Since the meteoric rise of Dogecoin in 2021, meme coins have received a lot of attention. In this article, we discuss whether they are a good investment opportunity.
A meme coin is a cryptocurrency that is based on internet memes, influencers, social communities, and in some cases, current events.
The genesis of meme coins can be traced to the creation of the original meme coin, Dogecoin (#DOGE). Dogecoin was founded in 2013 by a duo of software developers, Billy Markus and Jackson Palmer, who intended for the cryptocurrency to be a joke, hence using the Shiba Inu dog as the cryptocurrency’s logo.
According to Marchus and Jackson, Dogecoin was envisioned as a "fun and friendly internet currency" that would appeal to core #Bitcoin supporters, mocking the wild speculation in crypto markets at the time.
Surprisingly, the joke caught on and attracted a unique online following that decided to invest in the digital currency. DOGE became popular among #Reddit users, who used it for online tipping and supporting causes they believed in.
Another factor in Dogecoin’s early following was the use of Dogetipbot, a cryptocurrency transaction service that allowed users to transfer DOGE to other users via their Reddit comments. This meme currency bot was used extensively by Reddit and #Twitch users.
However, it wasn’t until 2021, that Dogecoin would become a household name following a series of tweets by Tesla CEO and crypto enthusiast, #Elon Musk, supporting the digital currency. That along with further speculation from investors resulted in the cryptocurrency peaking at 0.6364 in August 2021, which represented an over 5,000% price increase from the start of that year.
Dogecoin’s popularity had a stimulating effect on other meme coins, which also began to attract investor attention. Consequently, meme coins began pushing themselves to the crypto space’s forefront.
Currently, according to data from CoinMarketCap, there are over 1500 meme coins with a combined market capitalization of more than $19,7 billion.
Why are meme coins a thing?
Meme coins become popular for several reasons. To begin with, many young, first-time investors find the prospect of investing in meme coins appealing. To them, #investing in a meme coin is part of a new internet trend that could potentially be very lucrative.
With meme coin supporters often touting the high returns and the growing community of followers, it's no wonder many newbies are attracted to adding them to their portfolios. Figures like Elon Musk have also helped to portray meme coins in a positive light.
Secondly, people love memes. Dogecoin was successful in its early years because it was considered a ‘joke' coin, a fun version of Bitcoin and other digital currencies. While it has maintained this angle, it has also become somewhat of a serious investment to a section of crypto investors.
Fear of missing out (#FOMO) has also contributed to the popularity of meme coins. When Dogecoin rallied after Elon Musk’s tweets, several other meme coins came out of the woodwork looking to get a slice of the market action. Many were close clones of Dogecoin with minor adjustments to their code, but all promised to be the next DOGE.
One such coin, Shiba Inu (SHIBA), was promoted as the "Dogecoin killer," attracting scores of retail investors, who felt they had missed out on the DOGE rally and wanted to maximize their gains by buying into this new meme coin.
While there were some short-term gains at the beginning, #SHIBA lost a substantial amount of its value by the end of 2021. The same trend was replicated by other meme coins when the crypto bull market cooled off.
List of top 5 meme coins
Dogecoin
Dogecoin (DOGE) is an open-source cryptocurrency based on a fork of the Litecoin code. Dogecoin’s founders felt that a meme coin had a greater chance at mainstream acceptance than Bitcoin, which was still in its nascent stage at the time.
Dogecoin, like Bitcoin, uses a proof-of-work (#PoW) consensus mechanism to validate transactions and reward miners with newly minted Dogecoins. Digital currency can be used for payments but lacks any real-world utility. Instead, it derives most of its value from speculation and support from a segment of crypto aficionados.
Moreover, Dogecoin has no hard cap on the number of coins being released into circulation, which makes it infinitely inflationary.
Shiba Inu
Shiba Inu (SHIB) is a meme token designed as an ERC20-based alternative to the popular meme coin, Dogecoin. The cryptocurrency is touted as the ultimate "Dogecoin Killer" and is governed by an active community commonly known as the Shib Army. Shiba Inu was founded in 2020 by an anonymous developer going by the pseudonym Ryoshi.
Shiba Inu conforms to the ERC-20 standard, which enables it to support decentralized applications (#dApps) and to be incorporated into DeFi protocols. The Shiba Inu community launched its decentralized exchange (#DEX) known as #ShibaSwap. The DEX allows users to buy and trade SHIB, provide liquidity, stake, and swap tokens to earn incentives through the DEX reward scheme.
ShibSwap supports LEASH and BONE tokens. LEASH offers returns to liquidity providers on the DEX, while BONE is a governance token that allows users to vote on upcoming proposals on the Doggy DAO.
