🐶 Meme Coins: Scam or Opportunity?

What’s driving the insane rally of meme tokens? And will it last?

Remember the good old times when adorable Doge memes used to make us chuckle and laugh? Not anymore. The doggo is giving us FOMO and making us question our financial decisions.

So what’s going on in the world of meme coins? 

The Shiba Inu cryptocurrency, which calls itself the "Dogecoin killer", has gained 53,500 times since it was created in August 2020! Yes, that insane growth was achieved in just around 15 months. It is currently the ninth-largest cryptocurrency and has a market cap of ~ $38 billion.

And what about Dogecoin itself?

Well, it is the undisputed OG meme crypto and has seen an insane rally in the past year. Fresh out of the oven, there's even a 'Squid Game'-themed token that has grown 86,000% in just within a week (just before the crypto’s website shut down without any notice! And now it’s worth nothing).

So the big question is: to invest or not to invest? 

We hear you. Honestly, we are all standing on the same fork. Hoping to take the road less travelled by and make tons of money out of it. 

But with the noise that has been created around this, it’s difficult to analyse with a clear head.

So let’s try and understand what's driving these tokens.

One of the major reasons is, of course, memes. Social media frenzy has played a major role in making these tokens popular. And as their popularity rises, more people get interested in them and buy them. These people then come back on social media to brag about their purchases, creating a feeling of FOMO and driving further purchases. 

And if we're talking about crypto tweets, we have to talk about Elon Musk. This entrepreneur cum crypto influencer has played a major role in the rally behind Shiba Inu and Dogecoin. Musk has been a supporter of Dogecoin since last year, calling it the "people's crypto." He recently also bought a new puppy which is a Shiba Inu, the same breed as the dog in the Doge memes. 

People figured he was supporting the Shiba Inu coin and flocked to the crypto exchanges to buy it.

But new memes keep cropping up every week, so how reliable are these coins? 

Some of these meme coins, like Shiba Inu and Dogecoin, have now gathered a huge community of followers. You know how Salman Khan followers keep talking about his films, whether they are hits or flops? Much in the same way, these people keep the conversation going about these coins, keeping them trending.

So, how big are these communities? That is difficult to track. Currently, Shiba Inu has around 872,382 holders and Dogecoin has 4,488,192 holders. Compared to Bitcoin's 38,746,593 holders, the numbers seem small but Bitcoin has been around for much longer. It was created way back in 2008.

Owing to their popularity, many crypto exchanges have listed meme tokens, making the process of buying these cryptos easier.

But are these tokens really reliable? Most experts will tell you the same thing: not really. Why?

People treat these tokens as pump and dump assets. They buy them when they are cheap and then sell them as soon as they gain in value. They haven't achieved the status that Bitcoin has, where people consider it an investment or a store of value. So, if Bitcoin is the gold you buy on Diwali, then meme coins are like soan papdi packets (Tweet this). You never hold on to them: just dump them onto the next guest that comes to your house.

Basically, there is nothing fundamental behind the rally of these coins. These coins have almost no real-world utility. Very few platforms actually accept meme coins like Dogecoin and Shiba Inu. So, they can't really be used as currencies. Also, unlike Bitcoin, many of these coins have no supply cap. For instance, 600,000 new Dogecoin are created every hour and will continue to happen till the end of time. So it’s not really “limited supply.”

And that's not all. These coins are mainly being traded by retail investors; not many institutional investors have invested money in these tokens. So, their rally is just fuelled by memes, emotions, and Elon Musk's tweets. And like any get-rich-quick opportunity, these coins are extremely risky. If you're lucky, you may gain immense riches. But if not, the losses are equally immense.

However, meme tokens, much like crypto in general, are here to stay. And many are making active efforts to stay relevant. Dogecoin has been updating its network to increase mainstream adoption and boost transaction efficiency. So, the bubble may burst for some of these coins but as long crypto is around, new meme tokens will keep cropping up.

Have you invested in any meme tokens? Are you planning to do so? Share your meme token experience with us and let us know if you won the crypto lottery or not!

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