Imagine you have converted your life’s earnings into Gold and want to keep it safe in a bank locker. Whom will you trust more for safekeeping it? A shabbily-maintained co-operative society bank near your home or a more secure branch of SBI in the city?
Of course, you will prefer to keep your Gold in an SBI locker. Why? Because the bank’s fundamental strengths, popularity, services, reliability and customer base give a sense of security. More so, because of the several small bank fail stories of the last few years that have left thousands of depositors in tears.
It is plain common sense to store anything of value (including money or gold) at a place that seems secure and reliable for the long term. But when it comes to cryptocurrency, the opposite seems to have become true in India in 2021, especially for millennials.
Defying conventional wisdom, thousands of youngsters have preferred meme coins with shaky fundamentals like Dogecoin instead of more stable and fundamentally strong altcoins like Matic, which is a purely Indian cryptocurrency. Wondering why? Lets’ find out.
Sandeep Nailwal, Co-Founder and COO of Mark Cuban-backed Polygon (previously Matic), says that the majority of the crypto community is still invested in speculative assets. That is why a large number of individuals are purchasing dogecoins and other meme coins with no intrinsic worth.
“Polygon, on the other hand, is a technology-driven platform with a solid infrastructure that focuses on growing and expanding the blockchain developer ecosystem. As a result, Polygon, Ethereum, and similar tech-centric goods are preferred by individuals that understand the technology, have a knowledge of Crypto technology beyond speculations, and are looking at crypto as a long-term investment class,” Nailwal told FE Online.
But this is not it. According to Bitinning founder Kashif Raza, ease of access to trading platforms, lack of understanding of the crypto technology and endorsement of Dogecoin by famous personalities like Elon Musk have raised the popularity of the meme coin. Musk’s tweet on sending Dogecoin to the Moon further added to the interest shown by youngsters in this meme coin.
“Musk’s Twitter handle is very popular and has been controversial. About Dogecoin, even he had himself said it was just a meme coin. But when he started making serious tweets like Dogecoin will become the currency of the future, that there is huge potential in Dogecoin…youngsters felt if Elon Musk was tweeting about it, it must be good. But everything that a celebrity talks about doesn’t need to be good,” Raza told FE Online.
Surveys have found that nearly 70 per cent of investors in the crypto space are aged below 34 years. And Dogecoin is the second most popular crypto coin after Bitcoin, which many have compared to new-age Gold.
Raza said since last year’s lockdown, youngsters were locked inside their homes. They had disposable income at hand and time to explore easy ways to invest. Thanks to easily accessible equity investing platforms like Zerodha, and even several crypto exchanges, there was a spike in new account opening on these platforms.
Even an SBI Research report in June attributed “people spending more time in their homes during lockdowns” as one of the reasons behind a “significant tilt” of retail investors towards the stock market.
Earlier it was difficult to start investing in the market. But now, be it for stock trading or investing in crypto, all a person needs is aadhaar and a mobile number. Someone with even Rs 500 in his wallet can start investing in stocks or crypto.
Where Matic stands
It is not that Matic is unpopular.
According to Raza, nearly 70 per cent of Indian crypto users have either traded, bought or held Matic at least once.
“Matic is a popular coin, but youngsters are not attracted immediately towards it because it is not being tweeted about by a celebrity, or a high-profile personality like Elon Musk,” he remarked.
On crypto exchange WazirX, Dogecoin was trading at Rs 15.717 on Saturday (July 31, 2021) morning while the price of Matic was Rs 78.350.
The popularity of Dogecoin has led to a flood of new meme coins like Shiba Inu, Baby Dogecoin etc.
Is it wise to invest in meme coins?
Raza said these days a new trend has started. Youngsters come together to form small communities on social media platforms like Instagram and keep promoting their favourite coins, hoping their prices would jump. But it doesn’t seem to be happening so fast.
Dogecoin had touched its all-time high price of $0.73 on 8th May 2021 and it has fallen by 71.2 per cent since then, according to the data available on CoinGecko website today. Yet DogeCoin is ranked 7th in terms of market cap worldwide ($27,513,698,759) while Matic is at the 17th position with a market cap of $ 6,708,502,825. Matic had touched its all-time high price at $2.62 on 18th May and since then it has fallen by 60.1 per cent.
However, experts like Raza believe that when the current bear market in the crypto space ends, fundamentally strong coins will be the first to recover and command high prices, not the meme coins.