Investing in meme coins is a joke or if the joke is on the investor

2024 may be remembered as the year of meme coins, as cryptocurrency investing surged after falling out in 2023. These digital tokens, based on cute or funny memes, gained attention, causing FOMO but also being risky.

This article provides information on meme coins, their history, and popular tokens for educational purposes only. It advises caution when speculating on meme coins with small amounts of money, as Encyclopaedia Britannica, Inc., does not provide investment advice.

What are meme coins ?

Meme coins are digital currencies inspired by memes or cultural phenomena, using standard blockchain protocols but lacking a financial or technological purpose. They are compared to meme stocks like GameStop and AMC, with key characteristics including their unique nature.

Utilize humor and satire effectively :- Meme coins, often originating from humor, are often created as jokes or parodies, providing entertainment value through humor or satire.

Built on community :-  The value and popularity of meme coins are heavily influenced by their online communities. Active and engaged coin holders play a crucial role in sustaining a meme coin’s popularity.

Popular on social media :- Successful meme coins gain significant social media attention, which directly impacts their price performance.

Lack intrinsic value :- Digital currency, based on social media hype, lacks intrinsic value and is not tied to specific use cases, unlike stocks and bonds which derive value from the underlying company.

Highly volatile :- Meme coin volatility can affect its price, trading volumes, and market liquidity.

Attract speculative traders :- Meme coins are often sought after by buyers and sellers seeking quick, high returns.

Limited utility :- Meme coins often lack practical use cases beyond speculative trading, and often lack white papers outlining their purpose and technology.

Typically short lifespans :- Meme coins, while some have maintained popularity for years, are rare and often have short lifespans due to their short hype around them.

Meme coin investing is a highly risky endeavor

Meme coins, due to their lack of intrinsic value and high volatility, pose significant risks to speculators. Their short-lived popularity can lead to a sudden decline in their value, making owning a meme coin a risky and unpredictable investment. Investing in meme coins is a joke or if the joke is on the investor

• Possibly a scam – Internet memes and popular culture can be exploited by fraudulent actors to create meme coin scams, including fake projects, pump-and-dump schemes, and exit scams, where creators disappear with investors’ funds.

• Security risks – Meme coins pose significant security risks due to malicious actors and code vulnerabilities, often created by inexperienced creators. Poorly written smart contracts, inadequate security protocols, and lack of rigorous auditing further heighten these risks for coin holders.

• Regulatory uncertainty – The regulatory landscape for digital assets is rapidly changing, with meme coins, often viewed as frivolous or speculative, potentially being targeted for stricter regulations.

The history and development of meme coin

2013: The rise of Dogecoin :- Dogecoin (DOGE), created in December 2013 as a joke, parodied the cryptocurrency markets by mocking the rapid proliferation of digital tokens. The token, featuring a Shiba Inu dog as its mascot, gained widespread popularity due to its friendly and humorous culture, surprising its founders. The token’s name was inspired by a popular Internet meme.

2020: Shiba Inu grows up :- Shiba Inu (SHIB), the first major copycat coin, was launched in August 2020 by Ryoshi, an anonymous developer, based on the Shiba Inu pup. The cryptocurrency was heavily influenced by social media and celebrity endorsements, similar to Dogecoin’s success. SHIB’s rise is partly attributed to its popularity.

2021: Meme coins proliferate, then crash :- In 2021, meme coins like Dogecoin and Akita Inu and Kishu Inu gained popularity, while some, like Safe Moon, were later revealed as scams, causing excitement and causing confusion on social media.

The cryptocurrency bear market in late 2021 led to a significant decline in meme coin values, influenced by environmental concerns, regulatory changes, and market corrections. This cooled social media enthusiasm and highlighted the vulnerability of meme coin prices to broader market conditions.

In 2023, PEPE is expected to bring back the heat : – In 2023, Pepe the Frog, inspired by meme coins, gained popularity through social media marketing and community building. Its launch coincided with the resurgence of Bitcoin and other cryptocurrencies, generating significant returns for speculators and reviving interest in meme coins.

Since 2017, alt-right groups have used the Pepe the Frog meme in hate speech, raising concerns in the crypto community that the PEPE coin may be linked to these groups.

Psychology of Meme Coins

Memes, originating from Richard Dawkins’ 1976 book “The Selfish Gene,” are a phenomenon where a behavior or idea spreads rapidly through Darwinian natural selection. These memes, which can be genetic or cultural, can change the species forever. For example, a joke shared by one person can be shared with others, creating a ripple effect that spreads the joke to a larger group, potentially changing the entire species. And when that joke is attached to an exchangeable value, it can theoretically become an actual currency.

The worth of meme coins like dogecoin and their lasting value remains uncertain, but they have already garnered attention from celebrities like Snoop Dogg, Gene Simmons, Elon Musk, and former adult film star Mia Khalifa, demonstrating their potential for powerful narratives.

The appeal of meme coins is their community-based nature

Over 15,000 cryptocurrencies vie for attention on Twitter, Reddit, and mainstream news. Meme coins, unlike other tokens like Cardano’s ADA, offer a good time and a laugh, despite their utility and blockchain tech solutions.

Gene Simmons, a former self-proclaimed God of Doge, has been bullish on meme coins, investing $300,000 in ADA in February 2021. He also praises Cardano founder Charles Hoskinson and encourages fans to conduct their own research. Simmons has expressed general praise for Hoskinson, but seems to take crypto more or less seriously.

Meme coins are a form of highbrow humor popular among those in the know, driven by Reddit forums and social media hype, starting as viral jokes and eventually affecting the system itself.

How meme coins become ‘real’

Meme coins are inflationary, meaning there could be an infinite supply, unlike bitcoin which will stop minting at 21 million coins. They are not considered digital “gold” or silver, as they lack built-in scarcity and aren’t essential to a blockchain project’s functionality. They are mostly speculative investments, and even dogecoin co-creator Jackson Palmer has criticized the hype up the perceived value of meme coins.

Ethereum co-founder Vitalik Buterin reportedly dumped trillions of meme coins, including 300 trillion jejudoge, over 223 trillion kishu inu, 370 billion baby shiba, and 120 trillion huskytoken, with the highest total value of each bucket at $800,000. However, every successful meme coin comes to a pivotal moment, making them worth a second look when serious investors claim them, as per Randi Hipper, an influencer known as Miss Teen Crypto.

Meme coin investor Hipper and others consider the project’s creators, such as Elon Musk, and the practical use case of the coin, known as a “use case.” They also consider the potential for payment for the Mavericks, as Mark Cuban has started accepting dogecoin payments.

Ryan Fochtman, an investor and strategic partner for MoneyMade, supports Hipper’s sentiment about Elon Musk’s involvement in the space. Fochtman believes Musk’s backing of a non-utility coin and his potential future Tesla purchase with dogecoin has sparked interest in the cryptocurrency market.

The introduction of online exchanges for dogecoin or shiba inu for AMC tickets is expected to make altcoins more mainstream and create a more enjoyable space. This will lead to more companies accepting crypto, creating a domino effect where more companies fall and accept it, according to the speaker.