Top 3 Things That Make a Crypto a Meme Coin
And no, not all meme coins are bad!
2021 was the year of the meme coin. But what is a meme coin and why should you care? Let’s go into the top 3 things that make a crypto a meme coin.
Before we start, this article is our opinion only and is not meant to be financial advice as we are not financial advisors. This article is for informational and entertainment purposes only, and is meant to help give you some background and insight into meme coins. Also, we mention a few cryptos in this article, of which we hold in some quantities Ethereum, Horizen, Shiba Inu and Polygon Matic.
So, without further disclaimers, here are the top 3 things that make a crypto a meme coin!
With cryptos such as Dogecoin and Shiba Inu skyrocketing in 2021 and making crypto millionaires out of thin air, meme coins are all the rage, especially for new investors. And while both cryptos have fallen since their all-time highs, there is no arguing that they both have landed considerably higher than where they started and currently sit at 12 & 13 in marketcap, sandwiched between two tech-focused projects, Avalanche and Polygon Matic.
I bring that up because it is important to note, just because a crypto project may be considered a meme coin, it doesn’t mean it’s a bad thing. Shiba Inu ($SHIB) for example, has seen real growth in being accepted as a form of payment. Nevertheless, meme coins generally share 3 things with all others of their kind, and as a result, can sometimes be lumped together with bad apples giving all meme coins a negative connotation.
Top 3 things that make a crypto a Meme-coin
1 – The Name
Ever notice how tech-focused projects have tech-sounding names? Or are comprised of words you may never have heard of? Ethereum, Cardano and Horizen are examples of this. Well, meme coins take the opposite approach and try to market themselves by latching onto something relevant in current culture. Shiba Inu references the type of dog representing Dogecoin. Safemoon implies the value of the coin will rise sharply and safely. Squid Game coin leveraged the name of the popular Netflix series, even though it wasn’t connected to it in any way.
All 3 latched onto something culturally popular and relative to try and gain extra attention, rather than letting the project value speak for itself.
2 – Low Cost per Unit
Ever notice how meme coins have a super low cost per unit? It is done to attract investors. I’ll go into the deeper psychology behind this in a later article, but the gist is this – people like owning a lot of something that has perceived value and meme coins play into this.
However, at the end of the day, the price of a crypto is rather meaningless when you first invest in it. If you invest $100 into Bitcoin and only get .002 $BTC (at time of writing) or invest $100 into Shiba Inu and get 2.9 million $SHIB, it is the same thing. However, meme coins like to have a low entry price so investors can feel like they own a lot. In the case of $SHIB, it is often wondered if it will hit $1, and if/when it does, they will be a millionaire many times over. And heck, you can buy a burger for $1… so how hard could it be for $SHIB to hit a $1? That’s where Tokenomics comes in, and if you are unfamiliar with the terms (or need a refresher), check out our ARTICLE on it.
The reality is entry price of a coin doesn’t matter. All that matters is the % loss/gain while you hold it. If Bitcoin goes up 50% and Shiba Inu goes up 50%, you will have $150 worth of value regardless of having .002 of a coin or over 2 million. But the mental side of having millions of something perceived to have value is more powerful than holding a fraction of it, which is why meme coins are often priced as they are.
3 – Popularity / Social Influencers
Ever notice how meme coins have huge celebrity influencers, and that is the first thing you hear about them? Well, the final thing that usually makes a meme coin a meme coin is social influence. I don’t mean how the coin influences society, but rather, how do socially popular people, such as celebrity influencers influence the coin.
If you google a crypto project and see more results talking about a musician on Twitter, a model on Instagram or any other celebrity on any other platform supporting a project before you see real articles on a crypto’s case-use, business partnerships, development team, white papers or anything of the like, you’re probably researching a meme coin.
In itself, celebrity support is a good thing for a coin. To get adoption, people need to use / support a coin, and that is a lot easier to have happen when a celebrity endorses it. However, if that is the only thing it has going for it, the coin can fall as quickly as it rises, based on the whims of a celebrity. That usually is not the best investment strategy to follow (but what do we know, we aren’t financial advisors)!
There you have it, the Top 3 things that make a crypto a Meme coin. Again, I want to stress, a meme coin isn’t a bad thing just because it is a meme coin. In fact, there are plenty of ‘real’ crypto projects that have remarkably failed and lost a lot of people a lot of money. However, meme coins are generally more sizzle than steak, and as such, you should be aware of what you are investing in. So if you hear about a new coin or crypto project and it fits these three things, chances are it is a meme coin. And if it is, make sure to do extra due diligence before investing.