They almost never offer innovative technologies or new solutions in the field of blockchain, says Nikita Grishunin, founder of the CRYPTUS Educational Academy.
Among the famous meme coins of recent times, the following can be distinguished: DOGE, SHIB, PEPE, FLOKI, BONK.
The first meme token is considered to be Dogecoin, created in 2013. The coin originated from Internet pictures of a dog of the Shiba Inu breed.
The second was SHIB in 2020. Actually, he became a younger version of DOGE, having almost the same symbolism with minor visual differences. Later, similar alternatives began to appear, but they have so far attracted much less public interest.
What is the secret of the success of meme coins?
The boom of recent months has been meme token applications integrated into the Telegram messenger (Notcoin, Hamster Kombat). Users are encouraged to spend time interacting with the game, completing tasks like inviting friends, watching videos to make a profit. The applications are focused on mass adaptation of new users to the crypto market.
Thanks to viral marketing, meme coins spread like real jokes and are rapidly gaining popularity through platforms such as TikTok, Reddit, Twitter and others. Celebrities and influencers play an essential role in distribution, having a loyal audience that looks into their mouths and easily responds to calls to action. Some users tend to see insights or information hidden from the ignorant in the publications of the stars.
How meme coins attracted the attention of investors
Viral marketing companies are strategies that use large social networks (Twitter, TikTok, Reddit, and others) to promote a product or service.
Discussion and hype on social networks play a key role in the creation and dissemination of information about meme coins. Users actively share memes, news and trends, spreading noise around a particular meme token, express opinions, make guesses about the potential value of the asset, which in turn arouses interest from the outside, creates the FOMO effect (fear of lost profits).
Creating a community and a fan base - successful meme coins often generate active communities on social networks, where participants exchange information, participate in contests and discuss news. These communities are becoming powerful tools for attracting new investors.
Celebrity/influencer support — celebrities and bloggers with a large audience significantly affect the popularity of any tokens. Strong support can lead to an increase in the value of coins and interest from newcomers.
Memecoins are easily accessible to ordinary users due to their low starting cost. The most popular are traded on centralized exchanges (CEX), which also facilitates acquisition. However, it is worth understanding: these meme tokens already have a wide audience and popularity, which is why an ordinary user is more likely to not be able to receive the promised superprofit.
What are the advantages and disadvantages of meme coins?
Low cost = high volatility.
Memecoins usually have a low cost, which makes the coins available to a wide range of investors. However, not everyone is able to realize at what point fluctuations in value increase the risk of losses.
High (potential) profit = propensity to speculate and the possibility of fraud
Memecoins can bring high profits if they are lucky and grow successfully, which attracts many speculators who buy tokens solely for the purpose of resale, contributing to the creation of bubbles and a collapse in prices. Fraud and manipulation, pump-and-dump schemes are extremely common in the meme coin market, when developers deceive investors by increasing the price, and then abruptly merge coins in order to quickly make a profit.
Easy availability on centralized exchanges (CEX) = lack of necessary liquidity
The most popular meme coins are easily available for purchase and sale on many centralized cryptocurrency exchanges. However, they often have no real value or usefulness (they do not serve, for example, as a service token of some community), but are simply the object of speculation and a bit of entertainment. The vast majority of memecoins have low liquidity, which makes it difficult to buy and sell tokens without significant price losses.
No one knows the future, but it can be assumed that memecoins are able to exist on the cryptocurrency market for a short time. At the same time, it is worth noting that mass popular tokens are an excellent tool for attracting the attention of a new audience to the crypto market.