What Are Meme Coins? Understanding The Craze

Over the past year, many meme-based cryptocurrencies have seen explosive growth and reached their highest values ​​yet, earning 2021 the title "the year of the Meme Coins". For example, the price of Dogecoin went from around $0.005 to $0.69 in just 5 months (January-May 2021), showing almost unbelievable growth. 12,500%. Additionally, at a high of $0.69, DOGE posted a total market capitalization of $46 billion.

So what are the factors contributing to the popularity of meme coins and what exactly are they? This article examines all aspects of these cryptocurrencies.

What are meme coins?

Unlike standard cryptocurrencies like Bitcoin, meme coins are known for their association with internet jokes and viral memes. Created for entertainment purposes only based on amusing images, videos or other forms of media, rather than a solid foundation.

Dogecoin, better known as the first coin meme, was launched in 2013 by two software engineers, Billy Marcus and Jackson Palmer, as a parody of the growing trend of initial coin offerings (ICOs) at the time. The piece was inspired by the viral "Doge" meme, which features an image of a Japanese Shiba Inu with various phrases in Comic Sans font. In the beginning, DOGE was only intended as a fun and playful experience in the world of cryptocurrency. But for now, the most notable piece is no. 8 among all cryptocurrencies by total market capitalization, according to data from CoinMarketCap.

That said, other popular meme coins include Shiba Inu, Dogelon Mars, Samoyed Coin, and Akita Inu, among others.

However, not all meme pieces are based on "memes"; Many of them were simply created as a form of online humor or satirical commentary on the seemingly nonsensical cryptocurrency market. For example, when Rep. Sherman sarcastically called out a fake mongoose coin during a congressional meeting, a cryptocurrency called Mongoose Coin ($MONG) was created soon after.

Similarly, another token called Useless Ethereum Token (UET) was created as a touch of irony on the perceived stupidity of ICOs, with no real value or utility. Even without any connection to any internet meme or joke, some still call it a meme play due to its playful nature.

Here it should be noted that meme coins are considered very vulnerable and unstable compared to standard cryptocurrencies. Indeed, their value can be easily affected by the spread of viral ideas or random celebrity endorsements.

Additionally, meme coins often have a very high or unlimited supply, which means there are a large number of these coins in circulation. Shiba Inu, which has a total supply of 1 trillion tokens, and Dogecoin, which has no maximum supply and has around 132 billion tokens in circulation, are examples of meme coins with large supplies or unlimited.

What makes meme coins so popular?

Despite its not-so-serious origins, meme coins have gained huge popularity in cryptocurrency communities as people buy them to be part of fun trends. Once a coin becomes popular and increases in value, retail investors may also decide to invest in it, which can increase the value of the coin.

Many people are attracted to meme pieces because they are something new and unique. It is often associated with internet culture, which makes it appealing to young people and online warriors, who are likely to be more active on social media.

Moreover, the buzz around meme coins is also tied to the endorsement of celebrities , who sometimes show their support and belief in these crypto memes. Elon Musk is the most popular in the DOGE price action with his frequent tweets. With a large following on Twitter, the Tesla CEO's comments on cryptocurrency often lead to discussions and influence market movements.

Notably in 2021, but also this year, he repeatedly tweeted and commented on Dogecoin, which drove up its price. In February 2021 he referred to DOGE as the city's cryptocurrency, while in April 2021 he called himself "Father Doge" in a tweet ahead of his performance on Saturday Night Live. This, along with support from billionaire investor Mark Cuban, caused the price of Dogecoin to skyrocket.

Another reason why retail investors find meme coins attractive is that they usually cost pennies or a fraction of a penny. Because it is so cheap, you can even get millions of meme coins, which is very different from buying a fraction of ETH or BTC.

Overall, the popularity of meme coins is due to a combination of these factors, as well as the general interest in cryptocurrency and internet meme culture.

Is it worth investing in meme coins?

Meme coins are known for their unpredictability, as they are heavily affected by public opinion and unexpected events. This volatility can cause the prices of these currencies to rise, only to fall just as quickly as the excitement and hype in the community wanes. Unfortunately, some malicious parties also rely on meme coins to trick people into withdrawal scams. Read this article to find out how crypto squid gambling caused investors to lose an estimated $3.4 million: Crypto squid gambling: where was last year's scam?

However, this does not mean that meme coins are worthless. In light of historical evidence, while it caused huge financial losses for many investors, it also proved profitable for others. For once, if you invested $1,000 in Dogecoin in early 2021, when it was worth less than 1 cent per coin, your investment would have grown to $121,052 in May 2021, or 69 cents more. This represents a gain of more than 12,000% in less than six months.

Therefore, as with all other investments, you should properly research and evaluate the background information of relevant meme coins before investing in them. Check whether the project is audited, coins are distributed reliably, and liquidity funds are ensured by registering addresses. Finally, due to their low prices, it can be tempting to invest in coins, but always remember never to spend more than you can afford to lose.