What Are Meme Coins – All You Need to Know
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Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong.
Meme coins have gradually become part of our daily texts and a growing means of online expression. By adding humor and other feelings, people could use memes to enhance their communication and content on social media platforms. The increasing adoption of memes birthed meme coins in the crypto industry.
Subsequently, meme coins have witnessed explosive growth in 2023, with thousands of tokens emerging this year and offering investors massive returns. We’ll explore the world of memes to unveil what is a meme coin and all you need to know about the coin.
What are Meme Coins?
Meme coins are cryptocurrencies that have traits of comedies. Meme-inspired logos, branding, and names such as animal images characterize them. Being inspired by internet memes and jokes, meme coins are developed to become viral and shared just like other memes.
The popularity of meme coins usually depends on their virality, humor, social media trends, and strong community participation. Additionally, the growth of a meme coin could become explosive as it presents fast and huge market returns that would attract investors.
Also, the influential prowess of the participants on the internet plays a role in adopting a meme coin. Dogecoin (DOGE) and Shiba Inu (SHIB) are the leading meme coins in the industry that recorded their peak performance in 2021.
However, the recent meme coin frenzy in 2023 introduced some of the trending tokens like PEPE, TURBO, FLOKI, Wall Street Memes (WSM), BONE, and others. Meme coins are a highly volatile class of crypto assets with high speculation. Besides their humorous value, they have little or no utility.
The Advent of Meme Coins
Dogecoin is the first meme coin to be developed in the crypto industry. As a connecting ground for most modern activities, the internet is flooded with memes and jokes that people can share in the expressions and content.
Social media platforms like Meta (formerly Facebook), X (formerly Twitter), Instagram, and others helped the use and popularity of memes. Users could share humorous images and videos in their posts that could easily go viral with time.
The growing spread of humorous content caught the attention of Jackson Palmer and Billy Markus, the founders of Dogecoin. In 2013, Palmer and Markus designed Dogecoin as a crypto coin but a joke, using the Shiba brand dog as its logo.
However, the prominent billionaire and CEO of Tesla, Elon Musk, became the greatest influencer of Dogecoin. Musk’s frequent posts about DOGE on Twitter triggered the popularity of the meme coin.
Not only was Musk Dogecoin’s promoter, but the billionaire also has DOGE coins in his crypto portfolio. Musk included Dogecoin as a payment option for his electric car company, Tesla, in 2022, adding relevance and utility to the token.
Tesla merch buyable with Dogecoin
— Elon Musk (@elonmusk) January 14, 2022
Following the success story of Dogecoin came Shiba Inu, the second-largest meme coin by market cap. Created by an anonymous founder ‘Ryoshi’ in 2020, Shiba Inu also gained traction through the posts of Elon Musk and Vitalik Buterin, Ethereum co-founder.
With the increasing adoption of meme tokens, 2023 marked the peak of the memecoin mania. Projects like Pepe Coin (PEPE) and TURBO emerged with massive market surges.
The founder of TURBO, Rhett Mankind, designed the meme coin using the famous artificial intelligence (AI) ChatGPT. According to Mankind, he allowed the AI to complete a larger part of the development of TURBO.
I gave GPT-4 a budget of $69 and asked it to make the next great meme coin.
I will follow all instructions it gives me and document the process here.
Follow and participate 👇 pic.twitter.com/bBxkxkg7eS
— Rhett Mankind (@rhett) April 23, 2023
Mankind gave a budget of $69 to GPT-4, prompting the creation of TURBO. The AI designed the coin’s tokenomics, wrote its operational code, and suggested the name of the meme coin.
Meme Coins Vs. Traditional Crypto Tokens
Just like traditional crypto assets like Bitcoin (BTC) and Ethereum (ETH), meme tokens are developed using blockchain technology. This is the technology based on a distributed database for tracking digital assets and supports decentralization.
Technically, meme coins and traditional cryptocurrencies share some similarities in their functionalities as digital assets. However, meme tokens lack distinct utility applications to their value. Bitcoin and other traditional crypto tokens have specific purposes tied to their design.
For instance, Bitcoin (BTC) is designed as a peer-to-peer (P2P) digital asset to facilitate user payments and bill settlements. BTC transactions require no third parties like banks or other intermediates to complete.
On its part, Ethereum is the founding network of smart contracts that allow the development of decentralized applications. Its native token, ETH, is used to pay all transaction fees on the network and transfer value across the blockchain.
But meme tokens are not designed with any specific utility. Their attractive edge lies in their speedy popularity and potential for huge market returns during their popularity.
In most cases, the fame of a meme coin is fueled by hype and can only last for a short period, cutting off its speculative benefits to investors. In such instances, the tokens will lose all their market relevance and interest from investors.
