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Who would know that meme coins which seemed like a joke at the time would take the cryptocurrency world by storm, blending internet culture with digital finance? But what exactly are these quirky coins, and why are they garnering so much attention?

1.   What exactly are meme coins?

Meme coins are digital currencies inspired by internet memes and cultural phenomena. Unlike traditional cryptocurrencies, which aim to solve specific financial problems, meme coins often start as parodies or fun projects without serious intentions. They leverage humor and satire, embodying the playful side of the crypto world.

According to crypto expert Ilija Rankovic, meme coins have a special appeal to investors. If you aim to devote your time and effort towards meme coins, you should know they come with high risk but also high reward potential, more than often followed by viral trends and strong online communities. Still, selecting new meme coins to buy can be challenging, but luckily Ilija has a solution. Anything new has a special appeal, and anyone can make viral hype about something, so what sets the proper meme coins apart from potential scams? In short, what you should be looking for is community strength, branding, viral potential, and short-term price movement. Strong community engagement means lasting interest, short-term price action speaks about market momentum, and effective branding and virality are all about widespread recognition.

While some meme coins, such as Dogecoin and Shiba Inu, have managed to build a lasting community and gain serious traction, many others are simply pump-and-dump schemes that vanish into obscurity. If you want to become an investor, you should consider these differences.

2.   The power of community and social media

One of the biggest driving forces behind meme coins is their community. Unlike traditional investments that rely on fundamental analysis and company performance, meme coins thrive on hype, social media engagement, and viral marketing.

Active and engaged coin holders play a crucial role in sustaining a meme coin’s popularity. Platforms like Reddit, X, and TikTok become breeding grounds for hype, with influencers and celebrities often joining the bandwagon. This communal enthusiasm can drive prices to unexpected heights, but it’s essential to remember that such surges are typically fueled by speculation rather than intrinsic value.

For instance, Dogecoin started as a joke in 2013 but gained massive traction thanks to its passionate community and notable endorsements from figures like Elon Musk. The Tesla CEO’s tweets alone have sent Dogecoin’s price soaring multiple times, proving just how influential social media can be in the meme coin world.

3.   The volatility roller coaster

Meme coins are notorious for their extreme volatility. Unlike Bitcoin or Ethereum, which experience price fluctuations based on macroeconomic trends, meme coins are heavily influenced by internet trends and social media activity.

Their prices can skyrocket overnight, turning early investors into millionaires, only to plummet just as quickly. For instance, Dogecoin saw its market cap reach $14.42 billion, with prices fluctuating wildly based on tweets and media coverage. Some investors have made life-changing money, while others have lost their entire investment in a matter of days.

4.   The ease of creation and proliferation

One reason for the abundance of meme coins is the relative ease with which they can be created. With basic coding knowledge, almost anyone can launch a new token, leading to a proliferation of coins with varying degrees of legitimacy.

This ease of creation has led to an explosion of meme coins, many of which are short-lived and designed purely to capitalize on trends. While this democratizes access to cryptocurrency creation, it also means the market is flooded with coins that may lack long-term viability or purpose.

For example, within days of Elon Musk referring to Dogecoin as “the people’s crypto,” dozens of Doge-themed spin-offs emerged, such as Baby DogeCoin, Dogelon Mars, and Floki Inu. While some of these coins have managed to carve out a niche, many others quickly faded into irrelevance.

5.   Celebrity endorsements

Celebrity endorsements have played a significant role in the meme coin phenomenon. High-profile figures such as Elon Musk, Mark Cuban, and even Snoop Dogg have tweeted about or openly supported certain meme coins, causing massive price surges.

More recently, current President Donald Trump launched his own meme coin, “$TRUMP,” which rapidly increased in value, making billions on paper. This showcases how easily the meme coin market can be swayed by influential figures, leading to both excitement and concern. Still, if you plan to invest, you should be wary of coins that rely solely on hype rather than real-world utility or long-term growth potential.

6.   The risks of scams and “rug pulls”

One of the most notorious scams in this space is the “rug pull.” This happens when developers launch a meme coin, build hype, attract investors, and then abruptly withdraw all funds, leaving investors with worthless tokens.

Rug pulls have become increasingly common, with some high-profile examples leaving investors with millions in losses. Unlike regulated financial markets, the decentralized nature of crypto makes it difficult to recover lost funds once a scam has taken place.

What can you do to prevent such an outcome? You can do some research, like checking for transparency in the development team, reading coin’s whitepaper (if available), and analyzing its long-term vision.

7.   Lack of intrinsic value and utility

Unlike established cryptocurrencies that offer technological advancements or serve specific purposes, most meme coins lack intrinsic value or utility. They don’t have underlying projects or use cases, making their value purely speculative.

For instance, Bitcoin serves as a decentralized store of value, while Ethereum enables smart contracts and decentralized applications. In contrast, most meme coins don’t offer any technical innovation or real-world use cases beyond being an internet joke.

That said, some projects are attempting to add utility to their meme coins. For example, Shiba Inu launched ShibaSwap, a decentralized exchange, in an effort to give its token real functionality. But these efforts are still in their early stages, and it remains to be seen whether they can provide long-term value.

Tread lightly in the meme coin universe

Meme coins might have started as an internet joke, but they’re moving fast when it comes to entertainment and profit. They can still be risky investments, so make sure to take some precautionary steps. Do your research, and to be on the safe side invest only what you can afford to lose. Meme coins may be fun and exciting, but they should never replace well-researched, long-term investments in your financial strategy.