When it comes to successful near-term speculation in cryptocurrencies, especially Meme coins, hype is a far more important component. After all, it’s a high level of buzz and headlines that help to drive the level of “fear of missing out” (or FOMO) necessary to in turn drive a rapid rise in the price for a particular cryptocurrency.
But while hype and short-term speculation continue to drive the cryptocurrency market, as this market matures, attention paid to the long-term utility of coins and tokens is starting to come off the back burner. Binance CEO Richard Teng comments on the memecoin trends and their utility, “Memecoins, if nothing else, highlight the robustness of the existing on-chain token creation and trading infrastructure. It is a truly revolutionary development that today, permissionless, globally tradeable assets can be created and traded in multi-million dollar volumes within hours and at minimal costs. Given the current focus on memecoins, it is expected that the ability to create new tokens at virtually no cost will lead to a significant oversupply of various memecoins in the market. Ultimately, attention and resources are likely to consolidate around a select few memecoins that demonstrate longevity and resilience.”
As this trend continues, the resultant positive impact could be significant. Largely, because such a change could prove bullish for the long-term prospects of both established and emerging cryptocurrencies. With this in mind, let’s take a closer look at the “hype to utility” pivot currently underway, and what it means for crypto investors and developers going forward.
Profiting from ‘Meme Coin Mania’ is Easier Said Than Done
Cryptocurrency speculators able to read the pulse of the market can be successful when it comes to short-term trading in Meme coins and other speculative cryptocurrencies. However, attaining these skills necessary to profit from current and future waves of “Meme coin mania” is a whole lot easier-said-than-done.
The reasons for this are twofold. First, while there is an element of skill involved in profiting from short-term crypto speculation, a lot of it hinges on fortuitous timing. For example, sometimes, events like the recent U.S. Presidential election, can help to drive another round of “Meme mania.”
However, these events can oftentimes be tough to anticipate, making “getting in early” more a matter of luck than skill. Second, while we’ve seen several waves of speculative frenzy in the cryptocurrency market, as retail traders gain sophistication, not to learn valuable (and costly) lessons from past unsuccessful speculative activity, it may prove more difficult in the future for Meme coins to go “to the moon” on hope and hype alone.
Hence, going forward, market participants, both experienced and inexperienced, may be starting to prioritize the importance of a coin/token’s underlying utility, rather than the buzz and hype surrounding it.
Utility is Key for Building Lasting Value
Scores of cryptocurrencies have come and gone, but the ones with staying power have been the cryptos offering an adequate level of utility for their users/holders.
In the case of Bitcoin, the original cryptocurrency and the most valuable cryptocurrency by market cap, its utility stems largely from its functionality as a portable store of value that can be converted back to fiat currency with ease 24/7.
In the case of Ether (commonly known as Ethereum), its utility is derived from the token’s central role in facilitating transactions on the Ethereum Web3 network. As for another major altcoin, Solana, its value stems from the scalability and speed of its respective network.
Beyond just Bitcoin and established altcoins, many of the top Meme coins have demonstrated utility, helping to drive their staying power and lasting value. Dogecoin, for instance, may have started out as a “joke” Meme coin, but its growing use as a medium of exchange has enabled DOGE to continue being one of the largest cryptocurrencies by market capitalization.
The Bottom Line
Regarding the long-term importance of cryptocurrency utility, there are several major takeaways. First, for those developing new cryptocurrencies, a focus from the start on utility may prove more profitable in the long run than a shortsighted focus on maximizing the coin/token’s hype potential.
For experienced and inexperienced cryptocurrency investors alike, building wealth over the long haul may come down to buying and holding cryptocurrencies with high underlying present and likely future utility.
As for the cryptocurrency ecosystem as a whole, increased knowledge/appreciation of the long-term merits of investing in cryptocurrencies with high utility will bring with it a highly beneficial outcome: the further cycling of permanent capital into the space.
Yes, Meme coins stand to keep bringing new crypto investors into the fold. However, a greater focus on long-term investment will likely keep them there. In turn, this will help the crypto market shake off its reputation as a financial “wild west,” enabling it to fully become a component of the mainstream financial markets.
