The safety of meme coins is a significant concern for many traders, given the high-risk nature of these digital assets. Unlike established cryptocurrencies like Bitcoin or Ethereum, meme coins often lack a solid foundation in technology or utility, making them highly speculative assets. Although initially considered to be of little intrinsic value, meme coins have, at times, seen extraordinary price increases, attracting speculative traders looking for short-term profits. Unlike traditional investments, meme coins are typically not backed by tangible assets or extensive development teams. Bankrate.com is an independent, advertising-supported publisher and comparison service.
Pump and Dump Schemes
Some meme coins offer utility or are now part of wider decentralised finance (DeFi) ecosystems. For example, Bone ShibaSwap (BONE) is the governance token of ShibaSwap, a decentralised exchange (DEX). Meme coins are cryptocurrencies, like Bitcoin or Ethereum, that pay homage to a meme, which is an interesting or funny idea captured in an image, video, or another form of media.
- She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest.
- In 2014, the online community raised $25,000 to send the Jamaican bobsled team to the Olympics.
- And there is a risk of scams and frauds such as rug pulls, where creators withdraw liquidity from the market, leaving investors with worthless tokens.
- You may obtain access to such products and services on the Crypto.com App.
- Unlike many meme coins, Shiba Inu does place a limit on how many cryptocurrency tokens can be minted — but that limit is high.
- While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service.
What are the dangers of meme tokens?
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice. Lastly, viral marketing and the influence of social networks play a significant role in each coin’s value. Celebrities and influencers often endorse these coins, driving their popularity and price. Even Dogecoin has fallen 91% from its all-time high, while Shiba Inu is off 84%. Both still carry market caps of $8.7 billion and $6.5 billion, respectively. At its peak, Musk’s endorsement propelled Dogecoin to a market cap of $88 billion in May 2021 and became a pop culture phenomenon.
Are Meme Coins Safe?
These communities drive the popularity of the coin through social media buzz, memes, and viral marketing, which can create a sense of belonging and shared identity amongst holders. The fun and lighthearted nature of meme coins appeals to those looking for a break from the seriousness of traditional finance, turning trading into a more entertaining experience. Dogecoin (DOGE), the original meme coin and category leader by market capitalisation, was created in 2013 as a joke to satirise the hype around Bitcoin and other mainstream cryptocurrencies. Its developers, software engineers Billy Markus and Jackson Palmer, intended share the love sign for Dogecoin to be a fun and accessible altcoin, which is why it doesn’t have a capped supply. This makes memecoins a risky proposition for investors, though they have gained considerable popularity, thanks to endorsements from high-profile individuals and their cultural significance in the digital world.
Please note that the availability of the products and services on the Crypto.com App is subject to jurisdictional limitations. Crypto.com may not offer certain products, features and/or services on the Crypto.com App in certain jurisdictions due to foundation javascript potential or actual regulatory restrictions. AMC, ExpressVPN, Tesla, and Twitch accept meme coins like Dogecoin and Shiba Inu.
Whatever one might think of the method, there is an entrepreneurial quality to the way token creators cultivate myth and brand. In the case of both CumRocket and Floki Inu, the creators have tried to use their early success as a foundation on which to build non-frivolous use cases for their tokens. Below is a list of the seven largest meme coins listed on CoinGecko.com, ranked by market capitalization. We believe everyone should be able to make financial decisions with confidence. Meme coins work like any other cryptocurrency, taking full advantage of the blockchain and related technology.
Meme coins at a glance
In fact, the market capitalisation of the top two meme coins, Dogecoin and Shiba Inu, is in the billions. Keeping on top of cryptocurrency trends requires an understanding of how meme coins work and how they’re changing. The propensity for meme coins to increase rapidly in value also creates fertile ground for scam tokens that prey on FOMO. All cryptocurrencies are still considered to be alternative investments due to their newness and volatility. And of all the cryptocurrencies available, meme coins are typically the most volatile due to their supply and trading volume. Traditional financial wisdom would argue that alternative investments should account for the smallest percentage of your portfolio.
When trading meme coins, it’s crucial to be aware of common scams that can lead to significant financial losses. Meme coins, due to their often unregulated nature and the hype-driven environment surrounding them, are particularly susceptible to various fraudulent schemes. Understanding these scams can help users navigate the risks and avoid falling victim to them. Meme coins often gain traction due to their strong and often enthusiastic online communities.
Dogecoin is among the top 10 largest cryptocurrencies available today with a market cap of slightly over $8 billion. While meme coins originated as lighthearted, humorous ventures within the cryptocurrency space, their role and significance have evolved. This lack of intrinsic value can contribute to extreme volatility, where prices can surge rapidly but also plummet just as quickly, leaving traders exposed to potential significant losses. As such, they share many traits with information architecture for web design them, including the potential for going viral and becoming quickly outdated. So while Elon Musk (or some other celebrity) may tweet about Dogecoin and send its value soaring tomorrow, it could just as easily fade away into obscurity. While the financial risk of investing in meme coins is high, they’re still an important part of the cryptocurrency market.