Crypto For Dummies

Memecoins refer to cryptocurrencies that are primarily created and used as a form of satire or parody, often based on internet memes or popular culture references. These digital currencies have gained popularity alongside the rise of cryptocurrency and blockchain technology.

Unlike mainstream cryptocurrencies such as Bitcoin or Ethereum, memecoins generally lack substantial utility or underlying technology. They often serve as vehicles for humor, social commentary, or speculative investments rather than fulfilling a specific practical purpose. Memecoins are typically created by individuals or communities and are often associated with online communities or social media platforms.

One of the most well-known examples of a memecoin is Dogecoin, which was originally created in 2013 as a joke but gained a significant following and market value. Dogecoin features the Shiba Inu dog from the “Doge” meme as its mascot. It became popular for its friendly and lighthearted nature, which appealed to a broad audience

Trading Memecoins Can Be Very Profitable But…

Memecoins attract more investors because of the way some lucky traders have became millionaires overnight. Honestly, I think these stories can make anyone tempted to also try their chance.

If you are a twitter user and follow crypto topics, chances are you probably seen at some point several posts of users flaunting their fortune made by trading memecoins. I personally lost more than 400 Dollars in less than 48 hours by trying to invest in some random memecoin.

There is no denial that some lucky investors really make lot of money by trading memecoins, but no one seem to disclose their losses. It’s a game where everyone seems to be on the winning side. In reality, more than 95% of memecoin traders lose money. Yeah, lot of money. Of course, you won’t see as many headlines citing people losing money because they generate less clicks for news outlets, less likes & engagements on Twitter.

The reality is that there are more losers than winners, but the media and social media buzz make it feel like otherwise.

Trading Memecoins May Not Teach You Any Investment Skills

Investing refers to the act of allocating money, resources, or capital into an asset, venture, or financial instrument with the expectation of generating a profit or achieving a long-term financial goal.

Long-term goal usually do not work with memecoins. Most of them decrease in value in the long run. Below is the performance of Bitcoin compared to Dogecoin. Notice that Bitcoin has been increasing and continue to increase in value overtime, while Dogecoin had a major spike and crashed down but struggling to reach that all time high. Bitcoin broke its all time high multiple time in its history.

Investors who invested in Bitcoin since 2017 are still making profits. Those who invested in Dogecoin before the spike are the lucky few winners. All investors that bought it after the spike, certainly knew about it on TV or on social media. They probably lost lot of money and gave up on cryptocurrency investment thinking it’s not worth it. Yes, memecoins can easily bring new investor in the crypto space, but it could also deceive them and make them lose interest.

Trading Memecoins Is Very Stressful and Doesn’t Seem Like an Investment

Investing should be boring with a long term goal. When invest in something, you shouldn’t constantly be checking how much you made or lost. Memecoins are very volatile and their token prices can change dramatically in a single day. This makes many investors check the price every time they can. The stress of losing your initial investment or the profit you made can lead you to trade with your emotions.

Investing in an asset is believing it will become more valuable sometime in the future. Usually, you don’t worry much about the short-term price fluctuation of the assets. When you think long-term, you spend more of your time to read more about assets you invested in and want to keep up with any updates. You are then more motivated to buy more when the price goes down, maximizing your profits overtime.

Memecoins trading won’t teach you these skills. Instead, you will be more focus on what is trending on social media and assets that will likely go down or rug pull. If you are lucky enough to make profits in a memecoin, you are more likely putting that profit to another memecoin that could go down. You ask you why? I think this is because memecoin investment look like playing the lottery. Have you ever wonder why most lottery winner become broke after winning millions? Making money required many valuable skills that has to be learned. Investing and patience are some of those skills.

Conclusion

To summarized, I wants you to make aware that memecoins could be a distraction in your investment plan. I personally don’t hate memecoins and continue to trade some from time to time. But think of your investment journey as a long term goal to your financial freedom. Only assets with good fundamentals will continue to grow, generating profits overtime. Think 10 or 20 years from now. It may seem long but time fly past so fast you won’t even realize it. If cryptocurrencies and blockchain are like the internet in the 90’s, then some assets today could be the next Amazon or Google in their early days.