This week, the creators of Floki Inu - the meme coin named after Elon Musk's puppy - launched a major advertising campaign on public transport in London. The slogan that is emblazoned on the red buses in the British capital? Missed DOGE? Buy Floki.
You'd think that any cryptocurrency advertisement is a good thing. Unfortunately, the growth of these animal coins is anything but that. They play with people's fear of missing out and their projects and suggestions have no substance.
High risks and price losses
The combined market cap of Shiba Inu and Dogecoin is nearly $ 80 billion. That is about as much as the gross domestic product of countries like Panama or Luxembourg. If both coins collapse, they would tear away many people's hopes, dreams, and hard-earned money.
The problem is that Dogecoin, created on purpose for no purpose, has defied traditional investment logic and is up over 6,000% since the beginning of this year. That has led people to believe that any cryptocurrency value can do the same thing. So if the price of any doggy coin rises even a little, investors pounce on it, hoping to ride the wave. That then drives up the price.
But there is no substance behind it. As a result, the price will eventually start to fall. Investors who got in at the peak will lose money. And when the price falls completely, anyone who couldn't sell on time will lose their investment.
It is argued that these coins do have substance and that, as they attract millions of followers, they may be able to establish themselves as digital tender in the future. After all, half the battle in establishing a currency is getting people to use it.
The problem, however, is that most people buy these animal coins in the hopes that someone else will pay more for them later. They have little intrinsic value and some are certain to be frauds. As a result, it is very likely that Pet Coins will crash at some point and retail investors will be hit hard.
The investment narrative doesn't make sense
There are people who say that meme coins are a stepping stone into cryptocurrencies, making these complex investments more accessible and fun for small investors. But if you visit Reddit forums, you probably won't find a comprehensive introduction to blockchain technology. Instead, you will find a strange perversion of traditional investment advice.
One idea is that any mere mortal can spit in the soup of the establishment by getting rich with whatever Petcoin forum they're on. There are tons of posts out there designed to encourage buying and drive the price up. And a similar number of messages telling people to keep HODL and the price.
First, should the reason for buying an asset be because one believes in its value, not because buying it can drive the price up. That smells like a sophisticated pyramid scheme.
Second, if the price of the asset depends on everyone holding it, how is anyone supposed to make a profit? Owning $ 10 billion worth of DOGE means nothing if you can't sell or use it.
The crypto industry is so much more than meme coins
I invest in cryptocurrencies because I believe blockchain technology has the potential to change the world we live in. Aside from crypto fanaticism, volatility, concerns about fraud, and the possibility that the market could lose ground, this technology could change our lives.
It makes me sad to see people throw themselves into meme coins because there are so many extraordinary cryptocurrency projects out there that would make better long-term investments. For crypto investors, the path to wealth creation is to look for projects with real utility rather than chasing short-term gains.
I can understand the attraction of investing in a meme coin, but I don't want anyone to lose their money. Hundreds of coins are listed on cryptocurrency exchanges, so why not pick the ones with a solid foundation? At some point, the cryptocurrencies built on air will almost certainly fail. We can only hope that those who have a use survive the fallout.
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