A meme coin is a cryptocurrency created as a joke in much the same way as a meme. The term meme coin can also refer to a unit of such a cryptocurrency. Meme coins include Dogecoin, Floki, Shiba Inu (Perhaps the most prominent meme coin), Binance coin, Solana and Polkadot. Created in August 2020 by a founder called Ryoshi, Shiba Inu takes its name from the cuddly dog of the same name, don’t get it confused with the similarly dog-themed Dogecoin which is another popular meme coin, with features of the same breed as its mascot. Instead, Shiba Inu calls itself a “Dogecoin killer.” Shiba Inu operates on a decentralized computer network running a database called Blockchain. This blockchain database tracks and manages the crypto coin, verifying transactions and recording every transaction that occurs with it. So, the database ends up being a long-running record of the movement of the cryptocurrency. Specifically, Shiba Inu runs on the Ethereum Blockchain offering the safety and functionality of that platform. Shiba Inu is one of the newest waves of cryptocurrencies, riding a surge of interest in digital assets. If you’re looking to trade cryptocurrency or any digital currency you must understand what you’re investing in and what the potential risks are. Crypto is volatile and it’s not typically backed by any assets, so avoid wagering money that you can’t afford to lose.
Why are new crypto investors rushing into meme coins?
There are quite a few reasons why meme coins like Shiba Inu are in high demand:
Strong brands reduce information costs. Cryptocurrencies, blockchain, NFTs and smart contracts, etc. are complex topics that take a lot of time to learn. Strong brands are a shortcut. You automatically recognise Coca-Cola, Apple, and Toyota the moment you see their logos. Meme tokens convey similar attributes and familiarity so investors can feel comfortable about their decision without the necessary due diligence. Thus, creating a much higher risk, and allowing people to buy up, without carrying out much research about it.
The Doge and Shiba communities are some of the most loyal and active within the entire crypto ecosystem. While newbies can find comfort in that support initially, such communities can instantly morph into echo chambers of flawed thoughts, bad ideas, and flat-out falsehoods. Still, there is comfort and safety in numbers, which helps validate investment decisions, whether or not those decisions are sound ones. As in Shiba Inu, the cryptocurrency continues the riff on its canine-themed coin across its ecosystem, including the crypto’s white paper, which founders call a “WoofPaper.” Meanwhile, it refers to those who own and support the coin as its “Shib Army.” The official Shiba Inu Twitter handle has over 2 million Twitter followers, as against the 1.9 million followers of the Dogecoin account.
Meme coins are extremely cheap, Doge is less than $0.21 per unit and the Shiba Inu is $0.000042 per token. But ultra-low prices trick many new investors into thinking they can get rich if they have a couple hundred thousand tokens. Unfortunately, the price is not the same as the value in crypto. In addition to price, value factors the entire history of the asset’s tokenomics. Unfortunately, many new crypto coiners skip right over that. Despite the low price, the value of all Shiba Inu coins was more than $26 billion, due to the approximately 549 trillion in circulating supply, according to coinmarketcap. It has nearly 1 quadrillion authorized coins. However, about 40% of those coins were irrevocably “burned” by Ethereum co-founder Vitalik Buterin, meaning that they’ve effectively been destroyed and cannot be used again.
Mainstream cryptocurrencies such as Ethereum have been created with specific technology to boost trading and transaction. Meme coins do not have inherent value or specific use, devoid of fundamentals. It is a community-driven token which rises and falls based on speculations. The recent boom and bust of Squid Game are testimony of this fact (the movie has nothing to do with the coin). Meme coins are highly community-driven. Their performance and fame come primarily from the social media support and hype created by influencers like billionaire Elon Musk, CEO of Tesla and SpaceX on Twitter. His tweets about different tokens, especially the meme coins seem to have an impact on their prices. Dogecoin mania is driven entirely by Musk’s fancies and whims. Shiba Inu is touted as the “Dogecoin killer” by the Shiba army. The price duel between these two dogs-themed coins is nothing more than a fun spectacle for retail investors who are in it just for the fun of it or to make a quick profit.
Shiba Inu spiked in price during September 2021, when it was added to the Coinbase platform. This boost encouraged a lot of new buyers into the space, creating an interesting phenomenon in the global audience invoking the laws of demand in its favour.
While meme coins have made millionaires overnight, that is not always the case…
The release of the hit Korean series Squid Game, in September, was the beginning of another massive Internet trend. The series became Netflix’s biggest hit show, with over 130 million watches globally in October. The record-breaking series made headlines, inspiring a lot of viral content in the process, one of which includes the Squid Token. The timing was perfect, and the coin took off because Squid Game was perhaps the most popular thing on the Internet at the time, according to the coin’s whitepaper, it was built just like the series. It contained several games to be played by coin hodlers; however, instead of playing for their lives, hodlers played to earn coins. The rise of the SQUID token was meteoric; it got a lot of attention and made headlines, increasing its popularity and the rally behind it. On October 28, 2021, CNBC headline read, There’s a ‘Squid Game’ cryptocurrency – and it’s up nearly 2,400% in the last 24 hours. It was a juicy coin and everyone wanted to get into the show until the creators switched from green lights to red and decided it was time to cash out. According to Wired.co.uk, the media failed to point out that there were no ties between the Squid Game Netflix series and the coin. The coin went from less than a dollar to $600 per coin, and many hodlers saw themselves as theoretical millionaires. The reality, however, was that they just partook in a huge two-week-long scam. The hodlers of the coin couldn’t sell it, which meant they had no way to liquidate their earnings if the price of the token fell. Although the red flags were all too evident, it was already too late to do anything. The creators dumped their hodlings, bringing the token, which reached a value of about $2,860 per token in less than two weeks, to almost zero. Perpetrators of the ‘rug pull’ scam were estimated to have made away with at least $3.4 million, according to The-Sun US. Although scams like this paint meme coins in a bad light, the continued existence of Dogecoin and SHIBA INU signals that they might not all be out to get you broke, but – how can you tell?