Meme coins have recently taken their fair share of cryptocurrency centre stage thanks to the newfound interest from celebrities like Nigeria’s Davido, Sabinus and Australian Iggy Azalea. Both Davido and Iggy Azalea launched their meme tokens—$Davido and Mother, respectively—on the Solana network in May, although their paths took different routes afterwards.

While $Davido’s valuation dipped significantly before being flagged off by Nigeria’s Security and Exchange Commission (SEC),  Iggy Azalea’s Mother received a massive boost after a surprise utility announcement on June 9. Despite these contrasting outcomes, investor enthusiasm remains undeterred, as evidenced by comedian Sabinus launching Sabicoin on Saturday, June 15.

Sabicoin is the latest addition to the celebrity-driven meme coin trend, with Sabinus leveraging his influence to attract crypto investors. For celebrities who’ve ventured or will venture into creating meme coins, the odds for high profits–regardless of the intentions—appear promising, but for common enthusiasts like you and me, what are the odds?

Perhaps, an improved understanding of meme coins and why they are considered viable investment options will provide first-hand answers.

Understanding Meme Coins

Meme, as you know refers to funny images, videos or phrases that spread rapidly across the internet. Meme coins simply embody this in a cryptocurrency context.  Their existence, as explained by Bryan Hernandez to Forbes  “tends to be centered around a viral moment or funny idea, and their value depends largely on how much momentum that concept can generate.’’  Notable examples include Dogecoin and Shiba Inu coin, which, fueled by celebrity endorsements, garnered multibillion-dollar market caps at their peak.

Anyone with the necessary technical knowledge can create or own a meme coin, as it requires relatively little backend effort compared to other major cryptocurrencies. However, what’s the value of a coin named after an obscure person, animal, or artwork?

The value of a meme coin lies in the support of an enthusiastic community that generates buzz and attracts potential investors. Although this cult-like following isn’t the only prerequisite for a meme coin’s success, it is one of the key reasons why celebrities—whose livelihoods largely depend on public attention—embrace leveraging their influence to create their coins. 

Should You Follow the Stars? Risks of Meme Coin Investments

Like any product or venture hinged on speculations derived from a frantic community, Meme coins are highly volatile. Whether celebrity-owned or not, the value of these coins often skyrockets when they are in the limelight, but once the hype dies down, plummeting values are given.

There’s also the risk of pump and dump scams. Essentially, this is a scam that happens when a group of people artificially inflate the price of a coin through misleading statements and hype. Once the price has increased significantly, these individuals sell off their holdings at a profit, causing the coin’s value to crash and leaving other investors.

While utility for most meme coins remains a distant prospect, their low entry barriers and potential for high returns ensure they remain an enticing investment option for many.  But despite this, it’s imperative not to forget these coins for what they are –a joke that occasionally yields profit.