What Are Meme Coins? The Working of Meme Coins Explained

Meme coins are coins that are created based on popular memes
They have high volatility and mostly no interest value

What is a meme coin?

Meme coins are coins that are based on some popular internet memes. Meme coins are cryptocurrencies that are said to have no or zero intrinsic value. Such cryptocurrencies pose a high risk for investments.

Dogecoin and Shiba Iny are the most popular meme coins. However, they were launched just as a meme by their developer without revolutionizing technology. Still, it attracted the interest of a lot of big investors, and hence, they are very popular today. These meme coins are the first choice of traders because they are extremely volatile. Hence, trading in meme coins is a very good choice. But this makes investing a little bit risky. So if any investors are thinking of investing in a meme coin, any such action should be taken through research.

How do meme coins work?

Memecoins are just like regular cryptocurrencies; like other cryptocurrencies, most are built on the Ethereum network. Using its ERC – 20 token standard. They use Ethereum’s smart contracts to function. But some of them are exceptions, for example, Dogecoin. This cryptocurrency is not built on the Ethereum blockchain; it has its native blockchain-inspired by Bitcoin and uses Bitcoin’s proof of work consensus algorithm.

Memecoins generally have a strong community. This community supports meme coin’s growth. The main reason for the growth of the meme coin is its community. Hence, the stronger the community of the meme coin, the more chances there are of a surge in the price of that meme coin.

Advantages and disadvantages of meme coins

Advantages

Meme coins are really fun assets, making it very easy and interesting for newbies to learn about cryptocurrencies. They have their own Twitter and Instagram pages where their community promotes the meme coin with the help of various memes. Hence, being a part of the community of meme coins is like enjoying and supporting crypto. Due to their funny nature, many investors are attracted to such meme coins.

Meme coins are like a boon for traders because they always have high volatility, and this is what traders want. meme coins are coins with high volatility; hence, traders have a high chance of earning in meme coins.

Disadvantages

Although they are really good instruments for traders to earn high profits, investors can sometimes have a bad taste while investing. Due to this high volatility, they can sometimes suffer unexpectedly high losses.

Although there are hundreds of meme coins on the market, only a few are legit. Investors need to do thorough research before investing in these meme coins. Many meme coins are just built to scam investors. The developers of such meme coins embed malicious codes in their software, preventing investors from withdrawing their money. They manipulate the price of the coin to earn money and show fake growth. Once a sufficient number of investors get attracted to the project, they dump it, leaving its value close to zero.