The world of cryptocurrency is driven by many variables and known factors. Among them, the concept of “meme coin” has recently caught the interest of many investors, sparking the simple question, “Is investing in it a legit investment strategy?”
As the name suggests, meme coins are “digital currencies” born from trending internet jokes and ongoing social media trends. The concepts of the Doge coin and Shiba Inu coin are such examples.
If you are intrigued by the world of meme coins, how to use leading meme tokens and how to make the most out of your interest, this detailed guide will explore it all.
Table of Contents
What are Meme Coins?
Before we explore the depths of a meme coin and how it will shape the future of cryptocurrency, let’s first understand what a meme coin is.
As previously mentioned, meme coins are digital assets born from internet jokes, social media trends, and viral phenomena. Some popular examples of meme coins include Dogecoin (DOGE) and Shiba Inu (SHIB).
More recently, tokens like Pepe (PEPE), Bonk (BONK), and countless others have exploded onto the scene, often experiencing parabolic rises followed by equally dramatic crashes. This has raised the lingering question in the minds of investors: “Is it a legal investment strategy, and should you consider it?”
What are the Key Features of Meme Coins?
Knowing the key features is crucial if you want to start your investment journey with meme coins.
Here are a few that you need to be aware of:
Importance of Humor and Satire
The inception of meme coins came from trending and humorous memes on the internet. So, this particular aspect regarding the origin of the meme coin is undoubtedly one of the most essential aspects you must be aware of. In most cases, these meme coins are created as a joke.
Reliance on Online Communities
Since meme coins are a direct representation of trending internet memes, their popularity is heavily influenced by online communities. In fact, the engagement of the coin holders often plays a role in sustaining the popularity of the meme coin.
Popularity on Social Media
The birth of meme coins is on social media, meaning that the specific meme coins that manage to attract the attention of users tend to thrive on social media more, further propelling their popularity and value.
Highly Volatile
It goes without saying that meme coins are not stable. This includes their price, volume, market liquidity, etc. Every aspect of this digital asset is volatile and often depends on its popularity on social media platforms.
Low Transaction Fees
Another inviting aspect of meme coins that makes them so popular is their low transaction fees. Since they don’t command a high market value, the transaction processing fees involved in investing in them are quite low, explaining why they have gained so much traction in recent times.
Is There Any Real Utility to Investing in Meme Coins?
Given the volatility and short life span of meme coins, using them as an “investment choice” raises many questions. Another question that lingers is whether or not the investment process is legit.
One criticism of meme coins has been their lack of utility. However, some developers are now attempting to add real-world use cases.
Some of these instances are:
- Shiba Inu introduced ShibaSwap (a decentralized exchange) and announced plans for a Layer 2 blockchain called Shibarium.
- Floki Inu launched initiatives in decentralized finance (DeFi), non-fungible tokens (NFTs), and education via the “Floki University.”
- Dogecoin is increasingly accepted by merchants for payments and has integrated with platforms like Tesla and the Dallas Mavericks.
So, the idea that meme coins have no practical or real-world implementation is not true in the current world.
What are the Benefits of Meme Coin Investments?
Although there seem to be a lot of questions regarding meme trading, not every aspect of this trading experience is negative or comes with risks. There are a lot of benefits that you should be aware of as an investor.
- Firstly, although meme coins are pretty volatile, they come with a high ROI potential, some of which have even delivered 100x or 1000x returns for early investors.
- Investments in meme coins are often quite appealing to novice investors, primarily because they are priced in fractions of a cent.
- The meme ecosystem creates a sense of belonging and participation, making the investment journey fun and engaging.
- Some popular meme coins are listed on major exchanges, providing ample liquidity for traders.
How to Stay Safe When Trading Meme Coins?
Now that you clearly understand that meme coin trading is a “safe” and “legal” avenue, what strategies can you implement to ensure maximum ROI and favorable investment outcomes?
Following are a few tips you have to keep in mind:
- If you are starting your meme coin trading journey, start it for fun and not for fortune since meme coins are volatile and high risk.
- The most important step when trading meme coins is to leverage reliable platforms like BYDFi, where you know your investment won’t go to waste.
- One common mistake in meme coin trading is making emotional decisions. The idea of “FOMO” often drives trading decisions in such instances—avoid that.
- Since meme coins are digital assets, you’d have to conduct trading via wallets, so ensure that you use strong passwords to protect them.
Are There Any Risks Associated with Meme Coins Trading?
Every branch of cryptocurrency trading comes with certain risks and warnings that every trader should know.
Some of the risks that you should be aware of when it comes to memecoins are:
- Extreme volatility
- Lack of fundamentals
- Pump and dump schemes
- Regulatory crackdowns
- Scams and fake projects
Knowing these risks and making the right trading decisions should be enough to fetch you good returns.
Final Words
So, is memecoin trading becoming a legitimate investment strategy? The answer is yes, but there are certain caveats. It remains a high-risk, high-reward arena filled with speculation, volatility, and uncertainty. So you can’t dump and trade with all your money in meme coins since the returns aren’t always guaranteed. The key is to tread cautiously and be smart with your trading decisions.
