What are memecoins?
Memecoins are cryptocurrencies inspired by memes (characters, individuals, animals, and artwork) on social media or the Internet.
Memecoins tend to be highly volatile because they are mainly community driven. Therefore, their prices can skyrocket if a lot of enthusiasts embrace the tokens or can slump unexpectedly when traders turn their attention to the next memecoins.
The first memecoin created was Dogecoin (DOGE), which was inspired by the popular Doge meme of a Japanese Shiba Inu dog. Despite its origins as a humorous endeavour, Dogecoin’s comparatively low transaction fees and fast block times led to its wide adoption. The coin’s technical capabilities helped it become a viable medium of exchange rather than a sole light-hearted joke.
Following Dogecoin, many different memecoins had started to gain significant traction. Coins like Pepe (PEPE) inspired by the Frog meme or Shiba Inu (SHIB) took the crypto community.
How do memecoins work?
Similar to any other cryptocurrency, memecoins take full advantage of the based blockchain and related technology. In most cases, they are built on blockchains that use smart contracts, such as Ethereum ERC-20 standard or Solana.
However, there are still exceptions. The most obvious exception is Dogecoin. It has its native blockchain, which, in some ways mimics that of Bitcoin. The memecoin is based on a Proof-of-Work (PoW) consensus algorithm but with an unlimited inflationary supply.
Others, such as the so-called “Doge killer” Shiba Inu (SHIB), are building their own ecosystems and side projects to offer additional value and engage their enthusiasts.
Why are memecoins so popular?
During the COVID-19 pandemic, the crypto market saw significant growth, partly because retail investors were looking for ways to protect themselves against inflation. At the same time, meme coins surged in popularity, increasing both in market value and variety.
The phenomenon began with the “meme stock” events involving GameStop (GME) and AMC Entertainment (AMC) in late 2020, when a Reddit community dramatically boosted their stock prices. In January 2021, a Reddit group joked about raising the price of Dogecoin (DOGE) to create a crypto version of the GME surge. This idea gained traction, and with the help of tweets from Tesla CEO Elon Musk, DOGE’s price skyrocketed. Dogecoin hit a record high of $0.73 USD, a more than 2,000% increase in just five days.
However, in May 2021, after Elon Musk made a joke about DOGE on TV, the price fell. Traders then turned their attention to other meme coins on the market, such as the “Dogecoin killer” SHIB. Retail investors were FOMOing and started to pour into these meme coins with the hope for quick riches, leading to another surge in their values.
Another appeal of meme coins for retail investors is their low price, often just a few cents or less. Technically, this doesn’t mean much because these coins boast huge supplies. Still, holding millions of a certain meme coin feels different than holding a fraction of ETH or BTC. With a small investment, traders can acquire thousands or even millions of tokens such as DOGE, SHIB, or Akita Inu (AKITA).
Beyond potential profits, the meme coin craze is fueled by community sentiment. These coins are often linked to popular Internet memes, making them fun and sometimes like an “insider joke” within their communities. Buying meme coins can be a way to support these communities. Following the GME saga, meme coin traders inspired by the Reddit group SatoshiStreetBets launched a “David vs. Goliath” battle against mainstream cryptocurrencies, flooding the 2021 crypto market with community-driven meme coins.
Memecoins risk and volatility
Cryptocurrency aggregator CoinMarketCap lists over 1,300 currencies in its Meme Coin section. However, approximately nine pages of these coins are not actively traded and are effectively worthless. Among the meme coins, Dogecoin, Shiba Inu, Bonk, Pepe, and around 50 others boast more than $1 million in daily trading volume. Despite their popularity, these coins are generally considered risky and volatile trading assets.
In the media and investment world, meme coins are often characterised as elaborate pump-and-dump schemes. In most cases, that is precisely what these coins are. However, they might only be intended as a joke but somehow attract followers and investors.
Meme coins experienced exponential growth in 2021, but like all cryptocurrencies, trading and investing in them carries high financial risk. The tokenomics of meme coins can be particularly concerning. For instance, Bitcoin has its blockchain, a well-documented whitepaper, an established ecosystem, and a deflationary nature, leading to increasing institutional adoption in recent years. In contrast, most meme coins are inflationary with no maximum supply, and their ecosystems, use cases, and fundamentals are often defined by the collective jokes of the community. Only a few meme coins are built on the technology of major cryptocurrencies; for example, DOGE’s technology derives from Litecoin (LTC), and SHIB was built on the Ethereum blockchain.
Another significant risk is that meme coins are heavily community-driven and more speculative than larger market cap cryptocurrencies. This volatility often results in unexpected pump-and-dump scenarios. The lifecycle of meme coins is generally short-lived, with prices potentially skyrocketing thousands of times due to celebrity endorsements or FOMO, only to crash unexpectedly when the community moves on to the next meme coin.
