Think crypto folks get their satoshis in a twist about Bitcoin? Well, there’s another type of crypto asset that divides the crypto sector right down the middle more than a vaccine injection does your families and friends.
Depending on your risk tolerance, time in the market, and reverence for the ethos and importance of crypto as the antidote to the world’s centralized financial problems, you’ll other love or hate these little coins with a passion you can’t muster up for anyone or anything else in the space, except possibly SBF.
I’m talking of course about meme coins, also known as doggy coins, the fun-gible redneck cousins of NFTs that periodically descend like $PEPE-powered frogspawn on the banks of crypto, all vying for attention, ANY attention sometimes, to stay alive, grow a tail and worm a way into the wallets of crypto investors.
What’s the Deal with Meme Coins?
As their name suggests, meme coins are issued as inherently worthless digital assets that are fueled by their dissemination and promotion across social media, as long as they may last. They are usually ultra-cheap, costing fractions of a cent, thus making them accessible to any crypto investor.
With a cheap and cheerful visual identity, anonymous team, and minimal, optional backstory, meme coins require no technical understanding or mission to change the world for the better. They pretty much scream “SCAM!” down the blockchain abyss. Yet, for the majority of their investors, this only enhances their appeal.
There is no real ambiguity here: meme-powered crypto assets return like an opportunistic and deranged crypto carnival for degen freaks to the digital assets space usually towards the end of a bull cycle, once profits have gone down the Bitcoin-Ethereum-layer1-small cap rotation, to provide some light-hearted entertainment, and a cheap longshot gamble to try and strike it rich.
In most cases though, you instead grind your hard-earned BTC and ETH profits into dust powder over time, unless you intercept and jump on the meme coin circus bandwagons early enough, way before it enters the city gates (ie. Binance and Coinbase). For a very lucky few, a couple of hundred bucks can turn into life-changing millions, just like a lottery. Hold it a fraction longer than you should, and the house takes it all back.
Make no mistake: When Meme Season hits its peak and you’re in crypto, you’ll eventually take a FOMO punt.
The Short (and Often Shorted) History of Meme Coins
The history of meme coins, though not long, has been massively eventful and there’s rarely a dull moment when meme coin mania gets a hold of mainstream investors. A spike in meme coin prices can also be an important harbinger of things to come or signify the end of a particular market movement.
No meme coin is bigger than the original one, Dogecoin (DOGE). DOGE features the Shiba Inu dog meme and was launched in 2013 as a lighthearted companion to Bitcoin that poked fun at the crypto community’s eagerness to gamble money on coins with no utility.
The Musk Effect
For years, Doge was dismissed as a joke coin (as its creators Jackson Palmer and Billy Markus, the creator, intended), but that changed in 2021 when Elon Musk began endorsing DOGE on social media.
Musk’s tweets and comments, including referring to himself as the “Dogefather” and mentioning DOGE during his “Saturday Night Live” appearance, drew immense interest and investment into the cryptocurrency. Despite calling it a “hustle” on SNL, the attention pushed DOGE’s price to an all-time high of around $0.75, up from less than $0.01.
Musk’s endorsement of $DOGE was the first celebrity endorsement that seemed like honest fun instead of profiteering, and it would soon become clear that one joke token would not be enough to satisfy everyone on the internet.
Copycats chase Doge
Due to $DOGE’s massive ascent, new challengers and copycats soon popped up, all following similar trends such as dog tokens, fruit tokens, other animal coins, and the occasional “zeitgeist” token like 2023’s anti-establishment asset Pepe. Currently, there are 2 meme coins in the Top 20 cryptocurrencies by market cap and 4 in the Top 100. For crypto assets that do not claim to have any real use case or value, this is highly significant.
Shiba Inu (SHIB) is the most well-known of the bunch, first copying DOGE, then differentiating itself through its Proof-of-Stake chain and plans for a layer-2 network. $SHIB offered a brand new toy for meme coin degens to play with that came without the historical baggage (and accumulated bags) of Dogecoin, and its success caused an avalanche of similar Inu coins to hastily go to market, including Floki.
And of course, the year so far belongs to our new amphibian arrival $PEPE, which has caused an investor frenzy over April and May 2023 so far, swelling to a $1B market cap within a few weeks, despite its creator making it clear the token has no real value.
Much like last year’s Goblintown NFT collection, $PEPE’s success flies in the face of conventional wisdom, somehow tapping into the Bermuda Triangle of crypto’s collective psyche and as a result, has made millionaires of early investors for its staggering 5,000,000 % rise in price.
Many experts believe that big meme coin rallies signify the top of a current market cycle and with Pepe and Bitcoin both drawing down significantly since, this theory is playing out in real-time. Again.
How Do Meme Coins Generate Hype?
It’s incredibly simple and cheap to create a meme token as an asset on an existing chain like Ethereum, Binance Smart Chain or Solana. Next, the creator needs to promote their new asset on social media such as Twitter and Discord, tapping into existing communities of “degen” influencers and other projects and incentivizing market hype through paid promotion, airdrops or ultra-low priced private allocations.
In 99% of cases, a meme token enjoys a small initial price pump that then peters out over time before the asset sinks without a trace as liquidity disappears and the community moves on to the next one.
As a result, this often illegal promotion of meme coins is a murky science in itself that provides fertile grounds and ample justification for regulators like the SEC and its head Gary Gensler to develop new regulations that help them sink their claws further into the space through their “cryptocurrencies are securities” mantra.
