Should I invest in meme coin?

What is meme coin?

This is a cryptocurrency created for entertainment purposes, based on popular trends on the Internet. Satire, humor, the explosion of tokens tied to celebrities, politicians , and viral trends have turned meme coins into highly volatile and speculative assets.

Most Meme coins become popular thanks to the promotion of influential celebrities.

According to statistics from the website coinmartketcap.com, there are currently more than 80 Meme coins and tokens being ranked and evaluated on CoinmarketCap. Of which, Dogecoin and Shiba inu coin are the 2 most famous Meme coins that have created price fevers recently.

Meme coin was created for entertainment purposes. (Illustration)

Meme coins are often created on existing blockchains, but can also have their own blockchains. For example, the Pudgy Penguins meme coin, which will be introduced in late 2024, is built on the Solana blockchain. Dogecoin, on the other hand, operates on its own independent blockchain. Their value rises and falls based on demand, which often comes from internet users who enjoy the joke.

The value and popularity of meme coins are heavily influenced by their online community. They can be volatile in price, trading volume, and market liquidity.

Meme coins have a fast growth rate thanks to a large community. However, in essence, meme coins do not have any intrinsic value, because they are created by crowd psychology and are highly entertaining. Accessing meme coins is also easier than currencies like Bitcoin or Ethereum. However, due to crowd psychology, meme coins can fluctuate strongly in price, are easily manipulated, creating great investment risks.

The risks of buying meme coins

According to world experts, in theory, meme coins can be exchanged for goods and services like other currencies. However, many characteristics of meme coins pose risks to investors. The lack of intrinsic value means that the speculative price of meme coins can fall to zero. Meme coins do not have a real fixed value but depend entirely on the community of Meme coin players.

High volatility can make owning a meme coin a bit of a roller coaster ride. Their prices can spike when they get a celebrity endorsement or a lot of attention, but then fall even faster than they started.

Meme coins pose potential risks for investors. (Illustration photo)

In addition, meme coins are also susceptible to price manipulation due to the lack of clear legal regulations. This is a loophole that helps market makers inflate the trading volume and price of meme coins, attracting the attention of buyers.

Pump and dump schemes are also common, causing meme coin prices to be unreasonably inflated before a massive sell-off, causing damage to "late" investors.

Like other cryptocurrencies, meme coins have been the target of theft and fraud. Therefore, it is important for investors to protect themselves by keeping their passwords secure to protect their funds from hackers and criminals.

In terms of liquidity, many meme coins have low trading volume, making it difficult to sell at the desired price.

Therefore, traders are advised to approach meme coins with extreme caution, more as entertainment than as an investment portfolio. Meme coins pose many risks to investors, especially inexperienced ones.

Lagerstroemia (Source: Investopedia, Schwab, Britannica)

Source: https://vtcnews.vn/co-nen-dau-tu-tien-ao-meme-coin-ar961021.html