Cryptocurrencies as an alternative medium of payments without the interference of governments or financial intermediaries cannot be ignored. Adopted by several countries and Fortune 500 companies around the world, they are increasingly being used to facilitate cross-border payments, purchase of digital assets, and even for transferring funds to friends and family abroad.
The abundance, popularity, and adoption of cryptocurrencies led to an entirely new category of crypto being spawned- the meme coins. Today almost 250 meme coins exist. They especially became popular since Elon Musk started tweeting about them.
So, if you want to get more familiarised with this exciting new category of coins, all you need to do is to read this guide.
What are meme coins?
These are cryptocurrencies that are built around fun- Internet memes, trends, jokes, or even a viral image. Dogecoin was the first meme coin to be created in 2013. It is a coin known for having a Shiba Inu as its mascot.
How do they differ from cryptocurrencies
While meme coins originate as a joke, they function similarly to other cryptocurrencies. They are also created through a process known as mining and operate on blockchain technology.
The major difference between meme coins and cryptocurrencies is their utility. For instance, the reason cryptocurrencies such as Bitcoin and Ethereum were launched was to provide an alternative system of payment for users free of interference from third parties and governments. Get to know Ethereum to INR conversion rates and prices if you want to add them to your portfolio
On the other hand, meme coins are created with no specific objective or value. They are mainly created to gain quick profits within a short time. They usually gain attention and success because celebrities and communities promote them. Often they are backed by retail investors who advertise about them online. This is the main reason why they gain such incredible growth spurts despite not solving any real-world problems.
Meme coins have an unlimited or very high supply of coins. For instance, while Bitcoin is capped at 21 million coins, meme coins often run in billions. This is because their blockchain doesn’t have a system to burn these coins. Since their supply never gets diminished, their numbers keep rising always. This is why the valuation of individual meme coin units is very low.
How can you get meme coins?
Like any other cryptocurrency, meme coins can be obtained through a crypto exchange. You just need to set up an account on an exchange that carries the meme coin of your choice. For instance, Dogecoin is widely available on a large number of crypto exchanges including Coinswitch, Binance, and Kraken. If you wish to buy Dogecoin in India, know its prices and conversion rates.
After signing up on that exchange, fund your account and purchase the coin.
What are some risks of investing in meme coins?
Like all cryptocurrencies, investing and trading in meme coins comes with some inherent risks.
Apart from price volatility and price sensitivity, the tokenomics of meme coins can often be an area of concern. For example, all the established digital currencies have well-written and exhaustive white papers and an established system. Meme coins on the other hand have no set use cases and are defined by jokes and memes.
Another thing that makes trading in meme coins more difficult is that they are more speculative and driven by community sentiments. This often leads to ‘pump and dump’, which means unexpected rises and crashes in prices.
Meme coins are often subject to ‘rug pulls’. This means that when the developer of a particular meme coin receives all its funds, they simply abandon the project.
While they are a risky proposition, planning and diversifying your investment strategies and doing proper research can help you minimise your losses. You can keep abreast with the latest happenings in the meme coin markets through platforms like Coinswitch.
Passionate Writer, Blogger and Amazon Affiliate Expert since 2014.