It had to happen. As society has become more and more intertwined with social media, and finance has become more and more tech-savvy, the intersection of pop culture and finance was bound to intersect. Instead of a nice synergy of two ideas, it had more the feel of a head on collision, and meme coins were born. While the first meme coin of large-scale fame is Dogecoin (DOGE), many have followed in its wake. In the case of Dogecoin, what first started as a joke to make crypto sound ridiculous turned into a cult following, which turned into the same heartfelt community that raised funds so the Jamaican bobsled team could attend the 2014 Olympics. From this surprise success, many others have followed, with the trend even backflowing into traditional finance with the “meme stock” that was Gamestop. But why have meme coins taken on a life of their own, why have they created such controversy, and what role can they play in legitimate finance? Let’s find out.
Why Are Meme Coins Part of Today’s Society?
The idea of a meme coin is indeed preposterous, and at the same time more honest than many financial instruments and collectibles. To create value out of what is essentially a meme, or a short lived joke, is similar to any other fad. The Tickle-Me-Elmo’s, the POG’s, the fast fashion trends. All of these are money making ideas born out of a spike in popular interest, and nothing more. What is interesting about meme coins is the intersection with legitimate financial tools. The world of cryptocurrency has democratized our ability to make a digital, fungible currency with a set mint volume and circulation. Instead of someone having to quickly design and mass produce a product that leverages a fast moving meme, team’s can make a meme coin overnight to quickly capitalize on its popularity, and at very little cost if the team has the right talent. At the other end of this trend is the element of collectables. Meme coins can act as a type of currency, yes, but they also behave as a limited edition collectible, and this is what can help to drive prices up, especially in the short term as popularity rises. Everybody wants to jump in, so prices on limited supplies go up. However, it’s what the development team does after that can determine whether that stock crashes and disappears forever, or stabilizes and moves past a meme to become a legitimate cryptocurrency with a supportive, long-term community. This is perhaps the most frustrating part of meme coins in today’s environment. Teams with ill-intent could purposefully launch a coin for a pump-and-dump scheme, which will inevitably hurt those who want to be involved. However, in addition to being bad form and smearing the crypto industry, more and more teams are seeing that this is a short sighted play for meme coins because they have a place in the longer life cycle of the crypto markets. With proper TGE guidance and MEV market making tools (organizations like Peanut Trade specialize in these services, even for meme coins), meme coins can launch for long term success.
Scams and Scandals
Meme coins have long been, and still are, a source of speculative investing and potential pump-and-dump scheming when they launch. There are a number of signs to watch out for to determine if a meme coin is a scam, though there is no guarantee either way. Coins with little community presence that spike suddenly in popularity, especially from a few influencers, may be on their way up just to crash soon after. Market volume and liquidity irregularity are bad signs, as is a lack of transparency and online presence of the development team itself. Whitepapers and detailed roadmaps, on the other hand, show a purpose for the coin and indicate a longer term plan. Still, with any meme coin as with any investment, you never put in more than you are willing to lose.
Strategies for Platforms and Investors Align
For development teams who are aiming to launch a legitimate meme coin, you need to be aware that there are predators looking to take advantage of your token launch even if you have the best intentions. Being able to combat those looking to artificially spike prices when the coin is launched in order to dump it is critical. Teams must have tools in place to safeguard liquidity from third-party arbitrage bots, but must design the tokenomics and smart contracts to be sturdy and long-term focused from the beginning. As mentioned above, there are organizations like Peanut Trade who offer services from start to finish on guiding this process, and teams may find a benefit if they are looking to build a longer term community focused on stability and a passive profit for their project’s treasury.
Successfully long-term launching any token, but especially a meme coin, takes strategy and effort long before the launch, but also requires a strong hand (and automated tools) on the day of launch, with management tools working to keep things smooth until the coin can stabilize on its own. Once it does, the few that are well managed can last for years and grow their communities into global forces.
This is the oddity that is our modern world. The ability to create your own cryptocurrency, where things like Dogecoin started as a joke and became a wealth fund of billions, where a borderless community across the globe can band together around any idea they’d like and develop something together for the long term. It’s a strange world, but it’s pretty amazing.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.