Meme coins don't take themselves too seriously, but that doesn't stop people from buying them. Shiba Inu (SHIB -2.04%) is worth $7.3 billion (as of Aug. 21), enough to make it one of the 25 largest cryptocurrencies.
For investors who do their homework on everything in their portfolio, the continued success of meme coins is perplexing. Once you see the kind of returns meme coins can offer, it's easier to understand.
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From $100 to over $10 million
Shiba Inu has always traded at a fraction of $0.01, because it started with a massive supply of 1 quadrillion tokens. On Aug. 21, 2020, it closed at a price of $0.000000000117. If you'd bought $100 worth, you would've gotten about 855 billion SHIB tokens.
The price at the time of this writing is $0.000012. Your 855 billion tokens would now be worth about $10.3 million. You'd be in the two-comma club, just from putting $100 into a meme coin five years ago.
Therein lies the appeal of meme coins. They're long shots, to put it lightly, and the vast majority go nowhere. But a select few take off and deliver life-changing profits to early investors.
The odds are stacked against you when buying meme coins
It's easy to fall victim to survivorship bias when looking at meme coins. You hear about Shiba Inu, Dogecoin, and a few others that have had success, but not the thousands of meme coins that nobody buys.
Even with successful meme coins, you need to get in very early. Five years ago, Shiba Inu had less than $10,000 in daily trading volume, and there was no reason to expect it would take off.
While the entire crypto market is risky, there are legitimate investment opportunities. Meme coins, on the other hand, are a roll of the dice.
