If you’re investing in cryptocurrency, specifically in altcoins like Floki Inu (CCC:FLOKI-USD), you know that there’s a risk that you could lose your entire investment.
That risk is impossible to quantify, but it’s not zero. And that’s a message that I know you hear from many InvestorPlace contributors. So I’ll just add my name to the list.
But if you’re reading this article, you’re likely comfortable with the risk you’re taking. The reason that many individuals buy cryptocurrencies such as Floki Inu and “pupcoins” Shiba Inu (CCC:SHIB-USD) and Dogecoin (CCC:DOGE-USD) is for the possible reward. You’re looking at the ceiling, not the floor.
This was touched on by my colleague Josh Enomoto who correctly noted, as have other InvestorPlace contributors, that the volatility of altcoins is what makes them so attractive. Enomoto wrote, “In a matter of weeks or even days, you can find yourself up 1,000% on your holdings.” Of course, as Enomoto and other analysts have pointed out, you can also see the value of your crypto investment drop by 1,000% or more as well.
That’s why, to someone like me who is on the sidelines of the crypto movement, this seems mostly like gambling. Because if Floki Inu or many other altcoins for that matter achieve their goal of becoming a viable alternative currency, it will have to lose the very volatility that makes it attractive.
The Sea of Sameness
There are over 5,000 altcoins in existence. That statistic alone should give you at least a moment of hesitation. Why? Because at their core every altcoin is attempting to do the same thing. And in a permissionless environment, they can do just that.
Currently Floki Inu touts three unique projects: Valhalla, its NFT gaming metaverse; FlokiPlaces, its NFT and merchandise marketplace; and Floki Inuversity, a content/education platform. I suppose that each of these carries a uniqueness because they are intertwined with the Floki community, known as the Vikings.
However, even if an altcoin has a unique application; it’s not something that can’t be emulated by another altcoin. This is leading to a “sea of sameness” and that’s why I don’t see Floki Inu as being sufficiently distinct.
The Power of Community
As the Floki Inu white paper makes clear, FLOKI is intended to be a community, not an altcoin. In a prior article about Dogecoin, I’ve likened this to pledging a fraternity. One way that the Floki Inu community reminds me of a fraternity is its partnership with the Million Garden Movement. This is an initiative co-founded by Elon Musk’s brother, Kimbal Musk. The community of gardeners seek to educate people about a better diet and “educating millions of new gardeners to grow their own food.”
Let me make my position clear. I love this. If you’re familiar with my investment philosophy, you know that I’m a fan of giving investors a reason beyond price. And in a “sea of sameness” that I described above, this partnership is something that Floki Inu can point to as setting them apart.
However, I’m not sure that it’s enough in and of itself, to encourage stronger community participation. After all, the organization will happily accept donations of fiat currency. And they would be foolish not to do so. This means that the affiliation with Floki Inu, while noteworthy, is not necessarily a game changer.
Does Floki Inu Have a High Enough Ceiling?
If you’re comfortable with the idea that your entire investment could be worthless, then you have to ask yourself how high of a ceiling will you require to consider Floki Inu a worthwhile investment? I suspect that if you’re hoping for FLOKI to be worth $1 someday, you will be disappointed. But that doesn’t mean there isn’t money to be made.
I’ll stick by what I’ve said before. I suppose throwing a little of your fun money at Floki Inu may be good for your portfolio and good for mankind. But don’t look at the altcoin as an instrument of wealth.
On the date of publication, Chris Markoch 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.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.