It seems like every time I take a look into what's new in the crypto space, there are a thousand and one new projects coming to fruition, and more often than not a significant portion of the new options available are what has been now labeled as meme coins. The most common in the vast ocean that is the meme coin market are dogecoin variants, using different variations of the Doge and Shiba and floki coin names. Some are gaining mainstream popularity, many are fizzing out quicker than they come to existence but overall, there is no denying that meme coins are taking the crypto world by storm. Will any of these projects live past the current market cycle? Will the meme coin fad die off anytime soon? What exactly is a meme coin? These are the questions we will try to answer today as we take a deep dive into the current meme coin market.
The meme coin market has exploded in popularity over the last 12 months and it seems like every other project launching on the blockchain is categorized as such. The first meme coin to be created was none other than the world-famous Dogecoin, back in 2013. Doge itself was a famous meme at the time, consisting of a picture of a Shiba Inu dog accompanied by multicolored Comic Sans font in the foreground. The Dogecoin founders wanted to create a joke currency that shone a light on the wild speculation in crypto at the time, but the token has since created a life of its own and reached unprecedented heights in market share, popularity and created a new category of token - the meme coin.
So, what is a meme coin, and why do they appear to be such a good investment option for so many? Memecoins as the name suggests, are merely coins created to be either explicitly jokes, or tributes to a popular internet meme at the time. This was the case for Dogecoin, which we previously mentioned was depicted by the popular doge meme. Additionally, Shiba Inu, a token that has surpassed Dogecoin in price has made headlines and garnered attention from investors the world over, was created purely to be a Doge Killer and uses the same Shiba dog as its mascot.
Characteristically, meme crypto coins tend to have incredibly high total supplies, often in the trillions, and extremely low unit prices. This tokenomics model is created to give the perception that they are cheap and have significant growth potential. More often than not, a meme coin has little to no utility services and use case outside of the potential of increased price and popularity. Typically, meme coins gain value primarily based on speculation and hype, coming to life in order to ride the wave of attention given to the momentary meme of the minute. This works out well for early investors but, as with anything in this day and age, fads and memes tend to die out as quickly as they are born. There is generally going to be many stuck holding the bag if the token doesnt provide utility or offer anything substantial.
But to make things clear, this isnt a rule and there are many projects that start out as memes only to grow, adapt, develop and create use cases for themselves. Some develop services like a digital crypto dashboard, staking applications, gaming adoption, metaverses and have gathered such large followings and communities that they are now mainstay projects.
It appears that the popularity of the original Dogecoin is the spark that set of the current explosion seen in the last 12 months, but it isn't the only factor. Meme stocks have also taken a front seat in the traditional investment world with the infamous GameStop short squeeze that occurred earlier in 2021. The price for GameStop stock was near its all-time low and Hedge funds appeared to have massively underestimated the power of the online communities that supported the GameStop company. It was noted that there was a drastic undervaluation at the current stock price and hedge funds like Melvin Capital had short interest at over 100% of the outstanding shares.
It was not long before an army of Degen investors that frequented an online Reddit community called Wall Street Bets used this information to rally behind GameStop, invest everything they had into the company, and create what is now famously known as the GameStop Short Squeeze. The price for Gamestop stock increased over 60 fold and created headlines internationally. The price also made some very rich Degen investors, and drained the portfolios of some of the world's biggest hedge funds.
Meme stocks had now become all the rage and would-be investors were left seeking the next version of GameStop, with companies like AMC experiencing similar rallies and sharp increases. The stock market had become a completely different playing field for many, including the hedge funds and the individual investor.
Like anything in the investment world, it pays to only invest what you can afford to lose and this advice is paramount when choosing to invest in meme coins. Unlike the stock market, where one is investing in a range of business or corporate entities surrounded by regulations and rules, the crypto market is vastly different. Anyone can create tokens, meme coins other cryptocurrencies and with the variations of software or services available, a new token can be created in mere minutes. This also means that any project that is created, could very well be created by someone with nothing but ill intentions.
The thing about meme coins is that everyone seems to know that many are almost entirely nonsensical and ultimately worthless, yet they are all still getting on board for the ride. The risk of losing one's investment is no secret and is becoming more commonplace as the process to create crypto coins, meme coins and tokens becomes easier.
Scams and rug-pulls are frequent and the unregulated and anonymous nature of the entire industry means most of the time, there is little that can be done to successfully get a lost or stolen investment back. A famous example that recently made headlines was the Squid Game token, a project born to ride the success of the famous Netflix series that quickly turned into disaster for thousands of investors.
But it is not all doom and gloom in the meme coin business, there is a silver lining and there are some steps that can be taken to ensure this risk is minimized and the investments you make are safe. Research is key, and although some projects might be classed as meme coins, there are plenty out there that do have genuine use cases. The trick is filtering out the quality projects from within the vast ocean of fly-by-nighters. Projects that offer some kind of utility, have open and communicative development teams, solid roadmaps that are being implemented, and most importantly, have been thoroughly verified are the safest options.
Not all meme coins are created equal and not all meme coins are safe investments, but some are certainly worth taking a look into.
The XRP Ledger for example is offering a reduced rate of scam projects compared to chains like the Binance Smart Chain due to the inclusion of verification services and KYC with XUMM. Project developers and founders can still remain anonymous amongst the community but verify themselves within the XRPL network. This is in no way foolproof but does offer an additional layer of protection.
XFLOKIVERSE is ultimately derived from meme coins, with the substantial added extra of utility within the game environment. Utility should be a precursor to a crypto project, with the best community-based advantages of meme coins used for branding and reach purposes.