As the meme coin market continues to grow, it is crucial to be aware of projects that might exploit the hype to scam traders. A notorious example is Squid Game (SQUID), a meme coin inspired by the popular Netflix show. It surged over 86,000% in a week, but the development team abruptly rug-pulled, causing the price to plummet by 99%. Worse still, the holders were unable to sell their SQUID tokens. Therefore, it is imperative to be cautious and conduct thorough research (DYOR) before trading or investing in meme coins.
Popular Memecoins in 2024
Dogecoin (DOGE)
Created in 2013 by software engineers Billy Markus and Jackson Palmer, Dogecoin (DOGE) was inspired by the Shiba Inu meme and intended as a joke to gain mainstream attention. DOGE is a fork of Litecoin (LTC) and uses the same Proof of Work (POW) mechanism, with no maximum supply.
Shiba Inu (SHIB)
Shiba Inu (SHIB), often called the “Dogecoin killer,” was created in August 2020 by an anonymous developer named Ryoshi. Named after a Japanese dog breed, SHIB differs from DOGE by having a limited supply of 1 quadrillion tokens, with 50% burned and donated to charity. The SHIB ecosystem includes a decentralised exchange, an NFT art incubator, NFTs, and an NFT game.
Dogelon Mars (ELON)
Dogelon Mars (ELON), named after Elon Musk and his interest in SpaceX, is another popular meme coin. A fork of Dogecoin, ELON has a circulating supply of 557 trillion tokens. As of November 2021, it had surged over 3,780% since its April 2021 launch.
Akita Inu (AKITA)
Inspired by DOGE, Akita Inu (AKITA) is an ERC-20 token launched on Uniswap in February 2021. Like SHIB, AKITA locked 50% of its supply on Uniswap and sent the other 50% to Ethereum co-founder Vitalik Buterin. AKITA has a total supply of 100 trillion tokens, one-tenth of SHIB’s supply. It gained popularity alongside other dog-themed coins in May 2021 and is considered another potential “Dogecoin killer.”
Samoyedcoin (SAMO)
Built on the Solana blockchain, Samoyedcoin (SAMO) airdropped 13% of its supply to the community at launch. The SAMO roadmap includes token burn events, airdrop tools, a decentralised exchange (DEX), and NFT creation. SAMO’s price surged over 4,300% in October 2021, going from $0.005 to over $0.22 within a month.
Kishu Inu (KISHU)
Launched in April 2021, Kishu Inu (KISHU) is another dog-themed meme coin offering participation rewards, NFTs, and a DEX called Kishu Swap. Within a month of its launch, KISHU had over 100,000 holders and a market cap exceeding $2 billion.
SafeMoon (SAFEMOON)
SafeMoon (SAFEMOON), a BEP-20 token on the BNB Smart Chain, launched in March 2021. It penalises sellers with a 10% exit fee, distributing half to existing holders and burning the other half. SafeMoon gained attention in April 2021, achieving a 9418.54% ROI by November 2021.
Pepe (PEPE)
Inspired by the Pepe the Frog meme, the Pepe meme coin incorporates internet culture elements within its blockchain ecosystem.
Bonk (BONK)
The Bonk meme coin utilises blockchain technology and decentralised governance to support transactions and maintain the ‘Bonk’ meme within its ecosystem.
Floki Inu (FLOKI)
FLOKI’s ecosystem includes a 3D NFT metaverse, DeFi utilities, a crypto education platform, NFTs, and a merchandise store. The community has also committed to building schools as part of its charitable efforts.
CorgiAI (CORGIAI)
CorgiAI combines blockchain technology, community governance, and artificial intelligence algorithms to facilitate transactions, incentivise holders, and promote the corgi dog meme culture within its decentralised ecosystem.
Memecoins FAQs
What is memecoin used for?
Unlike traditional altcoins, most meme coins don’t have a specific function. Instead, they serve to create large, enthusiastic communities, hundreds of thousands or even millions. However, some meme coins, like DOGE, are also used as a common payment method.
What makes a coin a memecoin?
A meme coin is primarily defined by its association with a popular internet meme, which shapes its concept and marketing strategy. These coins also incorporate humorous elements at their core.
Which memecoin will reach $1?
We haven’t seen a memecoin that reached $1. So far, the only meme coin that came close to reaching $1 was DOGE, which has reached an all-time high of $0.73.
Are memecoins real?
Memecoins are as legitimate as any other cryptocurrencies but are typically much more volatile. It’s essential to conduct thorough research before engaging with any meme coin.
Will meme coins survive?
The future of meme coins is uncertain, and it’s unclear which, if any, will endure. Dogecoin (DOGE) was created in 2013 and is now the largest memecoin by market cap.
Can You Create Meme Coins?
Yes, anyone with the required technical skills can create cryptocurrency. However, transforming a coin or token into a popular meme coin is challenging and has only been successfully accomplished a few dozen times.
What Are the Most Popular Meme Coins?
According to CoinMarketCap, the top five meme coins by market cap are Dogecoin, Shiba Inu, Bonk, Pepe, and Floki.
