Memecoins refer to cryptocurrencies that are primarily created and used as a form of satire or parody, often based on internet memes or popular culture references. These digital currencies have gained popularity alongside the rise of cryptocurrency and blockchain technology.
Unlike mainstream cryptocurrencies such as Bitcoin or Ethereum, memecoins generally lack substantial utility or underlying technology. They often serve as vehicles for humor, social commentary, or speculative investments rather than fulfilling a specific practical purpose. Memecoins are typically created by individuals or communities and are often associated with online communities or social media platforms.
One of the most well-known examples of a memecoin is Dogecoin, which was originally created in 2013 as a joke but gained a significant following and market value. Dogecoin features the Shiba Inu dog from the "Doge" meme as its mascot. It became popular for its friendly and lighthearted nature, which appealed to a broad audience
Trading Memecoins Can Be Very Profitable
Source: Watcher.Guru
Memecoins attract more investors because of unfamiliar way some lucky traders have became millionaires overnight. Honestly, stories like this can make anyone daydream about making big profits by also rolling the dice.
If you are a twitter user and follow crypto topics, chances are you probably seen at some point several posts of users flaunting their fortune made trading memecoins.
In reality, more than 95% of memecoin traders lose money.
There is no denial that some lucky investors really make lot of money by trading memecoins, but no one seem to disclose what they also lost. It's a game where everyone seems to be on the winning side. In reality, more than 95% of memecoin traders lose money. Yeah, lot of money. Of course, you won't see as many headlines of people losing money because they generate less clicks for news outlets, less likes & engagements for Twitter.
The reality is that there are more losers than winners, but the media and social media buzz make it feel like otherwise.
I, myself leaned it the hard way by losing more than $5, 000 in just a month by investing in a memecoin. $5,000 maybe little compared to what other people have lost, but it put me in debt and messed up my financial health for a time. The crazy part is that I borrowed that money thinking I was going to it to million dollars investment.
Trading Memecoins May Not Teach You Any Investment Skills
Investing refers to the act of allocating money, resources, or capital into an asset, venture, or financial instrument with the expectation of generating a profit or achieving a long-term financial goal.
Long-term goal usually do not work with memecoins. They all go down in value in the long run. Below is the performance of Bitcoin compared to Dogecoin. Notice that Bitcoin has been increasing and continue to increase in value overtime, while Dogecoin had a major spike and crashed down but struggling to reach that all time high. Bitcoin broke its all time high multiple time in its history.
Investors who invested in Bitcoin since 2017 are still making profits. Those who invested in Dogecoin before the spike are the lucky few winners.
Investing should be boring with a long term goal. In the contrary, investing in memecoins is always exciting and usually with a short term goal. That really sound likes gambling. isn't it?
Investing in an asset is believing it will become more valuable sometime in the future. It teaches you to read more about that asset and keep up any updates. This encourage you to even buy more when the price goes down, maximizing your profits overtime.
Memecoins trading won't teach you these skills. Instead, you will be more focus on what is trending on social media and assets that will likely go down and rug pull. If you are lucky enough to make profits in a memecoin, you are more likely putting that profit to another memecoin that could go down. Why? because you haven't learned to be patient in growing wealth.
Conclusion
To summarized, I wants you to know that memecoins could be a distraction in your investment plan. I personally don't hate memecoins and continue to trade some from time to time. But think of your investment journey as long term goal to financial freedom. Only assets with good fundamentals will continue to grow, generating profits overtime. Think 10 or 20 years from now. It may seem long but time fly pass so fast you won't even realize it. If cryptocurrencies and blockchain are like the internet in the 90's, then some assets today could be the next Amazon or Google in their early days.
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