In recent years, meme coins such as Dogecoin, Shiba Inu, and PEPE Coin have become popular assets in the cryptocurrency market. They attract investors with the promise of quick profits, viral campaigns, and a broad community. However, behind the flashy marketing often lies a lack of real value and a solid ecosystem. In this article, we explain why meme coins without a functional backbone can be an extremely risky investment.
What are meme coins?
Meme coins are cryptocurrencies inspired by internet memes or jokes that often gain popularity through social media and hype.
Dogecoin
The first meme coin was Dogecoin, created in 2013 as a joke. It was based on a meme of a Shiba Inu dog. Dogecoin was never intended to be a serious project, but over time it has gained a huge community and support from celebrities such as Elon Musk. Despite Dogecoin running on a blockchain, its use is mostly limited to online tips and small transactions.
Shiba Inu
Shiba Inu, created in 2020, is being called the “Dogecoin killer.” Unlike its predecessor, it attempts to offer additional features, such as ShibaSwap and NFTs. However, much of its popularity is based on speculation rather than actual utility.
PEPPER Coin
PEPE Coin, launched in 2023, is a cryptocurrency inspired by the iconic Pepe the Frog meme. Its creators aimed to capitalize on the popularity of memes among younger internet users. While PEPE Coin quickly gained popularity and was listed on major exchanges like Binance, its value is purely speculative. The project offers no ecosystem, technology, or innovative features that could ensure its longevity in the market.
Problems with meme coins without an ecosystem
1. No real value
Most meme coins offer no ecosystem, product, or technology. Their value is based solely on demand generated by speculation and marketing. When the hype dies down, the price plummets, causing huge losses to investors.
2. Extreme price volatility
Meme coins like PEPE or Shiba Inu often experience rapid price increases and decreases. For example, PEPE Coin in May 2023 rose over 2,000% in a few weeks, but then lost most of its value. Such changes can be devastating for investors who buy at the top.
3. Lack of transparency and risk of fraud
Many meme coins are created by anonymous individuals or teams, which increases the risk of rug pulli (fraud where the project’s creators withdraw funds). PEPE Coin has also faced criticism for its lack of transparency regarding the distribution of tokens to creators.
4. No long-term potential
Unlike cryptocurrencies like Bitcoin or Ethereum, meme coins lack solid foundations or real-world applications, making them susceptible to oblivion once the initial buzz fades.
How to protect yourself from risk?
1. Thorough Research (DYOR)
Always check if a cryptocurrency offers more than just popularity. Does it have an ecosystem, product, or innovative technology?
2. Avoid hype-based investments
If you see a coin gaining popularity solely due to memes or media campaigns, think twice before investing in it.
3. Invest only what you can afford to lose
The volatility of meme coins makes investing in them more like gambling than a long-term financial strategy.
Summary
Meme coins like Dogecoin, Shiba Inu, and PEPE Coin may seem like attractive investments, but they often carry huge risks. The lack of a real ecosystem, extreme price volatility, and the possibility of scams are just some of the issues that can hurt investors. Before investing in any meme coin, consider whether it’s a decision based on solid fundamentals or just the hope of a quick profit.
Investing in cryptocurrencies requires caution and education, remember that not everything that is popular brings benefits.
