Do Meme Coins Have a Future? Analysing Their Potential in the Crypto Market

Meme coins have gone through a formidable rise, from grassroots joke projects to legitimate investment vehicles (especially President Trump’s $TRUMP coin). They’ve sparked excitement and skepticism in the crypto world, leveraging internet culture to create a unified sub-community that thrives off the unpredictable nature of these tokens.

The question is, can they sustain their momentum?

This article will explore their potential, challenges, and future of this frankly illogical market. 

Understanding Meme Coins

To understand meme coins, forget everything you know about finance, value, digital assets, internet humour, culture, trading, and online communities. It won’t be useful here. Meme coins and their communities don’t follow any particular rules or structures, and in fact, they often seem to break any laws or patterns they set for themselves.

It can be bonkers at times, or “degen”, to use their preferred terminology, but that’s the way it is, and the harder you try to understand it, the more bizarre it gets.

Still, we can look at meme coins objectively and identify some traits. They’re cryptocurrencies, they’ve become popular in recent years, they’re often inspired by internet memes, animals and humour (though sometimes they are just someone’s weird creation). 

If you think about how Bitcoin and Ethereum are backed by incredible code and underlying technology, well, meme coins aren’t.

They’re still digital currencies, though. The main issue with that logic, however, is that their volatility would make using them for purchases or exchanges of value extremely chaotic).

Instead, they’re simply launched for traders to capitalize on trends and communities. 

What’s the Origin Story of “Meme Coins”?

The concept of meme coins originated with Dogecoin ($DOGE) in 2013, which was based on the popular "Doge" meme featuring a Shiba Inu dog.

What started as a joke quickly gained traction, attracting a dedicated community and even reaching a market capitalization of over $80 billion at one point, thanks to encouragement and investment from Elon Musk. 

Since then, numerous other meme coins have emerged, such as Shiba Inu (SHIB) and Safemoon (SAFEMOON). Shiba Inu turned into quite a popular and successful project, while Safemoon turned into a $5.7bn scam that saw all the founders charged with fraud.

That’s pretty analogous to meme coins.

No two meme coins are the same, even if they might appear to be (copycats do exist), and on that note, not all meme coins lack utility or functionality. Some actually do have big visions and roadmaps that they intend to commit to once they have sold enough coins to hit their funding targets. Others are just for fun. 

Do Meme Coins Have a Future?

Yes, Meme Coins, they have a future.

They won’t disappear or fade away, and that’s simply because they serve several functions.

There is, however, one big existential threat facing them, but we’ll get to that…

Community and Culture

Meme coins have largely found success because of their ability to unite people and nurture community engagement. Each coin usually has a dedicated online community that actively promotes the coin on social media, driving adoption and creating a sense of belonging.

Their cultural relevance is also a factor, with the virality of the thing that inspired them, like $MOODENG for example, being central to their success.

Market Volatility

The crypto market is known (as outsiders love to remind us) for its risks and volatility. Meme coins embody that, with their values fluctuating dramatically based on market sentiment, news events, tweets, and other factors.

That volatility can send a project rocketing or plummeting in an instant, and while it spells bad news for the longevity of most coins, it is attractive to the continued involvement of high-risk traders.

Friendly On-Ramp (for Newbs)

Another factor working in meme coins’ favour is that it’s a fantastic way to introduce cryptocurrency to a new and curious audience. There are hundreds of millions of people who enjoy memes, but maybe just a few million who trade meme coins.

The approachability of this niche makes the complexity of cryptocurrency trading less intimidating, therefore serving as a significant entry point for those who finally want to get involved.

And finally, the existential threat…

Regulatory Environment

Meme coins may one day fall under the watchful eye of regulators who seek to stop its growth in its tracks.

The more they grow and gain notoriety, the more scrutiny they’ll be put under. It’s fair to say that sometimes meme coins are fun, lighthearted, and even cheeky, but when you look at some of the violent, repulsive, dangerous and cruel things done for short-term gains on meme coin launchers, it’s no laughing matter. 

How these projects navigate regulatory challenges will play a significant role in determining their long-term viability.

If the launchers get shut down, it would seriously harm the space’s future. But, more likely than not, for any project shut down, two more will pop up in its place.

Let’s move on. 

Potential for Mainstream Adoption

Some meme coins have the potential for mainstream adoption, but they’re a small minority. Most meme coins, it’s fair to say, have no chance.

The majority are poorly executed projects based on loose ideas, which struggle to gain interest, traction, or growth.

On the other hand, you have some meme coins that get enough users and achieve enough stability to be useful as a payment method within the DeFi ecosystem, or for buying NFTs.

The more they are adopted and integrated, the better chance they have of delivering beyond their inherent memetic value.

When Elon Musk mentions your meme coin, it’ll do well. Apart from that, there’s no real secret to success or mainstream adoption. Even other big celebrity-endorsed projects have fallen off a cliff, making it hard for wider society to take meme coins seriously.

Challenges Facing Meme Coins

There are several challenges that could hinder their long-term success and mainstream adoption, despite their potential for uniting communities and onboarding new users.

Lack of Clear Use Cases

A wise man once said, “novelty precedes utility”, and that’s just so true for meme coins. They may be born as silly jokes, but many develop real-world utility over time. Before that point though, it’s hard to vouch for their long-term viability.

It’s a bit like applying for a job when you haven’t got any work experience - how can you get work experience if you can’t get a job? 

In meme coins’ case, often the best use case is just how big and strong their community can get, and what they can do with that social power.

Risk of Market Manipulation

Unfortunately, the volatile nature of meme coins, combined with how easy it is for individuals to launch them, has made them absolutely ripe for pump-and-dump schemes. This is where individuals or groups artificially inflate meme coin prices before quickly selling their tokens, leaving others with big losses and broken trust. 

Regulatory Uncertainty

As mentioned already, regulators are paying more and more attention to meme coins. They are examining cryptocurrencies in general, but because of meme coins' ambiguous and often mischievous nature, as well as their anonymous launch capabilities, there is increased risk.

Regulators don’t like risk, they like having strict rules in place to create a safer environment for investors.

For meme coins to overcome skepticism and establish themselves as viable long-term investments, they’ll need to overcome all these challenges both individually and collectively (if they want to, that is). 

Concluding Thoughts

The future of meme coins is as uncertain as it is exciting. There’s potential on the horizon, met in equal measure by challenges and setbacks. With further adoption, more community engagement, increased cultural relevance, and support from regulatory changes, they could really establish themselves as a mainstay in the crypto world. 

Only time will tell, because sometimes, meme coins are simply their own worst enemy. 

In the Meantime…

If you're interested in learning more about meme coins and their potential impact on the crypto world, explore our library of content for in-depth resources and insights. 

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Remember, though: always do your research and invest responsibly in this volatile market.