Hype is actually a very important part of any crypto token launch plan and a powerful tool for creating excitement, urgency and a fear of missing out. These factors are the primary drivers leading to explosive growth in a short period of time. A new token lives and dies on its ability to generate headlines, social media shares, and overall market interest.
Meme coins are the epitome of hype driving increased values with little to no utility in some cases, but meme coins do play a vital role in cryptocurrency adoption. In an exclusive interview with Benzinga, Binance CEO Richard Teng commented on the role of meme coins in the burgeoning crypto industry, “Meme coins account for about 12% of altcoins’ trading volume, which is quite significant.” Teng continued, “Meme coins are fun, exciting, and relatable to young adults. They’re often the first step into crypto for many novice investors.”
Some meme coins that are launched onto the public markets experience a “pump” in price only to have the price “dump” shortly after. Responding to allegations of Binance allegedly listing pump-and-dump meme coin schemes, he said that Binance follows stringent listing criteria that ensures only projects with strong fundamentals make it onto their exchange. “If you look at some of these projects, they’re not just about where they are today but where they aim to go in the future,” Teng said.
What is Utility in Cryptocurrencies?
Tokens with an underlying purpose to the blockchain they are built on, a real use case that can save thousands of companies money or time, can be the real difference to a token’s long-term success. Ethereum was created to allow developers to build smart contracts and dApps that have had far-reaching implications for supply chain management, patient data handling in healthcare, and hundreds of processes that used to involve human oversight.
Solana is now leagues faster and comes with the same smart contracts, so we’re seeing a new dApps ecosystem and potentially a superstar token in the making. Bitcoin Cash finally promises to be the instant payment method that Bitcoin’s slow blockchain tech could never quite deliver.
Other tokens launch as payment processors or stablecoins that act as basic financial services for the world’s unbanked. TRON allows totally anonymous transfers with Telegram integration, no matter the amount, while Dreamcars offers the chance to invest in a supercar rental company through blockchain tech. So, from simple part-ownership of a Porsche to handling client records for the multi-billion US healthcare insurance industry, a crypto token can have an impact way beyond its basic value.
Utility is the simple ingredient that separates the hype from future crypto stars, and we should all look for it when assessing a token.
The Shift Toward Utility-Driven Projects
As the crypto market matures, it is naturally shifting towards utility-driven projects with the potential to deliver on their promises. When the blockchain offers solutions to real-world problems and helps companies cut inefficiency and waste, then the coin inevitably has a brighter future.
So far, blockchain tech has redefined supply chain management, cut waste, and saved time for the world’s largest companies. IBM uses it to monitor perishable food deliveries worldwide, Starbucks uses blockchain technology to trace its beans from farm to cup, and Nike has tokenized every pair of sneakers as part of an authenticity drive.
Other tokens and blockchains like Celo have bought basic financial services for the world’s poor with a simple crypto wallet and simplified sending service. It’s a simple yet brilliant application that is changing lives and forging a path thanks to the underlying tech and mission.
Investor Considerations: Navigating Hype and Utility
Investors don’t always need utility to turn a quick profit. Hype can work if you buy in at the right time, but there’s always the risk of getting that wrong. If there is no underlying reason to buy the coin, no technical breakthrough or killer application, then the old crypto volatility can strike at any time. This can even be a rug-pull, or classic pump-and-dump scheme, which it’s best to stay far away from.
Projects based on utility might be longer-term. Still, they are often more reliable and offer returns and price hikes when the underlying technology hits technical milestones or hits the news for other reasons. These are the long-haul projects that could help to change the world.
Always do due diligence on the technology involved as well. There are bold claims in the crypto market each and every week, but claiming utility is just part of the hype job in some cases, which is where these two lines blur.
When Hype is Enough
Some coins have become winners with hype alone and memecoins are an ideal case in point. This year, Dogecoin saw massive gains with simple social media buzz around. Dogecoin’s market cap soared to $23.3 billion at one point due to basic market sentiment, hype, and FOMO.
Dogecoin has since carved out a niche as a payments processor and online tipping tool, so it is finally discovering utility. Make no mistake, though, this one was a pure hype train at the start. Memecoins make up 3.4% of the asset class, with $116 billion in combined market capitalization.
The problem is relying on hype is not a long-term strategy. It’s almost impossible to keep cranking up the publicity without an underlying product. Utility is the key to longevity and real success and is the secret to becoming more than a short-lived hype job.
