https://nasacademy.com/blog/article/the-perfect-guide-to-understand-meme-coins
Crypto can be confusing enough on its own to outsiders, but one of the strangest parts of crypto that leave even experts perplexed are meme coins.
Memes have been around as long as the internet, but surged in popularity as the technology advanced. Now, memes are a part of our cultural landscape, with images being recognized all over the world. How many times have you seen a meme with no text at all, and immediately knew what it meant?
Meme coins are exactly what they sound like — crypto currency based on memes.
Meme coins are surprisingly controversial, with the government of Thailand banning them in 2021, and investigations into the promotion of meme currency Floki Inu by an ad agency in London being more serious examples of controversy.
Other than official scrutiny, crypto experts are also critical of the movement, citing that meme coins exist purely as a joke and demean crypto currencies as a whole. In an industry where the vast majority of people are already skeptical about crypto in general, their concern is understandable.
On the other hand, meme coin enthusiasts argue that meme coins make crypto less scary and more welcoming. Putting a familiar face onto crypto creates familiarity, rather than newcomers being confronted with Bitcoin numbers and stats about investments.
Let’s dive into the wild world of meme coins, which involve a lot of backstory — and a lot of Japanese dogs.
The very first meme coin was Dogecoin, and was created in 2013. Doge is a meme featuring a shiba inu and surrounded by whimsical text saying things like “such wow”, “much concern”, “many fast”.
Dogecoin was created as a joke, and didn’t see much traction until the cryptocurrency bubble formed in 2016-2017, where it skyrocketed in value. When the bubble burst in 2018, it saw massive devaluation like the rest of the cryptocurrency. Its value recovered somewhat in 2020, but not to the levels it had seen in years past.
In the years since Dogecoins creation, there have been many other meme coins popping up — most notable of which include Nyancoin (based on nyancat), Shiba Inu, and versions of the original Dogecoin, like Dogedash and Dogelon Mars.
The value of meme coins periodically rises and falls, but the current boom can be traced back to the GameStop stock prices soaring thanks to a subreddit community inflating the store’s stocks. This was eventually halted, and the group felt as if they had been betrayed by the interests of rich people manipulating the stock market.
Angry at their situation, the group discovered Dogecoin. Not only was Dogecoin on the blockchain in a decentralized financial system — and so safe from manipulation — it was also based on a meme from the same internet culture. Feeling that Dogecoin was created in the same culture and represented the same values (unlike the stock market), this group adopted Dogecoin as their next project.
Cryptocurrency like Bitcoin is extremely volatile, and the expense of it dissuades many who can’t afford to invest in it. Meme coins, on the other hand, don’t have the same restrictions that currencies like Bitcoin have. Dogecoin, for example, is an unlimited resource with billions of coins on the blockchain, while the amount of Bitcoin available on the blockchain halves periodically, creating digital scarcity.
This means that meme coins come at a fraction of the price of Bitcoin, and makes it more accessible to many more people, who often buy large amounts of coins at a time. There are also so many meme coin currencies — over 250 of them — because they’re also incredibly easy to produce, at a small fraction of the effort of other cryptocurrencies. This lends itself to meme culture, where new meme coins can be produced quickly to reflect new memes and internet trends.
As with all cryptocurrencies, investing in meme coins can be risky, but meme coins have their own set of unique risks and rewards.
The volatility of the value of meme coins comes from word of mouth, and this is largely because of celebrities or short-lived movements — such as the GameStop and Dogecoin story.
Another example of celebrities influencing meme coin value is Elon Musk’s tweets about Dogecoin, which saw the cryptocurrency skyrocket in value. However, at the rate things change on the internet, this increase in value doesn’t last forever and, because meme coins rely on word of mouth rather than scarcity to increase in value, it is possible for meme coins to become completely worthless.
Many meme coins are also not as secure as Bitcoin because of the blockchains they use. An example is the meme coin currency based on the Netflix series Squid Game. Taking advantage of the popularity of the show, the value of the coin skyrocketed to the value of $2,000 per coin. At that point, the creators sold off all the coins and stole the money from their investors.
At this point, the only two meme currencies on established and tested blockchains are Shiba Inu on Ethereum, and Dogecoin on Litecoin.
That said, because meme coins are nowhere near as expensive to invest in, it’s far less riskier to invest than using something like Bitcoin. Just make sure you don’t spend more than you’re willing to lose in meme coins.
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