Understanding Meme Coins
To understand what meme coins are, we first have to understand what a meme is. Memes have been a pivotal part of internet culture long before the boom of crypto. Memes can be images, videos, GIFs, iconic lines from pop culture, and much more. Memes are often used jokingly or to express a reaction in a way that transcends traditional dialogue. Memes also amalgamate with ‘the current thing’ to create trends. With the rise of crypto, it was only natural for meme culture to bleed into it, giving birth to digital assets that affect the landscape of the cryptocurrency market and investments.
The Rise of Meme Coins: How Did They Gain Popularity?
Meme coins are highly community-driven and often have multiple problems in governance. Yet, they seem to not be just a one-off as new meme coins pop up very often.
The reasons behind their popularity stem from various factors such as the influence on social media, remarks by famous people, projects launched by online influencers, viral trends, FOMO(fear of missing out), and the massive scale of the online meme community. Let’s explore how these factors, along with some of the notable meme coins have gained popularity over the years.
Dogecoin: The OG Meme Coin that Started it All
In 2013 software engineers Billy Markus and Jackson Palmer decided to jokingly create a lighthearted alternative to traditional cryptocurrencies. The coin features the iconic Shiba Inu (Inu meaning dog in Japanese) that has been the face of many memes as its logo. While it started off as satirical, today it has become one of the most traded cryptocurrencies to ever exist. The coin was valued at $0.74 at its all-time high, and as of July 01, 2023, 12:46 pm IST, with a market cap of $9.5B.
‘The Elon Musk Effect’ gained popularity due to the Tesla and SpaceX CEO’s comments regarding cryptocurrency, including multiple in relation to Dogecoin. Whenever Musk comments on crypto, the market reacts. In 2021 SpaceX started accepting Dogecoin as payment to launch the ‘DOGE-1 mission to the Moon’, further adding proof to the unforeseen rise of Dogecoin.1
Shiba Inu Token: Riding on the success of Dogecoin
Whenever a successful product is launched and used, there are bound to be other groups to rid the success of said product. Similarly, with the undeniable rise of Dogecoin, there came the Shiba Inu (SHIB) token. It takes its name from the Shiba Inu dog breed, which one may notice is the same breed of dog used in the Dogecoin logo.
The coin was created in 2020, and some herald it as the “Dogecoin Killer,” yet that has not become a reality as of today. The token was created on the Ethereum blockchain as an ERC-20 token. The token gained great notoriety in 2021. The SHIB token was once valued at $0.000032 at an all-time high and has since fallen to $0.00000729 as of July 08, 2023, 10:44 am IST. 2
PEPE Coin: The New Kid on the Block
Well, this one comes with a little bit of controversy, yet an article on meme coins written in 2023 won’t be complete without mentioning PEPE. Pepe the Frog memes have been part of meme culture long before it was ever associated with cryptocurrencies. The coin, as the name suggests, has PEPE the frog at its forefront. PEPE coin first started trading on April 15, 2023, at a price of around $0.000000001. 3
It quickly gained popularity as it attracted the community due to its no-tax policy, a redistribution system that benefits long-term stakers, and a burning mechanism to preserve the scarcity of PEPE coins. 4. The coin is currently listed on Binance, clearly showing its impact on the decentralized meme coin market. The above-stated controversy is linked to US politics, and an article released by Coinbase sparked some outrage towards the exchange within the community with calls to boycott the exchange in May of 2023.
With the success of Dogecoin and Shiba Inu, there seem to be many alt-coins related to memes popping up very often. Yet most of them end up being fads and lots of controversy.
Risks Associated with Investing in Meme Coins
As most meme coins tend to be short-lived, the risks related to them are quite high. The people who benefit from meme coins are often the creators of the coins, as most of them end up being rug pulls and pump-and-dump schemes. Let’s take a look at one scenario to clearly explain the risks of meme coins.
The Squid Game Token (SQUID)
Squid Game is a highly popular and successful Korean Television Show that aired on Netflix in 2021, breaking records and bringing in a new audience for K-dramas. The token was marketed as a play-to-earn token, with the games to be played pulled straight out of the popular show.
Everything seemed great for the token, and it had a quick rise in popularity. A fateful day for all those who invested in the SQUID token was November 01, 2021, as it recorded an all-time high price of $2,861.80. The shock came down when within 15 minutes of the token hitting the all-time high, the value drastically fell to a price far less than $1, even reaching its all-time low on the same exact day it hit its all-time high.5 It was heartbreaking for many to see multiple people in the community losing massive amounts of money.
The above incident was also critiqued by many as it was evident that a quick look through the whitepaper and the ‘official’ website would make one skeptical about the project’s validity. Yet this just proves how powerful FOMO is and the sly market manipulation of the creators of such tokens. It’s important that one exercises caution and perform due diligence before investing in any cryptocurrency or token. Engaging with reputable sources, consulting financial advisors, and staying informed about the latest developments in the cryptocurrency market when making crucial decisions.
Memes are something that will be part of human society for the foreseeable future. With Web 3.0 and DeFi becoming more and more popular by the day, it’s safe to assume that one can expect more and more creation of meme coins and other alt-coins. Yet it will be interesting to see where everything leads with the new regulations that are set to be enforced on the broader cryptocurrency market.
- CNBC: www.cnbc.com[↩]
- Coinbase: www.coinbase.com[↩]
- Forbes: www.forbes.com[↩]
- Binance: www.binance.com[↩]
- Coinmarketcap coinmarketcap.com[↩]
