A “meme coin” is a cryptocurrency that mimics or is named after an animal, artwork, character, or any other individual entity. They are founded by traders with an appetite for fun and interaction within the coin’s community that it builds amongst buyers and investors.
The intrinsic value of the coin is rather tenuous and hugely affected by the community that follows, meaning they are prone to volatile fluctuations in value. If the popularity of the meme coin plummets, so too will its price, leaving buyers with one of the riskier investments of the digital age.
The most famous and best-known meme coin on the market is Dogecoin (DOGE), which is associated with Elon Musk, CEO of X formerly Twitter. The polarizing figure of Musk is associated with other variants such as Shiba Inu (SHIB), Wall Street Memes (WSM), and Floki Inu (FLOKI) which is inspired by Musk’s dog.
Why Should You Avoid Them?
It’s fair to say that if you’re a serious investor of your hard-earned money in cryptocurrency, then meme coins will not be for you. Here’s why:
Enormous Supply and Availability Mean High Volatility
The value of a meme coin is linked to its popularity at the time and exploitable for those with social media influence. This creates a scenario where individuals or organizations have too much influence over the fluctuations, which the owners do not have.
Attractive to Scammers
Cryptocurrency has always been appealing to scammers, so inevitably, when a meme coin creates traction in the industry, suspicious individuals will turn their eyes to it. Scammers use them for notorious “Pump and Dump” schemes, buying up huge amounts in the early days, giving others the appearance of popularity and huge growth, only for them to sell all of theirs in one go and drive the market value down for the rest.
If you’re a serious crypto investor, we suggest you avoid meme coins. The only time to consider buying a meme coin is when you are new to cryptocurrency and with money you can afford to lose. This way, you get an education and introduction to the digital world for a small investment.
What Is the Difference Between a Meme Coin and An Altcoin?
The term “altcoin” essentially covers any cryptocurrencies that are not Bitcoin.
It is important to understand that all “meme coins” are altcoins, but not all “altcoins” are meme coins.
How does this work?
Altcoins are made up of many different categories of cryptocurrency:
- Governance Coins
- Payment Coins
- Security Tokens
- Stable Coins
- Utility Tokens
- Meme Coins
To explain the difference, let’s look at a couple of proper altcoins and their intrinsic value.
Ripple (XRP)
Unlike meme coins, Ripple (XRP) has a truer value tied to its importance in the world of cryptocurrency. Ripple (XRP) is a ground-breaking stand-alone platform, different to the traditional crypto platforms.
Ripple acts as a bridge between traditional finance and the decentralized digital age. It is is a blockchain-based digital payment framework that has become fundamental to the industry. It acts in a way like the SWIFT traditional banking system, allowing users efficient, secure, and timely settlements of those cross-border transactions.
Litecoin (LTC)
Like Ripple, Litecoin (LTC) has become fundamental to the cryptocurrency world because of the groundbreaking premise behind its development.
Litecoin (LTC) was a development to counteract Bitcoin becoming too centrally controlled by the bigger mining firms that would give them too much of an upper hand within the industry. To do so, it was created from a fork of Bitcoin in 2011, and although it delayed the largescale firms it didn’t halt them completely and has now become a peer-to-peer payment system and a minable coin.
The developer Charlie Lee refers to LTC as “the silver to Bitcoins gold” with its open-source global payment network that stands alone.
Conclusion
In essence, while meme coins may offer a momentary thrill and a sense of community, serious investors should exercise caution and steer clear of these volatile assets. The high supply and availability, coupled with susceptibility to social media trends and the potential for scams, make meme coins a risky endeavor for those seeking stable and reliable investments in the cryptocurrency market. Instead, you may want to look into more stable currencies, like Litecoin and Ripple.