Last year alone the SEC charged a slew of meme coin influencers and creators for promoting what it believes to be unregistered securities. More regulation is sure to come from a number of financial watchdogs within the next year or two.
Key Characteristics of Meme Coins
For those who know where to look, meme coins are usually quite easy to pick out, sharing a few common traits that are impossible to miss.
Meme coins are characterized by their catchy, often humorous names inspired by popular internet “meme culture”, making them relatable and engaging to especially younger generations who grew up with this decade-old phenomenon. Unlike traditional cryptocurrencies, meme coins lack concrete use cases and are more of a cultural phenomenon, tapping into the fascination with online communities. They turn the bug of being useless into a feature by offering this simple value proposition: Buy X coin, become part of the latest social media trend, and maybe just maybe you can retire in the next year or 2.
Small market caps
Additionally, meme coins typically have small market caps and a lack of concrete use cases, which may seem like drawbacks but are actually part of their appeal. These characteristics make the coins feel like a grassroots movement, with a passionate community of supporters promoting and investing in their favorite coin.
Meme coins will also prioritize fun over function at every opportunity, and what’s more fun than seeing a really big number in your crypto wallet? Owning a large number of coins is relatively easy due to their low individual values, and is a lot more pleasant to look at in your wallet than owning fewer coins with the same value. Often a single US dollar could buy you hundreds of thousands of any meme coin. This accessibility, combined with the potential for significant gains if the coin gains popularity contributes to its broad and uncomplicated mainstream appeal.
Top Meme Coins To Watch
Of the 340 meme tokens listed on CoinMarketCap, only 4 are ranked within the 100 coins when measured by their market capitalization (total value). Dogecoin, Shiba Inu, and Floki have weathered at least one major bear market, while new entrant $Pepe appears to be positioned for the long haul as well. Despite this, they remain highly speculative and risky investments. Here’s more info about each one.
Dogecoin, the pioneer meme coin, emerged in 2013 when Billy Markus and Jackson Palmer crafted it as a playful project centered on the well-known “Doge” internet meme, which features a Shiba Inu dog. Surprisingly, Dogecoin gained a devoted fan base and evolved into a significant cryptocurrency contender.
Today, Dogecoin remains the top meme coin with a market cap of over $10 billion and continues to influence the creation of new coins in the crypto realm. Its robust community of supporters, high trading volume, and the 8th largest market cap make it the go-to crypto for anyone intrigued by this distinctive market niche.
Shiba Inu (SHIB)
Shiba Inu (SHIB) is an Ethereum-based altcoin with the Japanese Shiba Inu hunting dog as its mascot. Launched in August 2020 by an anonymous creator named Ryoshi, it is often seen as an alternative to Dogecoin and dubbed “the Dogecoin killer.”
With a strong community called the “SHIBArmy,” Shiba Inu features three tokens: SHIB, LEASH, and BONE. The ecosystem includes ShibaSwap, Shiba Inu Incubator, and Shiboshis (NFTs). Despite its massive price surge in October 2021 and market capitalization of $41 billion, SHIB remains a highly speculative investment with limited utility and extreme volatility.
Floki Inu (FLOKI), launched on July 10, 2021, is a multi-chain ERC-20 and BEP-20-compliant token that stands out from other meme coins with its real-life use cases. Its three main utilities include Valhalla, a play-to-earn metaverse; FlokiPlaces, a marketplace for purchasing physical goods using FLOKI, creating demand for the token; and FlokiFi, a decentralized exchange (DEX) letting $FLOKI holders swap digital assets into other digital tokens.
Pepe Coin (PEPE)
$PEPE is the new meme king on the block(chain), paying tribute to the Pepe the Frog internet meme. Aiming to capitalize on the popularity of meme coins like Shiba Inu and Dogecoin, $PEPE recently kicked off a wave of meme coins that have traders burning gas fees like it’s 2021 again.
Despite the anonymous founders being only launched in mid-April, $PEPE has already been listed on Binance along with $FLOKI and has maintained a market cap of over $1 billion since the listing was announced. Expect a long list of coins with “Pepe” in their names to be created soon and remember that part of being a meme coin is being original.
The popularity of meme coins remains a frustrating Pandora’s box for more serious crypto believers seeking to reform the traditional financial system, who see it as a surefire way to gamble away your portfolio and chase away smaller investors. Play your meme card right though, time the market and get very lucky, and you’ll likely still lose a chunk of your money.
Despite this, these joke coins play an important role in drawing in new blood into the overly technical and often humorless, virtue-signaling world of crypto where you need to be an early mover and know your layer-1s from your layer-2s and your TVLs from your FDVs in order to make sustainable gains in the long run.
For most small investors, they provide invaluable early lessons on what not to buy and when to sell, including the author, who had his first experience of the crypto carnival at a Dogecoin meetup in Taipei in 2018, and whose small bag of Doge disappeared with New Zealand exchange Cryptopia’s hacked wallets in 2019.
Pepe Fiction: Personality Goes a Long Way
Like Samuel L Jackson’s barking mad Bible-quoting hitman, Jules Winnman explains in Pulp Fiction:
“Dogs have personality. Personality goes a long way.”
The same logic it would appear applies to doggy coins in crypto.
This article reflects the opinions of the author alone, is for educational and entertainment purposes only, and should not be considered to be financial advice of any kind. The prices of cryptocurrencies like meme coins are extremely volatile in nature and may result in financial loss. Please do your own research before investing any money.