this potential for a meme coin to “moon” that is what can make them so appealing to novice investors.
You Become Part Of A Community
Arguably one of the most significant reasons for investing in a mem coin is that they typically have unique communities. Not all do, but some have a knack for creating communities of people interested in the direction and potential of the coin. For a small investment, holders can feel p[art of something special, surrounded by others in the same boat. In other words, you all rise together or sink together.
It Is Something Different
While the world of crypto is still exciting, it has become pretty mainstream these days, so buying a meme coin can add some flair to proceedings. By going against the common thread and investing your cash into crypto other than BTC, ETH, or SOL, you can feel like a pioneer in the space.
Potential Risks
As with any form of investment, there are some risks. However, these are multiplied with meme coins for the following reasons:
- They are far more volatile than more established tokens.
- You could fall victim to a scam.
- Most meme coins have zero value outside of pure speculation.
- They are more likely to fall prey to pump and dump schemes (not always by the developers).
Overall, meme coins are an interesting phenomenon in cryptocurrency, and some do have utility outside of speculative value. However, you could lose a lot of money unless you know what you are doing or don’t take the time to research.
