TL; DR
Full story
“Memecoins have more potential benefits than blue-chip governance tokens, according to VC.”
Catchy headline, right? Memecoins outperform blue-chips? (Impressive!).
Unfortunately, this is just a well-disguised (and widely misleading) “water is wet” statement.
It’s a trick we fell for a lot (for longer than we’d like to admit) when we first started exploring crypto – so we thought we’d tell you how it works, in case you’re in the same boat.
The trick works as follows:
Yes, memecoins have more potential benefits than blue-chip governance tokens – but…
The lower the total value of a cryptocurrency → the less investment required to increase its price → the greater its ‘potential upside’.
That’s the basic idea ☝️
Here’s some real-world context for you:
The memecoin darling of this bull run, dogwifhat ($WIF) currently has a total market value of about $2.5 billion, while Bitcoin is worth about $1.24 billion.
Yesterday morning, Bitcoin went from $61.78k to $63.1k, increasing its total value as an asset by ~$20 billion.
If you had bought BTC for $61.78k and sold it for $63.1k, you would have earned about a 2% return on your money.
If that same $20 billion in value had been added to $WIF’s $2.5 billion market value, holders would have seen a 700% return.
(Not bad for a Tuesday morning).
“$WIF has a bigger potential upside than Bitcoin!”
See how that makes for a catchy headline, but is it a widely misleading “water is wet” statement?
Finding out which of the 2,000+ memecoin projects launching every day are Actually will the price go up?
That’s the hardest part.
