Meme coins are cryptocurrencies inspired by meme trends. They can be extremely profitable, or dangerous if you're not careful. Here's a quick guide on how to invest in meme coins safely.
What are Memecoins?
Meme coins are a type of cryptocurrency inspired by memes, people, characters, or trends.
Most have no utility except for trading, and each token has an extremely low value.
Also, the coins have a massive or uncapped supply.
Meme coin's value are driven by active online communities through social media. On the flip side, this makes them extremely volatile and subject to change very quickly.
Dogecoin and Shiba Inu are two of the most popular memecoins in the crypto space.
Coins like Bone ShibaSwap (BONE) is the governance token of ShibaSwap, a decentralised exchange (DEX).
Some investors buy meme coins for potential payday or quick flip. Others see the tokens as an opportunity to escape traditional finance systems.
Scam Artists
Even though there are great projects out there, many meme coins are often scams.
In most cases, a honeypot or rug pull is more likely. A honeypot is a type of scam that lures investors into a coin, but prevents them from selling.
A rug pull is a type of scam where developers abandon a project and take their investors' money.
Honeypot scams bait investors with a “pot of cryptocurrency” or the promise of big returns.
Then, rookie investors fall for the trick and transfer cryptocurrency to the scammer’s wallet.
By the time they realize it's scam, their crypto is gone.
Rug pulls thrive on DEXs because these types of exchanges allow users to list tokens for free and without audit.
Rug pull coin prices usually shoot up fast. It could move from 0 to 100X in a day. This trick is designed to drive FOMO so more newbies will invest in the token.
How to Protect Yourself
Do thorough research on all the coins you're interested in. Explore the history, social media presence, unique features, etc.
Make sure to define your trading strategy. Set a goal, risk level, and time frame.
Set stop losses to protect yourself if need to get out of potential honeypot or rug pull.
Crypto is always changing and evolving, so your trading strategies should too. Analyze your mistakes and adapt when new coins come around.
Keep up with the news surrounding the meme coin and crypto in general. Partnerships with companies, celebrities or influencers can drive the price up or down.
Stay vigilant when protecting your crypto! Try FLOW to support focus and concentration throughout your day.
