There’s a lot of hype surrounding meme coins. These cryptocurrencies named after characters quickly went from an attempt at being humorous to attracting a significant user base due to their potential. But do meme coins hold enough potential to change the future of finance? Here’s what you need to know when looking for the best new meme coins to buy and deciding if they are right for you as an investor
The history of meme coins
The history of meme coins goes back to 2013 and the creation of Bitcoin. This first and most well-known cryptocurrency still reigns supreme to this day, and it has triggered events that have led to the creation of dozens of cryptocurrencies – including meme coins. The true history of meme coins starts that same year, as Dogecoin was introduced to the market in 2013.
It was created as a parody cryptocurrency that featured Shiba Inu, and its original purpose was to put some lighthearted fun into the overly serious crypto market. However, things backfired—in a good way—and Dogecoin became a valuable asset that generated a loyal fanbase. It saw some incredible price gains, which opened the doors for other meme coins. Not long after that, we got to enjoy projects like Shiba Inu (SHIB), Floki Inu (FLOKI), and Grumpy Cat Coin (GRUMPY).
The hype surrounding meme coins
Quite a few things contributed to the incredible popularity meme coins enjoy among crypto lovers – starting with their accessibility and affordability.
Unlike some other cryptocurrencies—like Bitcoin and Ethereum—meme coins are affordable. They don’t have a high cost per coin, and it’s not uncommon for them to be traded for a fraction of a penny. Not only does this sort of affordability open up the market for people who are on a budget, but it also fosters the ‘what if’ type of thinking.
What if I buy this coin now for pennies and see it become a valuable asset in a few years? What if I miss out on the opportunity to buy it now and regret it in the future?
This type of thinking encourages speculative investment and makes buying meme coins more likely for newcomers to the crypto world.
Moreover, meme coins have been building a strong position on the market due to celebrity endorsements. When you have a high-profile celebrity like Elon Musk hyping up different meme coins, it’s to be expected that it will lead to significant price spikes.
Of course, there’s also the fact that meme coins generally cater to younger audiences. The communities in the industry are known for cultivating a rebellious stance against traditional financial institutions, so they give the investors a sense of belonging to a group.
Couple all of this with the sometimes overwhelming presence of meme coins on social media platforms and you get an environment that makes it almost impossible for this type of cryptocurrency to fail.
Key characteristics
Meme coins generate a lot of attention, and some key characteristics make them instantly recognisable:
- Short lifespans: Only a few meme coins so far have managed to captivate the audience and stay around for years. The hype around a particular meme coin doesn’t last long – before you know it, there will be another one to take its place.
- Low market capitalisation: Even when a meme coin is at its highest price, it’s rare for it to have a high market value.
- Easy to create: You don’t need any knowledge or coding ability to launch a meme coin, which means that anyone can visualise and make them.
- Low transaction fees: People don’t like to lose money on transaction fees, so this perk is another thing that welcomes speculative trading in the community.
- Easy to copy: Anyone can create a meme coin and, with a bit of luck, it can become the next talk of the town. This invites many copycats who will derive a new meme coin from an existing one.
The pros and cons of meme coins
Meme coins can be a great asset for people who approach crypto trading with their main purpose being to have fun. They are a fun asset that can serve as a great introduction to the crypto world. Meme coins can familiarise you with blockchain technology and possibly get you ready to approach crypto trading more seriously.
We’ve also mentioned that they are generally much less expensive than other cryptocurrencies, so you won’t have a lot on the line if something goes wrong.
Likewise, by joining the meme coins community, you’ll get a chance to be an active member of a group that’s mostly comprised of young generations.
However, as fun and interesting as they are, meme coins also come with a few cons – starting with extreme volatility. Take Dogecoin’s current volatility of 24.91% as an example. Like other meme coins, there’s a good chance it will experience dramatic price swings within a short period. This makes meme coins an unsuitable investment for people who don’t like to take any risks.
Speaking of risks, you should be aware of the most significant ones. When purchasing meme coins, you need to be on high alert for possible scams. Since anyone can make them, it’s not uncommon for fake projects to feature bogus coins, which ends in coin creators who disappear with investors’ money. There are also security risks to be mindful of, as meme coins are created quickly, and by people with little to no technical experience.
Likewise, meme coins have very little real-world use potential, at least for now. They are primarily used as a token, and they have little to no utility in your daily life.
Ultimately, meme coins are prone to being over-hyped by celebrities or influencers, so people end up investing in them only to realise their mistakes down the line.
Investing in meme coins 101
Even though they are undeniably risky, there’s a way to invest in meme coins without it becoming a make-it-break-it kind of situation for you.
For starters, you should thoroughly research the meme coin you are pursuing. Don’t let the hype cloud your judgment and make you act out of haste. Investigate the coin’s volatility, underlying technology, and tokenomics structure.
Likewise, keep your investment modest. You should never invest more than what you are comfortable losing, as meme coins come with a great risk.
If you like to invest a lot of money in crypto, ensure that meme coins take only a small part of your investment portfolio. In other words, satisfy your desire for fun, which meme coins undeniably are, but put your money toward cryptocurrencies with actual potential.
Can meme coins change the future of finance?
It’s highly unlikely for that to happen. The meme coin phenomenon is very risky, and it has little to no real-world value for investors.
However, if some of them transcend their current position by integrating with the metaverse, there’s a good chance meme coins will become useful in real life.
Until then, it’s best to think of meme coins as what they really are – a fun asset that will allow you to join in the hype and connect with like-minded people through an active community of users.
