Meme coins are a type of cryptocurrency that is inspired by internet memes. Introducing the genesis of memecoins is introducing Dogecoin, which was created in 2013 as a parody of Bitcoin and other major cryptocurrencies.
DOGE is simply a joke whose humorous character is based on the Internet meme of the Doge. Its mascot is a Shiba Inu, a Japanese breed of dog. Technically, Dogecoin is just a simple fork of Luckycoin, itself a fork of Litecoin making it a cycle of alternative coins to other cryptocurrencies.
Dogecoin slowly carved out a reputation between 2014 and 2017. It became the iconic meme of the cryptocurrency industry, amusing investors and observers. Dogecoin’s price soared in 2017, going from a valuation of $20 million to over $1 billion.
Dogecoin made a spectacular entry into the top 10 most valuable cryptocurrencies on the market alongside Ether, BNB, and Solana, this time with the support of billionaire and Tesla founder Elon Musk.
The phenomenal success of Dogecoin gave ideas to other individuals. In August 2020, the Shiba Inu (SHIB) memecoin was also created, and less than a year later, its valuation exceeded one billion dollars.
With the successive successes of Dogecoin and Shiba Inu in 2021, the meme coin craze began. Several meme cryptocurrencies are available for purchase and sale on most crypto platforms.
What are the most popular memecoins?
There are many meme coins, but few have managed to rise to the top ranking of the most valuable cryptocurrencies on the market.
Here are the most valued on the market as at 20th October 2024:
Dogecoin (DOGE): $20 billion;
Shiba Inu (SHIB): $11 billion;
PepeCoin (PEPE): $4.3 billion
Dogwifhat (WIF): $2.6 billion;
Bonk: $1.6 billion;
FLOKI : $1.5 billion;
Popcat : $1.2 billion.
How can we explain the success of meme coins?
It should be noted that not all meme coins are successful. In reality, the vast majority have no value and have very wacky themes.
Beyond their humorous dimension, some meme coins have been able to lead with their philosophy: they are cryptocurrencies created by the people and for the people.
This totally decentralized and wacky side appeals to some investors who want to criticize more traditional cryptocurrencies, while others only want to support the community of their favorite meme coin.
Additionally, billionaire Elon Musk’s support for Dogecoin is certainly no stranger to this success. The latter first mentioned Dogecoin in a tweet in April 2019, mentioning that It could be his favorite cryptocurrency.
Since then, Tesla’s CEO has mentioned this meme coin many times, even specifying that he owns some. His influence on memecoins is such that one of his tweets is enough to propel their price upwards.
The Dogelon Mars (ELON) coin was born to ride this hype by combining the Doge meme and Elon Musk’s vision of conquering Mars, while the FLOKI meme coin was born in homage to the billionaire’s dog, a Shiba Inu named Floki.
The meme coin craze also followed the stratospheric surges in DOGE and SHIB prices. Many opportunists then sought to replicate this success. Since this type of cryptocurrency does not need to bring anything new on a technical level, it is extremely simple for anyone to create one.
Fear Of Missing Out (FOMO) which is either the fear of missing yet another spectacular rise like those experienced by Dogecoin or Shiba Inu or of missing the next meme coin that will pulverize all records lending to Speculation has been a very powerful driver for meme coins.
Finally, and this last point is more of a psychological bias, meme coins only cost a few cents or even fractions of a dollar. Some inexperienced investors then think that buying a lot of tokens is enough and that if the unit price is very low, the potential for gains is higher.
This is wrong, of course, since the unit price of a token is relative to the number of tokens in circulation; the more there are, the lower the unit price will be. Thus, the total valuation of a cryptocurrency is a much more important piece of data to observe than the token’s price alone.
Is buying a memecoin a good idea?
Investing in a meme coin is very risky. It is one of the riskiest types of cryptocurrencies. Indeed, as we have seen, meme coins often do not offer any technical innovation.
Their use cases are generally limited, if not almost non-existent, so many have nothing concrete to fall back on. On top of that, meme coin tokenomics are often worrying, with extremely high inflation.
Additionally, meme coins are subject to more significant speculation than other types of cryptocurrencies, which means that their volatility is very high, especially if their valuation is low. Thus, prices can increase very quickly and with a wide range, to the delight of many investors. However, the opposite is also true, and many lose out there.
A meme coin lives and dies by its community and its community alone. So if the community eventually turns away from it out of weariness or because a new, more attractive meme coin has emerged, the price can instantly collapse.
To conclude, if you want to invest in a meme coin, we recommend doing in-depth research on the subject, given the inherent risk in this type of cryptocurrency. Many scams also surround meme coins, and staying away from them as much as possible is better to protect your capital.
