New RockItCoin ATMs were just added in Texas! See our newest locations. New RockItCoin ATMs were just added in Indiana! See our newest locations.

Meme Coins: The Slot Machines of the Crypto Casino

Posted on November 2nd, 2021 by EM Search Consulting

2021 may come to be known as the year of the meme coins. From January 2021 to May, Dogecoin (DOGE) went from being worth slightly less than a penny to almost 75¢, a gain of more than 7,000%. Not to be outdone, Shibu Inu (SHIB) rocketed nearly 70,000% from April 2021 to October.

Since percentages can be confusing, let’s phrase those a different way. If you invested $1 in DOGE in January, it would have grown to about $70 by May. And if you invested $1 in Shibu Inu in April, it would have grown to almost $700 by October.

Seeing gains like that is bound to pique your interest. It would make sense to think that DOGE and SHIB brought some new, innovative tech to the crypto space. But if you take a minute to look into either coin, you learn that they’re both just jokes. Billy Markus, the co-founder of DOGE admits that the coin was created as a joke, a meme.

Throwing your money at memes is like dropping it into a slot machine. Sure, someone will come out ahead. But the vast majority of people who play the slots walk away with less money than they started with.

What Is a Meme Coin?

A meme is a unit of cultural inheritance in the same way that genes are units of biological inheritance. They’re simply ways of sharing ideas. If you whistle a song, that could be considered a meme because you’re sharing the idea of the song with anyone in earshot.

As memes became one of the primary forms of communication on the internet, the word took on a new meaning. Now, memes are largely thought of as amusing, bite-sized pieces of media, often taking the form of an image overlaid with text.

Meme coins are the cryptocurrency equivalent of those jokes. They don’t have much of a function other than to make you smile. But given the viral nature of memes and their ability to spread at the speed of light, some came to be worth far more than anyone ever imagined they could.

Should I Invest in Meme Coins?

Whether or not to invest in meme coins is a choice you’ll have to make on your own. Yes, investing in DOGE or SHIB in early 2021 could have made you rich. But after reaching their peaks, both coins lost more than half of their value in a matter of days. And the vast majority of meme coins will never see such meteoric rises.

If you do decide to invest, be realistic about it. Shibu Inu shot up more than 700x in just a few months yet a single SHIB has never been worth more than a fraction of a cent. BuT DOGE UsEd To bE wOrTh LeSs ThAn A pEnNy AnD iTs VaLuE cLiMbEd OvEr $0.70, sO SHIB ShOuLd Do tHe SaMe, RiGhT? Wrong.

At the time of writing, 1 SHIB was worth $0.00002754 and the coin had a market capitalization of roughly $11 billion. In laymen’s terms, market capitalization is just the amount of money you would get if you sold every single coin at its current price. If you do the math, that means that there are almost 400 trillion SHIB in circulation today.

At its current price, $0.01 buys you 363 SHIB. For the value of a single SHIB to climb to $0.01, it needs to go up 363x or 36,300%. That would peg the market cap of SHIB at roughly $4 trillion. As a point of reference, Bitcoin, which is worth more than $60,000 per coin, has a market cap of just over $1 trillion.

So for SHIB to grow to a value of $0.01 it would basically need to become 4x as popular as Bitcoin is at its peak. And whereas Bitcoin gained its popularity by introducing digital currency to the world, Shibu Inu became popular by retelling the DOGE meme joke.

Sure, it’s possible cryptocurrencies like Dogecoin or Shibu Inu could make you wealthy, but it’s unlikely. And investing in such volatile coins can be a huge risk. If you look back a few years to Bitconnect, you’ll realize how quickly the bottom can fall out of cryptocurrencies.

Bitconnect: A Cautionary Tale

Bitconnect was a cryptocurrency that allowed people who owned the coin to lend out its value and collect interest for doing so. However, it turned out to be nothing more than a Ponzi scheme. So after steadily climbing in value from around $0.50 to nearly $500 over the course of 2017, it lost more than 92% of its value in a single day. And it kept falling from there.

Although Bitconnect wasn’t a crypto meme in the same way that DOGE and SHIB are, it was still a meme coin. Its value was linked to the idea of gaining interest on your cryptocurrency. And as it turned out, that “interest” you could earn was nothing more than a meme.

So the next time you see a meme token pop up on social media with promises to take you to the moon, take a second to think about it rationally before throwing your money at the hype. If you’re hearing about it on social media, it probably already spiked and is due for a fall in the near future.

But who knows? Maybe you found a golden ticket and YOLOing your life savings will be the best decision you ever make. It almost certainly won’t be. But that’s for you to decide on your own.