The Shiba Inu ecosystem also supports the Shiba Inu Incubator, which supports ideas and concepts from the community. The Shiba Inu Rescue Association allows users to donate towards the rescue of stray dogs.
PEPE
Pepe coin (PEPE), a cryptocurrency inspired by the popular Pepe the Frog meme, was launched in April 2023 by an anonymous team. Pepe Coin stands out with its colossal maximum supply of 420.69 trillion coins while implementing measures to maintain scarcity by regularly burning tokens.
Operating as an ERC-20 token on the Ethereum blockchain, #Pepe coin leverages the secure proof-of-stake (#PoS) consensus mechanism. The native token of the Pepe Network, known as PEPE, serves multiple purposes, as it can be used as a souvenir, a gift, or an investment tool.
Pepe coin promises a ‘no taxes' policy which translates to minimal trading fees. These fees are only applied during periods of high network usage, allowing users to enjoy cost-effective transactions.
According to the project, the token's distribution strategy designates a significant majority of 93.1% for the liquidity pool, ensuring stability. The remaining 6.9% is held by the development team to support future exchanges, community partnerships, and promotional endeavors.
Dogelon Mars
Dogelon Mars (ELON) is a meme coin similar to Dogecoin and Shiba Inu. The ERC-20 token derives its name from a combination of Dogecoin and Elon Musk.
Dogelon Mars was built by a team of anonymous developers and operates both on the Ethereum and Polygon networks. ELON has a total supply of 1 quadrillion tokens. The developers sent 50% of ELON tokens to #Vitalik Buterin, the Ethereum founder, to burn them and remove them from circulation. The remaining balance of ELON tokens was placed into liquidity pools.
Baby Doge Coin
Baby Doge Coin (BABYDOGE) is a meme token modeled by fans of the highly successful Dogecoin and is meant to be a unique addition to the Dog meme series of tokens. #BABYDOGE was launched in June 2021 by anonymous developers, who hoped it would impress Dogecoin followers with its adorableness (and to profit from the meme crypto frenzy).
BABYDOGE is a BEP-20 token operating on #BNB Smart Chain. The meme coin was built with a deflationary mechanism, and the maximum token supply of BABYDOGE is 420 quadrillion tokens.
Are meme coins worth investing in?
While it is possible to make a profit trading in meme coins, you have to remember that, in many ways, it's similar to gambling. Meme coins have very few practical uses beyond being "joke" currency and being used for speculation.
Compare meme coins like Dogecoin and Shiba Inu to Bitcoin, and you will see the difference. Bitcoin is a disinflationary digital currency with a limited supply, which has established it as "digital gold". Conversely, investing in meme coins is buying into something that lacks real-world applications, although many investors do find a sense of community in meme coins due to their shared belief in their value.
While there is always a chance that the meme coins price could explode, investors should be sure to do their own research, taking into account their expertise in the crypto market, attitude towards risk, and investment goals before deciding whether meme coins may be a good investment for them.
FAQs
What are the best crypto exchanges for meme coins?
For meme coins, there isn't a single ‘best' exchange as availability can change and new platforms often emerge. However, some popular exchanges have historically listed many trending meme coins due to their extensive coin offerings. These include #Binance, #KuCoin, and #Gate.io.
However, investors should be sure to always verify an exchange's reputation, security measures, and regulatory compliance before using it. Additionally, some meme coins might not be available on major exchanges and could be traded on decentralized exchanges (DEXs) like #Uniswap or #PancakeSwap.
Remember, buying meme coins can be highly speculative and volatile, so exercise caution and do thorough research before investing.
What are the best apps for meme coins?
There are several apps available for anyone seeking to monitor meme coins and stay updated on their prices, trends, and news. Which of these is best for each investor can only be decided by them depending on their needs and preferences.
Apps such as #CoinMarketCap or #CoinGecko offer comprehensive data on various cryptocurrencies, including meme coins. Providing price tracking, market capitalization, trading volume, and historical data. Portfolio tracking apps like Blockfolio and Delta allow investors to add their meme coin investments, track their value in real time, and set alerts for price changes.
Wallet apps like #Trust Wallet or #MetaMask support a wide range of tokens, including meme coins. They offer secure storage and easy access to decentralized exchanges (DEXs) for trading.
What are the best meme coins for long-term investment?
What makes a good or bad investment, whether long or short-term, largely depends on each individual investor and their goals and risk tolerance.
However, Dogecoin (DOGE) is the most popular and one of the most promising meme coins out in the market, with many users, an active community, and a total market #capitalization of $11.3 billion at the time of writing. This makes it the largest meme cryptocurrency in the crypto market and a potentially appealing prospect for long-term investors.
