The meme coin market has grown significantly in the past years, with each token expanding its use case approach and purpose to appeal to the community. Although some consider them to be impractical, these meme-based cryptocurrencies have become lucrative trading tools, mainly when social media figures boost them.
Software engineers Billy Markus and Jackson Palmer deployed the first meme coin on the market in 2013. Inspired by the Kabosu dog, who became a star loved by the entire world, Dogecoin reached its peak in 2021 in terms of market capitalization and is now leading the meme coin market.
Many other funny and interesting tokens followed Dogecoin’s path, from Shiba Inu to Pepe coin, and they all got popular due to the power of their communities. Still, people argue over their actual value, so what are the reasons for their continuous fame?
Meme coins are part of pop culture
Pop culture is one of the strongest movements of the modern age, where entertainment in all its forms (movies, music, video games) is an integral part of the community’s lives. Meme coins are one of the most prominent features of pop culture, influencing a sense of belonging within groups through shared experiences.
So, it’s no wonder meme coins got so popular, as they represented memes like Doge, Pepe the Frog, or Bonk, which have circulated the internet and are still highly used, even if they’re not trendy at the moment.
People use memes in various circumstances, from commenting online or chatting with friends, so owning a coin based on one’s favorite meme is a peak pop culture moment.
Meme coins offer the potential for significant gains
Although meme coins are as established and safe as assets like Bitcoin or Ethereum, they’re still helpful for traders and investors looking for short-term gains. Meme coins can have dramatic price fluctuations that people can take advantage of, especially when they’re trending on social media.
One of the moments when Dogecoin became highly known was when Elon Musk tweeted about it, leading to a massive price spike in a few hours.
A similar post happened towards Shiba Inu, which contributed to more interest from investors in a short time. Other interesting meme tokens, like Fartcoin, benefited from media attention and achieved significant value in a short time, so this is the power of the meme community.
Meme coins enhance infrastructure technologies
A revolutionary blockchain backs every meme coin. Shiba Inu lives on the Ethereum ledger, Bonk is part of the Solana ecosystem, and Floki belongs to BCS (BNB Smart Chain).
The meme token borrows the blockchain’s features, whether it’s speed, low-cost transactions, or innovative technology. Shiba Inu, for example, has numerous use cases and a vast ecosystem due to the tools used for Ethereum.
Meme coins allow decentralized infrastructure to evolve and flourish, as developers with bright ideas can capitalize on smart contracts, decentralized applications (dApps), or decentralized autonomous organizations (DAOs) and contribute to the industry’s evolution.
Are meme coins risky?
Despite their approach to technological advancements, investing and trading in meme coins can expose users to certain risks. That’s why beginners must be careful when allocating their finances to meme coins, which are naturally volatile.
Many consider them speculative, especially since prominent figures in online media can influence their prices with a simple post.
Even professional investors should manage them with caution and diversify their portfolios to prevent the possibility of losing money.
Ideally, spreading investments across cryptocurrency should assign a significant portion to established coins like Bitcoin or Ethereum, followed by mid-cap coins, and ending up with small-cap assets like meme coins.
How to build a well-balanced portfolio with meme coins?
Even if they are prone to risks, investors can construct their portfolios efficiently to manage them. The first step is to understand one’s risk tolerance by assessing one’s financial situation, investment horizon, and emotional comfort with market volatility.
The actual portfolio-building strategy includes:
- Investing in emerging projects;
- Allocating a portion to stablecoins for liquidity.
- Rebalancing the portfolio in accordance with market conditions;
Investing in emerging projects can be challenging if you’re not wary of the vastness of the decentralized ecosystem. Sectors like DeFi (decentralized finance), NFTs (non-fungible tokens), and layer two blockchains can be successful if innovation drives them.
Therefore, researching various projects within sectors and analyzing their performance is essential to identify safe opportunities for your portfolio.
What is the future of meme coins within the crypto environment?
Meme coins are here to stay because they can provide value to investors. For example, Dogecoin started as a joke, but it soon became a common payment method that more companies accepted (Tesla, AirBaltic, NewEgg).
In addition, many charities, including The Water Project and The American Cancer Society, accept DOGE and encourage people to donate through the currency.
Another example of a meme coin that evolved to be useful in the real world is Shiba Inu, whose vast ecosystem is fit for governments, businesses, and individuals. In addition, Shiba Inu is continuously evolving in terms of decentralization, layer-2 technology, and cross-chain ecosystem.
Therefore, meme coins might start as projects with no utility, but they update and develop to become useful for the market and its users. So, we expect future meme coins to evolve and become more popular due to their features and use cases.
This might happen as cryptocurrency pushes for global adoption and regulation provides a legal framework within which brands can leverage digital assets. Paying with crypto and meme coins will become the norm, and their underlying technologies will help build the Web3 world.
What do you think about meme coins?
Many consider meme coins controversial due to their lack of diversity in utility compared to assets like Bitcoin. However, their popularity surged due to the power of pop culture, their opportunities for rewards, and their contributions to the tech evolution.
Besides the risks of volatility and speculation, meme coins can be introduced in portfolios for users to capitalize on these investments and ride the wave of decentralized entertainment.
