Unless you’ve been living under a rock for the past 12 months, you’ve probably heard of the massively popular “meme coins” that have taken the crypto world by storm, stealing the limelight away from some of the more well-established coins in the top 100 list.
Despite the fact that most of the crypto community dismisses these meme coins as jokes, serious money is flowing into these digital currencies, and perhaps it’s time we pay more attention to their viability as investment prospects, given the massive potential upside they can offer. With that said, if you want to learn more about investing in meme coins like Dogecoin, this article by Invezz breaks down the process for new customers.
What are Meme Coins?
Meme coins are generally considered cryptocurrencies that have gained a considerable amount of popularity in a short time, usually without any real rhyme or reason behind their success. Typically, these coins have little to no inherent value and do not offer any utility that would be considered innovative or groundbreaking. Most meme coins are simply copies of other popular projects and are simply renamed and rebranded to draw more attention.
However, as the name implies, “meme coins” are usually (but not always) themed around famous internet memes, which, as you know, are viral images and jokes that are shared around on social media. Many people argue that their very presence somewhat undermines the validity of the crypto industry as a whole, making it appear to be a joke rather than a serious industry striving for mainstream adoption. You could also argue that meme coins take away the focus from more innovative projects that offer real use cases and provide value to society. However, things do not always pan out quite so logically in the real world.
Nevertheless, meme coins are here to stay, for the time being, at least. In fact, CoinMarketCap has even aggregated a list of all of the top meme coins and tokens in the crypto space, of which there are currently 114. Let’s take a look at two of the most popular examples:
Dogecoin is the original meme coin, making it the project responsible for starting all of this madness. After being launched back in 2013 as a joke by software engineers Billy Markus and Jackson Palmer, the “fun and friendly internet currency” has gone from strength to strength to a point where it is now one of the most successful and well-known digital currencies in the world.
It was initially based on the famous “Doge” meme consisting of a picture of a Shiba Inu dog with text over the top representing the dog’s inner monologue. One important thing to note is that Dogecoin runs on its own blockchain, and as such, it separates itself from meme tokens, which run over the top of other existing blockchains.
Dogecoin is firmly planted within the top 10 charts (by market capitalization) at the time of writing. With its current supply, Dogecoin is valued at around $43 billion, which means it is appreciated higher than both Twitter and Ford, which is a simply staggering thought.
Shiba Inu is yet another meme coin, but this time it is based on Dogecoin itself. Shiba, like Dogecoin, has no apparent utility but has garnered a devoted fan base ready to help drive its value higher. The token was dubbed the “dogecoin killer” by its creators in a somewhat tongue-in-cheek attempt to embrace itself as a meme.
Since it was created in 2020, the coin has soared from a value of $0.000000000056 to an all-time high of $0.0000379. That isn’t too handy with maths; that is a 140,000 times increase – and all that happened within eight months.
However, Shiba Inu perfectly displays the dangers of meme coins. All it takes is one look at the graph to visualize the insane volatility that these types of assets bring. If you catch them at the right time, you can make a lot of money in a short space of time, but if you buy at the top, you can kiss a large part of your investment goodbye.
Should You Invest in Meme Coins?
According to CryptoSlate, meme coins account for around 2.4% of the crypto market cap, making them worth over $48 billion. Most of this value is held within Dogecoin and Shiba Inu; however, a handful of other notable coins may be worth looking into.
So, should you consider investing your money into these types of coins, or should you steer clear? The answer largely depends on your appetite for risk and what investment strategy you employ. While it is possible to make money by investing in meme coins, it’s more akin to gambling than investing. Cryptocurrency is already highly speculative at the best of times. By investing in meme coins, you are choosing to invest in the most speculative aspect of the most speculative market. But as they say, fortune favors the brave, right?