If you’ve been following crypto news lately you will likely know all about the infamous TRUMP and Hawk Tuah coins. The latest in a long line of what is known as meme coins. Both of these coins caused quite a controversy. For vastly different reasons. But one question that has left a lot of people’s lips is ‘What are meme coins?’ And it is a good question.
Nearly everyone is aware of the more popular cryptocurrencies like Bitcoin and Tether. But the vast majority of people have likely never heard of meme coins. Save for potentially Dodgecoin, which we will get into later in this article. Today we are going to be taking a deeper look at this crypto trend. Trying to break down exactly what meme coins are and what purpose they serve within the crypto space and in the wider economic world.
What Makes A Meme Coin
As the name implies a meme coin is a crypto currency that is sort of a joke in regards to its naming. Some of the most popular meme coins, like Dodgecoin, are simply based on popular internet memes. While others, like TRUMP, are designed to commentate a specific person or moment in history. Meme coins don’t have any special functionality. They usually work exactly like any other crypto currency.
Some meme coins do try to change up the traditional crypto formula. Shiba Inu coin, often called SHIB coin, is a good example of this. The coin launched with an astronomically large supply of 1 quadrillion. As you would expect this has made the relative value of a single SHIB extremely low. SHIB was designed to be a community focused crypto experiment. Seeing if, through burning large quantities of coins and using community support, could SHIB one day become valuable. This was heavily inspired by Dodgecoin which saw a meteoric rise in price after Elon Musk gave his vocal support for it. There are numerous people out there who own millions of Shib coins. And while it isn’t likely that SHIB will become valuable anytime soon, it speaks to the potential power of meme coins.
Meme coins are also usually defined by a vocal and active community, particularly on Reddit and Discord. There are thousands upon thousands of crypto reddit accounts dedicated to meme coins. And this highlights one of the great things about meme coins. By their very nature they perfectly illustrate the very idea behind crypto currencies. Crypto was made to take financial power away from governments and banks. Putting it back into the hands of the people. Meme coins, and the online communities that form around them, are proof that this ideal is working. People are willing to put in the time and effort to carve out a sense of financial freedom for themselves and others within their community.
The Dark Side Of Meme Coins
No financial institution is free from scammers. And the crypto market has garnered a lot of attention in recent years due to a large number of what is called ‘Pump-and-Dump’ schemes taking place. A pump-and-dump is when a coin’s price is artificially inflated by the creators. This is done through systematic large purchases. This then attracts new investors and people quickly start buying up the coins in hopes of making large returns. The creators then immediately sell their coins for massive profit. This, in turn, tanks the value of the coin massively.
This rug pull scheme has become increasingly common in recent years. The infamous Hawk Tuah coin was the latest, and most viral example of a pump-and-dump. More often than not we see meme coins being used as catalysts for a pump-and-dump. Primarily because they often attract novice investors. Making it far easier to swindle people out of their money.
That isn’t to say that all meme coins are illegitimate. It is just more likely for a meme coin to be unreliable. And not just because of the risk of it being a pump-and-dump. Dodgecoin’s success definitely proved that meme coins can be a lucrative investment. But data would suggest that Dodgecoin is the exception and not the rule.
Most meme coins are a fun introduction to the world of crypto. A savvy investor can definitely make some small returns from a meme coin. But you should always approach them with a cautious eye. Ensuring you have done a deep dive into the coin and its creators. And, as always, ensure you only invest what you can afford to lose.
