The promise of getting rich fast has never slipped the attention of cryptocurrency investors. Missing out on Bitcoin scarred many people, which could have “made it.” Investing $100 in Bitcoin in 2010 would have amounted to over 333.33 BTC, which is a tough pill to swallow for many. In the crypto world, crazes fueled by greed are common, and meme coins seem comparable to the ICO epoch of 2017.
Accreditation from institutional investors like PayPal or Tesla has normalized cryptocurrency. Binance Chain introduced a more accessible entry barrier for accessing DeFi and dApps by altering Etheruem’s primary concerns going into 2021, its high fees. As reported by Vanity Fair, meme coins are a new means of using greed and anxiety to entice users to purchase into a hollow project with low fundamentals.
A Mania Fueled By Access
The DeFi summer was a catalyst for crypto to regain global attention as the global pandemic led users to look for alternative revenue sources. Automated market makers encouraged peer-to-peer transfers without the need for a centralized entity. However, the promise of a decentralized and free-market presented both opportunities and issues.
According to data from Bscscan, Binance Smart Chain has outdone Ethereum in terms of daily transactions with over 7 million transactions compared to 1.7 million at the time of writing. Designed for fast trading, Binance Smart Chain works in correspondence with Binance Chain, which services similarities with Ethereum’s ecosystem.
Low transaction costs on the network facilitate DEX’s such as PancakeSwap to develop into magnets for investors. The absence of a centralized entity in DeFi and Binance creates a censorship-free network for new projects to be launched. According to Vice reports, projects on Binance Smart Chain are “simple” to create and launch, allowing people to launch shallow projects that are fueled only by marketing and empty promises.
Data regarding a new meta of traders highlight Gen Z as representing the majority of retail traders in 2021. Digital native of sorts and with a DIY mentality, research suggests only 16.9% of new Gen Z investors understand cryptocurrencies and blockchain fundamentals. Fomo is the main catalyst for new investors to enter the cryptocurrency market. The promises of getting rich quickly lure them towards meme projects such as Dogecoin or Shiba Inu.
Elon Musk’s presence in the cryptocurrency space as an influential figure added a new dynamic to how people perceive crypto. Seen a credible source, Elon Musk helped Dogecoin look like a “good investment”; however, a series of “irresponsible tweets” made it less trustworthy. What’s more is that damage to the crypto market has been done, and as some users reported, the emergence of meme coins push the market towards a new bear market.
As highlighted by Vanity Fair, the emergence of meme coins is the sum of determinants such as greed, faster access to information, social media, and influencers. The ability to target young investors through cartoonish branding paints a grim picture for the cryptocurrency market. While projects like SafeMoon or Shiba Inu have made headlines after parabolic rallies, investors caution about their sustainability. Psychologically, people ache for getting rich quickly, and supporting a meme coin by influential social media personalities removes the risk barrier from people’s perception.
The cryptocurrency market is a wild west, and the top two searches on Google reinforce the idea that it hasn’t changed since 2017. Binance Smart Chain has enabled faster and more affordable access to DeFi; however, they do not control the types of projects users release. What’s more, each ecosystem that services a lower entry barrier, such as MATIC, experiences the same influx of meme coins or PolyDoge. Growth for meme coins on Binance Smart Chain is attributed to the market demand of naive investors hoping to catch the new Bitcoin.