Select takes a look at meme coins, which have become a mainstay of the crypto market.
Doge, which combines the Shiba Inu dog Kabusu with bright typefaces and infantile words along the lines of “such wonder” and “extremely worried,” is one of the bitcoin community’s faves.
Dogecoin, which was founded as a joke in December 2013, sparked a whole new crypto category: meme coins, which are cryptocurrencies that are associated with an online joke or pop cultural reference.
Following the introduction of the Doge meme, Dogecoin spawned an avalanche of cryptocurrencies featuring the adorable pooch’s image, making it the most popular meme for these sorts of cryptocurrency.
As a consequence, inside the meme coin category, a new subcategory has emerged: dog-themed coins. Most retail investors will be acquainted with them, since the new subgroup of meme coins, which includes Dogecoin and its derivatives, Shiba Inu, and Dogelon Mars, witnessed substantial levels of speculation in 2021. After tweeting about his interest in and support for Dogecoin, Tesla creator Elon Musk was a crucial reason why these cryptocurrency soared and grew last year.
Pepe Cash, based on the Pepe the Frog mascot, and “HODL” (hold on for dear life), a crypto rallying cry to cling onto your coins at all costs, even amid a market slump, are two more meme currencies outside the dog-themed coinage specialty.
A quick overview of Dogecoin’s history
Dogecoin is widely regarded as the original meme coin, and although it was created to mock the irrational speculation that abounds in cryptocurrency markets, it rapidly grew a following of its own. Dogecoin was seen by crypto fans as a means for new investors to learn about and play with the technology without having to worry about the larger stakes of Bitcoin, which had recently surpassed $1,000 per coin at the time.
Dogecoin was marketed as a “fun and friendly online money” as a consequence. Unlike the Bitcoin community, the Dogecoin community was less concerned with the cryptocurrency’s price and more interested in seeing the coin used in the use cases that were regarded as critical for cryptocurrency in general.
For example, a number of Dogecoin tipping bots appeared on social networking networks, allowing users to donate modest sums of the cryptocurrency to others who liked their posts. Dogecoins were also used to collect funds for a number of worthwhile causes, like assisting Charity: Water in the construction of a well in Kenya and sending the Jamaican Bobsled Team to the Sochi Olympics after they qualified but couldn’t afford to go.
Investing in meme coins comes with a lot of dangers
While Dogecoin may seem to be a lighthearted initiative, investing in this form of cryptocurrency, or other meme currencies similar to it, has significant risk.
Some meme currencies have a huge market capitalization, while others saw their price per coin surge hundreds of percent in a matter of days, making some investors very wealthy and basically communicating to others that they, too, may be able to do so.
It’s also worth mentioning that these meme-based cryptocurrencies are usually not serious, long-term initiatives, since they’re usually made by copying and pasting code from another coin. They also lack strong development communities, which are essential for keeping them safe and technologically current. Dogecoin development, for example, has come close to halt at many points over its existence.
Furthermore, many meme currencies are held by tiny groups of individuals with huge, market-moving amounts of the currency and narrow liquidity pools. As a result, their prices are notoriously unpredictable, affected heavily by social media attitudes and “FOMO” (fear of missing out) (fear of missing out). As a result, meme currencies are especially vulnerable to pump-and-dump scams, in which a single or a group of major coin holders hypes up the currency, encouraging others to purchase and inflating the price before selling all of their holdings on the open market.
While one person or group may make a lot of money, a rapid sell like this might send the market into the red, leaving everyone else “carrying the bag,” as they say in crypto. Unwitting investors who expected the value of their coins to grow wind themselves with tokens worth significantly less than they paid for them.
Investing in meme coins
Despite the fact that memecoin markets are notoriously volatile, some investors continue to invest in them. Investors may buy meme coins on many of the same platforms they would use to buy more serious cryptocurrencies like Bitcoin and Ethereum, whether they want to earn money by timing market surges or simply want to engage in a fun crypto-insider market.
Dogecoin, the oldest and most well-known meme coin, may be purchased, sold, and traded on leading cryptocurrency exchanges such as Coinbase, Gemini, and Binance. Traditional stock investing and trading services including Robinhood, WeBull, and SoFi have started to enable its customers to trade in cryptocurrency, including Dogecoin.
Fun fact: When Dogecoin was originally published, slips of paper carrying private keys containing hundreds, if not thousands, of Dogecoins were distributed at crypto events and parties as a method to attract newcomers to the community. When the cryptocurrency reached an all-time high of roughly 70 cents in May 2021, a paper wallet holding 500 Dogecoins, worth about 20 cents at the time, would be worth around $353.
Other dog-themed cryptocurrencies, such as Shiba Inu, are also accessible on similar centralized trading sites, although other esoteric meme coins are not. Instead, interested investors will have to join up for additional exchanges or learn how to acquire these lesser-known currencies through decentralized exchange platforms.
For example, Dogelon Mars may be bought and sold on Crypto.com, KuCoin, and OKEx. On the decentralized exchange Uniswap V2, there is also a wrapped ether pair.
Is it a good idea to invest in meme coins?
Make sure you have a strong financial foundation before investing in crypto, particularly meme currencies. You’ll need an emergency fund to cover at least three to six months’ worth of living costs, as well as to pay off any high-interest debt you may have, such as a credit card. Furthermore, if you have a 401(k) retirement account with an employer match, you should concentrate on contributing enough to get the match.
Investing in meme coins may be beneficial depending on your risk profile. Meme coins may provide a minimal initial investment and large rewards for individuals that trade everyday and have time to constantly monitor the marketplace. Nonetheless, investors should be aware of the hazards involved and do their own research of any meme currency they choose to trade. Consider the possibility of losing virtually all of your initial investment.
Meme coins are not suited for people who want to engage in cryptocurrencies as a hobby or to save money over time, and it could be better to stick with more solid cryptocurrency assets like Bitcoin or Ethereum. Even the most established cryptocurrencies, however, are subject to significant volatility. Traditional investing strategies, like as equities and index funds, are also more cautious and trustworthy options for people who don’t want to risk their money on the volatile cryptocurrency markets.