From Dogecoin To Shiba Inu: This Crypto Wild West Could Make You Rich Or Leave You Penniless

The rise of meme coins has brought a new twist to the world of digital assets. This particular class of cryptocurrency, inspired by internet memes, are created for fun and have no fundamental value.

The most famous meme coins are Dogecoin DOGE/USD and Shiba Inu SHIB/USD, which have gained popularity over the years, thanks to endorsements from famous names like Elon Musk.

However, meme coins have also been associated with high volatility and scams like the "rug pull."

There are dangers associated with meme coins, but also opportunities to make money.

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Background

Dogecoin, created in 2013 by software developers Billy Markus and Jackson Palme, is currently ranked as the eighth-most valuable cryptocurrency, with a market cap of over $14 billion.

Shiba Inu was created by an anonymous individual, or individuals, going by the moniker "Ryoshi." It was created in August 2020 as the "Dogecoin killer." Its market cap currently hovers $6.7 billion.

The Dangers Of Meme Coins

Like all cryptocurrencies, investing in meme coins comes with high risk.

Meme coins are associated with high volatility and scams like the "rug pull."

The rug pull is a fraudulent scheme in which developers create a token paired with standard cryptocurrencies like Bitcoin BTC/USD, Ether ETH/USD or Tether (CRYPTO: USDT), place the token on a decentralized exchange, and withdraw all funds after purchasing by investors.

This scam has affected several meme coins, and investors have lost millions of dollars.

The lack of regulation in the cryptocurrency market makes it challenging to identify and prosecute scammers.

Is It Worth Investing In Meme Coins?

The lack of fundamental value makes it difficult to predict the long-term growth potential of meme coins.

However, some investors have made a fortune by investing in meme coins like Dogecoin.

In May 2021, Dogecoin reached an all-time high of $0.74, making it more valuable than some established companies like Dropbox.

Investing in meme coins requires careful research and analysis of market trends.

It is also essential to be aware of the risks associated with meme coins, such as high volatility and scams like the "rug pull."

Danny Talwar, Global Head of Tax at Koinly told Benzinga that while investing in these coins can be tempting due to their meteoric rise in value, it's essential to understand that they're highly speculative assets.

“Consider the potential tax implications when trading to avoid any unexpected tax bills that could potentially reduce overall returns, especially as we near the end of the U.K. and U.S. tax seasons,” Talwar said.

According to Gasper Stih, Marketing Director at Zonda Global, the vast majority of meme coins lack the fundamentals typically found in investment assets, such as a business plan, solid tokenomics, a professional team, or a roadmap with growth potential.

“Many of them were created as jokes or "memes" (hence the name) and are not intended as long-term investments. Most are not eligible for listings on regulated exchanges like Zonda, Bitstamp, and others. Therefore, it is essential to conduct thorough research and understand the risks involved before to making any investment decisions,” Stih said.

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