Memes have been an integral part of the internet since its inception, existing as a reflection of our time and culture. It’s not surprising that memes have also collided with cryptocurrency to form what is known as meme coins. Unlike other cryptos which focus on utility and decentralizing finance, meme coins prioritize fostering community spirit while still having some fun along the way. So just what is a meme coin exactly? In this article, we will explore all things related to these tokens so you can get an understanding of how they work. Further, you can visit the official website of bitcoin circuit.
What is a Meme Coin?
Meme coins are cryptocurrencies built as jokes or parodies of popular memes. The most well-known example is Dogecoin (DOGE), which was created in 2013 based on the famous Shiba Inu meme from Japan. These types of cryptos tend to be highly volatile and usually have a large or unlimited supply, relying mainly on online community support for their prices. Their popularity can surge quickly due to FOMO, but similarly, traders may also turn away suddenly when hype fades away leaving the price deflated.
During the COVID-19 pandemic, many retail investors sought to diversify their investments to protect themselves from potential inflationary rates. This surge of crypto adoption helped fuel an expansion of different meme coins and drove up their combined market capitalization. Though it is challenging to pinpoint the precise reasons behind this growth in memes’ coin popularity, a combination of factors likely contributed to its success.
What are the risks of investing in Meme Coins?
The demand for meme coins would have experienced remarkable growth in 2021, however trading and also buying meme coins has great risk, like most cryptocurrencies. First of all, the tokenomics of meme coins is unsettling. Bitcoin is but one example of that. It has its very own blockchain, an established ecosystem, a well-written whitepaper, and a deflationary history. Bitcoin also has seen improved institutional acceptance recently.
Nearly all meme coins when compared with BTC, tend to be inflationary without maximum supply. Their environment, applications as well as basics are usually determined by the collective thinking of the society. Just a couple of meme coins have been developed along with the technology of the technological capabilities of the big crypto markets. DOGE’s technology, as an example, originated from Litecoin (LTC) was created on the Ethereum blockchain.
Yet another possible threat is the fact that meme coins are extremely community driven and are much more speculated compared to bigger market capitalization cryptocurrencies. This volatility triggers unanticipated pump and dump. Meme coins enjoy a brief lifetime. Rates may rise many times from celeb shilling or maybe FOMO, or maybe break suddenly once the market chooses to move on to the subsequent meme coin.
You need to be mindful that because the meme coin market keeps growing, there may be potential for fraudsters to make the most of the hype. As an example, Squid Game (SQUID), a meme coin based on the acclaimed Netflix movie of the same name, soared more than 86,000% within just 7 days. The development company abruptly rug-pulled, though, and triggered the price to drop by 99%. Those who own SQUID weren’t permitted to trade their tokens, which makes the situation much worse. Thus, you have to be extremely cautious and DYOR.
Final Words
DYOR (do your research) before investing in meme coins is essential. Given their high volatility and the potential for sudden crashes, one should never invest more than they are comfortable losing when dealing with these types of coins. Meme coins often rely heavily on community involvement, making them unpredictable; therefore it is important to ensure you have some knowledge of the market beforehand.
