An oft-repeated adage warns to be careful what you wish for, lest it comes true. Possibly originating from an ancient Chinese proverb, it’s the modern-day equivalent of urging someone to perform their due diligence before they engage in something as wild as cryptocurrencies. But even cryptos have their levels of speculation, with Floki Inu (CCC:FLOKI-USD) likely ranking up there with the most lucrative but also the most dangerous.
True proponents of the canine-inspired meme will probably correct me, noting that while they can’t help what others label FLOKI, they will insist that their blockchain-based project of choice is not a meme but rather a movement. According to Coinmarketcap.com, members of the Shiba Inu (CCC:SHIB-USD) community helped bring Floki Inu to life.
If you know anything about the SHIB community, you’ll immediately recognize the power of its brand. To be fair, if Floki Inu can capture even a small amount of that energy, the underlying token can go somewhere. I mean, it’s already ranked 2,842 in terms of market capitalization. While that doesn’t sound like much, when you have 16,012 competitors, that status is (alarmingly) lofty.
Still, anybody thinking about venturing into Floki Inu should be extremely careful. I’m not going to stop you. However, you should realize what you’re getting yourself involved in.
Floki Inu and the Fungibility Dilemma
Peruse insights from the blockchain community long enough and you’ll come across a near-universal theme: people mainly got into cryptos because they don’t trust the central banks issuing fiat currencies.
Of course, that’s a very understandable concept, especially with the inflation we’ve been suffering. While it’s debatable that all the inflation stems from the Federal Reserve’s monetary policy, the central bank certainly exercises massive influence. From its war room, the fate of savers and speculators hangs in the balance.
But such decisions are made by the aristocracy for we the people. Thus, the idea of de-fanging the fiat monetary system was born with the invention of the blockchain. No longer will an elite few determine the supply demand dynamics of the currency of the internet. Instead, that function will be decentralized and publicly distributed.
Theoretically, then, anybody with an internet connection — and a really flipping fast computer — can participate in the monetary policy of tomorrow. It all sounds wonderful. But is it really?
One of the hallmarks of a national currency is that its fungibility, with very few exceptions, ends outside the issuing government’s borders. As a result, fiat currency isn’t just paper notes. Rather, it represents something deeper, a tangible connection to the culture and customs of its underlying people.
However, a cryptocurrency like Floki Inu is 100% fungible. That is, a FLOKI minted in the U.S. is the same as one minted in Tristan da Cunha (don’t email me, it’s just an example). By virtue of its fungibility, then, the culture of each minted Floki Inu coin could be anything or nothing at all.
In other words, the fungibility of any crypto at scale implies that those who gamble on it are speculating on speculation itself. It’s fine, but you’ve got to be aware of this.
Volatility Is the Attraction and the Curse
As I and a few of my InvestorPlace colleagues have mentioned, the volatility of Floki Inu empowers the crypto. In a matter of weeks or even days, you can find yourself up 1,000% on your holdings. That’s the appeal about any of these speculative wagers.
Naturally, though, the opposite is true. You can lose a chunk of money in the blink of an eye. But an even greater fundamental risk is that such a narrative ultimately dooms any efforts to present a longstanding alternative to fiat currencies.
You see, fiat currencies aren’t just paper notes, and they aren’t just tangible ties to a nation’s culture and customs. They’re also promises of an established entity, one that may have great international credibility. By that token, the most legitimate fiat currencies are by default the most stable.
Consider your significant other. You wouldn’t say that your spouse is faithful on Monday but not faithful on Tuesday. Either the person is loyal or is not. In the same manner, a major fiat currency like the dollar or yen is trustworthy or it isn’t.
In contrast, a currency that fluctuates wildly cannot be deemed trustworthy. And I would argue that again, something like Floki Inu is difficult to trust because it’s not a wager on a unified ethos but on speculation, a whimsical and wayward human emotion.
If you’re okay with that, have at it! But don’t fool yourself into thinking FLOKI is something that it isn’t.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
