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Has Crypto Gone to the Dogs? Why Floki Inu, Shiba Inu, and Dogecoin Are Bad for Crypto

Has Crypto Gone to the Dogs? Why Floki Inu, Shiba Inu, and Dogecoin Are Bad for Crypto
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Are Dog Coin Investors Barking At The Wrong Tree?

the main points

  • Investors can lose a lot of money on meme coins.
  • The investment narrative for these coins is meaningless.
  • There are a lot of better cryptocurrency investments.

This week, the people behind Floki Inu (FLOKI) – the meme coin named Elon Musk’s puppy – launched a massive ad campaign on public transport in London. The emblem that was engraved across the red buses in the British capital? “Did you miss DOGE? Get Floki.”

Another pet coin, Shiba Inu (SHIB), is in the top ten by market capitalization as a petition for a Robinhood-listed token has gained more than 400,000 signatures. Dogecoin (DOGE) price rose after another Musk mention on Twitter.

You might think that any crypto-currency publicity would be a good thing. Unfortunately, the growth of these pet coins is anything but. They play on people’s fear of missing out, and there is no substance to their proposals.

Here are three reasons why these coins are misused for cryptocurrency.

1. Investors can get burned

The combined market capitalization of Shiba Inu and Dogecoin is approximately $80 billion. This is the same size as the GDP of countries like Panama or Luxembourg. If both pieces fall apart, they will take with them a lot of people’s hopes, dreams, and their hard-earned money.

The problem is that Dogecoin – deliberately created without any purpose – defies conventional investment logic and has grown over 6000% since the beginning of this year. As a result, people began to believe that any cryptocurrency could do the same. So when the price of any Doji coin jumps a bit, investors pile in, hoping to ride the wave. This pushes the price up.

But there is no guarantee for that. As a result, the price will eventually start to fall. Investors who bought in at the peak will lose money. And if the price drops completely, anyone who cannot sell at the right time will lose their investment.

People argue that these coins Act It has substance and that by attracting millions of followers, they may be able to succeed as digital forms of payment in the future. After all, half the battle in creating a currency is getting people to use it.

But the problem is that most people buy these pet coins in the hope that someone else will pay more for them in the future. They have little intrinsic value and some are almost scams. As a result, there is a strong possibility that pet currencies will eventually collapse and retail investors will be hit hard.

2. The investment listing is meaningless

There are those who say that meme coins are a stepping stone towards cryptocurrencies, making these complex investments more accessible and fun for retail investors. But if you visit the Reddit forums, you probably won’t find an accessible raw guide about blockchain technology. Instead, you’ll find a strange misrepresentation of traditional investment advice.

One idea is that regular Joes can pass it on to the establishment by getting rich from whatever pet coin forum you are in. There are a large number of messages that encourage people to buy and help raise the price. And similar numbers of messages telling people to HODL (wait for dear life in crypto) and keep the price.

First, the reason you buy an asset should be because you think it has value, not because you can raise the price by buying it. This betrays a detailed pyramid scheme.

Second, if the price of your investment depends on everyone’s ownership, how can anyone make any profits? Owning a $10 billion DOGE means nothing if you can’t sell it or use it.

I am a fan of investing long term and keeping dips. But it only works if you research each investment carefully and base your decision on your confidence in the underlying value of the asset.

The reason the Motley Fool advocates a buy-and-hold strategy is that it is difficult for retail investors to time the market. The pressure to constantly evaluate trading time can cause people to panic when buying or selling. Holding strong investments is a good way to build long-term wealth. It’s not because investors have some sort of peculiar duty to hold on to to keep the price of the asset.

3. The crypto industry is much more than meme coins

I invest in cryptocurrencies because I believe that blockchain technology has the potential to change the world we live in. Regardless of crypto fanaticism, volatility, and concerns about scams and the potential for market bottoming, this technology can change our lives.

Seeing people pile on meme makes me sad because there are so many unusual cryptocurrency projects out there that would make for better investments in the long run. For cryptocurrency investors, the way to build wealth is to look for projects with real benefit rather than chasing short-term profits.

For example:

  • Ethereum (ETH) is an ecosystem that supports a range of decentralized applications. Smart contract technology means we can take the broker out of all kinds of arrangements, from home contracts to insurance sales.
  • VeChain (VET) simplifies supply chains, making it possible to track every step in a product’s lifecycle. For example, if there is an outbreak of E. coli, a supermarket can trace it to the source and reduce infections.
  • Cardano (ADA) has a vision that blockchain can give people identity and access to banking in the developing world. It already has several partnerships with governments in Africa, including a project with the Ministry of Education in Ethiopia to record students’ academic achievements on the blockchain.

I can see the attractiveness of investing in meme coin, but I don’t want anyone to lose their money. Cryptocurrency exchanges list hundreds of currencies, so why not look for the ones with strong fundamentals? At some point, cryptocurrencies built on the air will almost certainly fail. We can only hope that the beneficial owners will survive the fallout.

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