People usually engage in gambling for two primary reasons: the prospect of winning a significant amount of money and the amusement it brings. Most people understand that casinos have an advantage over them, ensuring that the casino is profitable in the long run. As a result, gamblers are aware of the risks involved when they participate in gambling activities. The current craze around memecoins entails uneducated and uninformed people being enticed into a form of gambling that is disguised as an investment prospect. There is a significant risk of suffering losses due to price volatility and, mostly, fraudulent activities and scam projects.
Memecoin addiction
The primary distinction between cryptocurrency markets and traditional markets is that cryptocurrency markets operate continuously, including weekends, 24 hours a day. This can motivate individuals to participate in the activity even during times when they should be getting rest. New memecoins are constantly entering and leaving the market, presenting people with an overwhelming amount of options. Influencers on social media flood the platform with eye-catching previews, urging individuals to invest in tokens that are going to skyrocket by 100x.
Those who end up holding these tokens when the music stops are the ones who lose out. As expected, many individuals are left with nothing, watching their investments disintegrate into nothingness.
Popularity and pumping
Meme-based cryptocurrencies have become popular thanks to social media platforms like Twitter, Reddit, and TikTok, where they are frequently shared and endorsed by celebrities and influencers. The buzz created by these social media trends boosts the value of meme coins, and numerous investors purchase them out of FOMO (fear of missing out), hoping to generate a rapid profit.
During a period of inactivity in the cryptocurrency market, the $PEPE memecoin‘s recent surge resulted in early investors earning millions of dollars on small investments of a hundred dollars or less. The coin’s value skyrocketed from practically nothing to a market capitalization of approximately $1.5 billion within just a few weeks. This event triggered discussions regarding pump and dump schemes and market manipulation.
While some may argue that memecoins’ capital and attention are futile, the cryptocurrency market cannot be entirely dismissed as detrimental. Decentralized exchanges like Uniswap, PancakeSwap, and others are the ones enabling transactions. Although the memecoins traded may not offer enduring value, the DEXs utilized by traders continue to demonstrate their significance.
Scams and rugpulls
Crypto Twitter is filled with tales of how early $PEPE investors became overnight millionaires. While PEPE did revitalize the memecoin craze, it also prompted the emergence of many fraudulent tokens in the previous week. Scammers in the crypto space have been taking advantage of the popularity of some memes by launching deceitful projects to trick investors.
PeckShield, a blockchain security company, detected the emergence of ten memecoin scams, including PEPEDOGE, PEPEC, WOW, MEME, FOUR, NEWPEPE, BENZ, BMW, POP, and BOBO. The creators of these flagged fraudulent tokens reportedly withdrew the liquidity and “rug-pulled” naive investors.
ZachXBT, a well-known blockchain investigator, reported that a single wallet address has been connected to 114 memecoin frauds in only 45 days.
Making money with memecoins
While it is possible to earn a significant return by investing in memecoins, it is undoubtedly not without risk involved. Memecoins, with their erratic behavior, are more unstable than their conventional equivalents and, therefore, their value could suddenly drop overnight. For every story where somebody made a substantial profit from a memecoin, there are also numerous people who have lost big but don’t post it on social media.
Individuals who profit from memecoins and shitcoins are typically either insiders, creators, or wealthy investors. By the time a new “gem” is publicly announced, it is often too late to invest, as insiders and wealthy investors have already made considerable profits. Shitcoins and memecoins are not intended for long-term holding; they are designed to be bought early, pumped, and then sold for a profit before moving on to the next project.
As an ordinary investor, your primarily function is to exit liquidity for those who are involved in their creation. And you can create your own memecoin in under 30 seconds, as explained by a Twitter user whitelights.eth in this video (click here to watch).
We entered a new memecoin season
The recent surge of memes has sparked speculation that the memecoin season has returned, meaning crypto traders should anticipate an influx of these digital assets in the market. In April, digital artist Rhet Mankind produced a $TURBO memecoin utilizing ChatGPT. The token has attracted significant attention from the community, resulting in its market cap surpassing $100 million.
Memecoins are once again trending, with some experiencing enormous 1,000% increases in just a few hours. The revival of memecoins underscores the increasing interest and demand for this particular kind of gambling.
