How high can the price of a meme currency go? When Dogecoin was launched in 2013, it was intended to be an amusing dig. At the speculative frenzy that had erupted around Bitcoin at the time. Then, in August of this year, an unknown developer produced the Shiba Inu currency. Which serves as the canine mascot for Dogecoin. As a spoof on the earlier joke. Somewhere along the line, the internet jokes started to feel a lot more real.
The two “meme coins,” as they are referred as, are now the ninth and tenth most valuable cryptocurrencies. In terms of market value, with a combined market valuation of $79 billion, according to CoinMarketCap. On October 27, the value of the Shiba Inu momentarily topped. That of the eight-year-old dogecoin for the first time. The value of the coin rose on expectations that it might be listed on the Robinhood cryptocurrency exchange.
The cryptocurrency market is full of hyperbole. Meme coins, on the other hand, are among the most dangerous and puzzling investments available. While other cryptocurrencies, such as bitcoin (a form of payment). And ether (a cryptocurrency for the Ethereum blockchain, which allows for decentralized applications. Such as contracts), at the very least have a declared purpose. Meme coins are deliberately intended to be a sort of collective hilarity.
Experts claim that the coins, despite the fact that they serve no purpose, are accruing value. Entirely as a result of speculative market demand. Because of speculation, the values of various assets have risen in recent months. Including meme stocks, cryptocurrency, non-fungible tokens, and other valuable things. Meme coin prices are the latest to rise as a result of this trend. If and when the markets do crash, many retail investors will be left holding the bag.
FOMO, Shiba Inu coin, and Dogecoin
Coin values increase. Since the start of 2021, how high the price of bitcoin has roughly doubled, while ether has quadrupled. Smaller coins like Dogecoin and Shiba Inu coin have moved even faster.
On Oct. 28, $1 bought roughly 14,000 Shiba Inu coins, compared to $0.23 for Dogecoin. There is a limitless supply of Shiba Inu coins (15 zeros). This enables regular investors to amass large amounts of coins cheaply. As underlined in Shiba Inu’s whitepaper (pdf) by anonymous author Ryoshi. The Shiba Inu coin’s main motivation may be its competition with Dogecoin.
The objective of both Shiba Inu coin and dogecoin is unclear. But Shiba Inu’s goal is to collectively dominate the dog-themed coin market.
“We got the moniker Dogecoin Killer because SHIB is prepared to overtake Dogecoin,” Ryoshi writes. “Even if SHIB never reaches $0.01. Our exposure and utility will make it worth more than the popular canine memecoin.”
In a time when bitcoin, ether, and other major cryptocurrencies are becoming more costly. Cheaper coins give a possibility to make large early returns (and losses). The mentality of an asset bubble, not fundamentals, drives these returns. “People invest in bitcoin because they hear other people make a lot of money. And they don’t want to be left behind,” said Itay Goldstein. He is a finance and economics professor at Penn’s Wharton Business School. Meme coins exploit the same FOMO.
Meme coins bolster critics’ case The crypto market is basically a speculative vehicle with no real-world utility. “Valuing [meme coins] without understanding what they do is a poor statement,” says Eshwar Venugopal. A finance professor at the University of Central Florida. “I believe the average bitcoin investor is more concerned with speculation than what this initiative is doing.”
Memes are reshaping finance
They are most commonly viral jokes, photos, or videos. Their impact in pop culture and politics has been growing for decades, but not yet in finance. In 2021, retail investors on Reddit and Discord’s WallStreetBets forums. Teamed together to boost meme stocks like GameStop and AMC Entertainment. By squeezing short-sellers they felt were undervaluing them. (Melvin Capital lost 53% of its investments in January 2021.)
On Reddit, Twitter, and other social media sites, communities are forming around meme currencies. How high raising their worth. In this case, regulation is the important differentiator. Public firms must file annual and quarterly reports. While GameStop’s skyrocketing stock price. Demonstrates the power of internet talk and collective action to boost stock prices. The company generates real revenue and assets. No real business or product exists in Meme coins. Because there is no regulation in the US, customers have no idea who controls. Which cryptocurrencies or how their finances work. Consumers would be able to evaluate bitcoin ventures based on financial disclosures, Venugopal claims. Decreased risky investment due to transparency.