Cryptocurrency enthusiasts who have entered the world of meme coins such as Dogecoin and Shiba Inu attracted by their lure are finding this journey rather painful.
What used to be seen as a concept of sarcasm and fun has evolved to be a big money maker over the past year. Famous cryptocurrencies such as Dogecoin, Shiba Inu, and Safemoon had a busy year, posting record growth. Critics said the time for meme coins has come to an end.
However, as we tread deep into the current bear cycle, experts predict that the future could bring more positive results to meme-based cryptocurrencies.
Dogecoin, Shiba Inu, and many other altcoin tokens associated more with online pranks rather than solidly founded projects like Bitcoin or Ethereum, have been hit by a hefty price retracement after hitting record price levels in late 2021, which is normal in a bear cycle.
Volumes too. Exchange rates have declined, now measured in millions instead of billions. Now let’s see in detail some aspects related to these cryptocurrencies.
Meme coins, what they really are
Memes are a widespread phenomenon on the Internet: they are often caricatures or funny situations that are summed up in a single image. Such memes now also serve as the basis for cryptocurrencies and meme stocks.
What is a meme coin?
A meme coin is actually a “normal” cryptocurrency, only the developers of such coins usually want to claim something in particular. Despite this, many meme coins are very successful. Dogecoin itself has for some time entered the top 10 of the most popular cryptocurrencies and also has the highest market capitalization among “fun cryptocurrencies”.
Meme coins often offer greater upside potential than “more classic” cryptocurrencies.
The development of Meme coins
As already mentioned, memes are originally an internet phenomenon. You usually take a certain photo and write a short text about it. Scenes from movies, series, or even images of celebrities or politicians are often used. Animals like cats and dogs are especially popular, and the goal is usually to make fun of a certain situation. Many memes are therefore to be understood as caricatures, parodies, or satire.
A well-known meme, for example, is “Doge”, created in 2013. The founders used an image of a dog for this and added funny sayings as text. Doge also served as the basis for the development of a meme coin. Doge Coin was created by the two programmers Billy Markus and Jackson Palmer. The coin has existed since 2013.
The two developers initially thought DogeCoin was fun. They wanted to parody Bitcoin and other alternative currencies. However, the “fun project” eventually turned into a very successful cryptocurrency.
Many meme coins are not supported by the same established cryptocurrency technology as Bitcoin, nor do they have an established ecosystem that supports them. Among the most popular coins, only two use tested blockchains:
Dogecoin’s protocol is based on Litecoin
Shiba Inu was built on the Ethereum blockchain.
Starting from a price of less than $ 0.002, DogeCoin managed to exceed $ 0.01 for the first time in April 2021.
Elon Musk was largely responsible for the big rise in this cryptocurrency, in fact, the billionaire has tweeted several times that he finds the DogeCoin an interesting cryptocurrency. As is known, Musk can forcefully move the markets with his tweets, influencing for example the price of Tesla shares.
There are big differences in terms of the maximum number of coins available. Bitcoin developers have determined that there can be a maximum of 21 million pieces of this cryptocurrency. The developers of DogeCoin had also initially thought of a limitation. It initially amounted to 100 billion coins. However, this restriction has now been lifted. More than 5 billion Doge Coins can therefore be added every year.
Doge’s popularity has inspired the creation of new tokens based on dog breeds, including Shiba Inu, Baby Shiba Inu, and Floki, named after Musk’s pet.
The Change.org petition to add Shiba Inu to the Robinhood platform received 300,000 signatures. This move ultimately pushed SHIB to record highs, and the cryptocurrency briefly overtook Dogecoin, the native meme coin.
Shiba Inu was created in 2020 after Dogecoin became popular. Similar to Dogecoin, SHIB also held moderate value before attracting mainstream investors in 2021
Are meme coins scams?
Basically, investors should realize that if they buy meme coins, they can also lose money. They are just fun currencies and don’t play a big role in everyday life like Bitcoin might play for example.
Some meme coins are even designed as a scam. The best example is the Squid Game Coin. Squid Game Coin was created as a parody of the Netflix series of the same name and the price trend was unimaginable. In just one week, the price went from $ 0.01 to over $ 75. However as it turned out later, Squid Game Coin turned out to be a scam. In short, the founders of the coin collected investor money and then simply disappeared.
Such coins are often only listed on lesser-known cryptocurrency exchanges which is why we point out the importance of using reputable cryptocurrency brokers.
The growing popularity of Meme Coins
As the world of more stable cryptocurrencies, or stablecoins, continues to offer more and more a decentralized alternative to the world of traditional finance, meme coins are created without that utility or particular purpose. They exist simply as a cryptocurrency attached to a meme.
So why are investors so interested in them when there is no serious project behind them? Their value depends solely on the community of users who move in support of a particular meme.
Some meme coins are more than just jokes. The creators of the Floki Inu meme coin, for example, partnered with the Million Gardens Movement, a charity co-founded by Musk’s brother Kimbal.
Meme coins are phenomenal during a bull cycle but are awful in a bear cycle. The reality is that if these cryptos have as much as a resemblance to a utility, they can have incredible runs. Even if there is a minimal function, it can lead to staggering price growth.
Dogecoin had an outstanding performance launching at 0.002$ and going all the way up to 0.70$, which is simply amazing. That is basically a 350x growth.
Today, compared to previous times, there is not only a vast array of these coins but also a wider array of some semblance of purpose.
Whether that’s a metaverse game or an NFT collection, there is some degree of functionality.
The ones that have failed to find a useful purpose, whatever it might be, will not be around anymore in a 2 years period.
This is what happens during bear cycles. People tend to invest in more stable, functional, useful coins, and the rest suffer.
So, choose wisely if you are thinking about investing in meme coins, or cryptocurrencies in general. Always do your research thoroughly, and consult your financial advisor before putting money into the market.
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