Difference Between Meme Coins and Traditional Crypto Tokens
The table below provides distinctive aspects between meme coins and traditional crypto tokens.
| Aspects | Meme Coins | Traditional Crypto Tokens |
| Definition | Class of crypto assets inspired by internet memes and viral trends on social media platforms. | Digital assets with laid-out records and increased adoption. |
| Purpose | Designed as jokes and to entertain the community. | Developed as digital assets to ensure decentralization and with specific applications. |
| Development | Most meme coins have no active development teams or distinctive roadmaps to foster future growth. | Designed by active development communities with laid-out roadmaps that bear the visions and future growth steps. |
| Utility | It has little or no utility but is mostly for speculative purposes. | Includes several utilities being designed with high transparency and a great alternative to fiat currencies. Crypto assets are used for peer-to-peer (P2P) payment purposes, decentralized applications (dApps), smart contracts, and stores of value. |
| Investment Profile | They are highly speculative investments that offer potentially high returns for investors seeking short-term gains. | They are less speculative than meme coins and provide high benefits for both institutional and retail investors on a long-term basis. |
| Value Generation | Meme coin adoption and growth depend on social media posts, hype, and strong community speculation. | Value and growth depend on the tokens’ use cases, adoption, market demands, developmental progress, and updates. |
| Investment Risks | Their high speculative nature gives a higher risk with meme coin investments; they are mostly used for crypto scams due to a lack of fundamentals. | Has a lower risk potential than meme coins. Their distinctive development track records, intrinsic technology, and greater adoption are protective hedges. |
| Price Volatility | They are driven by hype and market speculations and exhibit high volatility with extreme price changes. | They are relatively stable compared to meme coins but are influenced by broader market trends and adoption. |
| Maximum Supply | Most meme coins have an unlimited token supply that could easily cause high volatility and inflation once the value changes. | Traditional crypto tokens always have a specific and limited maximum, accounting for strong insusceptibility to slight inflationary changes. |
Meme Coins Scams and Regulatory Concerns
Despite its potential for explosive price rallies, meme coins have seen wide adoption in crypto. However, some people within the crypto community are still skeptical about their lack of intrinsic value and utility.
Moreover, meme coins have been used to carry out pump-and-dump schemes and rug pulls in the crypto space. Recently, some developers of the popular Pepe Coin (PEPE) sold off trillions of Pepe coins worth almost $16 million.
PEPE DEVS DUMPING 🚨🚨😱😱
In the past few hours, @pepecoineth devs have sold over 16T #PEPE tokens, worth over $15.6M.
They still hold around 2.5% of the total supply, so keep an eye on their wallet.
Their wallet address 👇
0x5BdEA820293689B77FA8e83b1E3D58B27B5ce9BA pic.twitter.com/ptVqPvBEq9— Global Rashid (@globalrashid007) August 25, 2023
This action from Pepe creators triggered more selling pressure from investors, causing a drastic decline of over 20% in the token’s value. Many observers in the industry believed the project had been rug-pulled by its developers.
From a global perspective, many countries have fortified their regulatory approaches to the crypto industry. The increased scrutiny is due to billions of dollars in losses several investors have suffered.
In 2022, the crypto space recorded the implosion of some crypto firms and protocols. These include the Terra-LUNA algorithmic ecosystem and the FTX crypto exchange. Also, the collapses triggered the liquidation of some crypto-related firms with high exposure to them.
With some legal battles and regulatory tightening approaches, the tension in the crypto industry regarding regulation is still far from ending.
Some major crypto assets with utilities such as Bitcoin (BTC) and Ethereum (ETH) seem to have received legal approval in most jurisdictions. However, the story could be different for meme coins due to their high susceptibility to scams and volatility.
Pros and Cons of Meme Coins Investments
Pros
- Fun-based crypto assets
Meme coins offer users funny and humorous means in their online expressions and communication. Being inspired by internet memes, meme coins offer relief to users as jokes and comedies.
- Low entry price
Meme coins come with low entry prices for users of all levels and financial status. You don’t have to break the bank to invest in a meme coin, as the value is always below $1. Retail investors could easily have access to meme coins even without substance capital at hand.
- High investment returns
Meme coins are popular for their explosive price growth within a short period. Once a meme coin goes viral, it could easily build a robust community of users that will trigger its price surge exponentially. In most cases, meme coins are a good investment option for high returns.
- Community Engagement and Participation
Meme coins offer users an active community to join and interact with others. The coins create a community with crypto enthusiasts of like minds for sharing similar thoughts and humorous expressions. Also, through community participation, users could learn more and improve their investment patterns while enjoying the entertaining aspect of the token with others.
Cons
- Lacks Utility
Meme coins have little or no utility attached to their values. This makes them short-term investment assets that could plummet with the slightest shift in any factors that impact the tokens.
- High Risks
There are always high risks of scams and pump-and-dump schemes associated with meme coins. Their high speculative native and extreme volatility could easily trigger price fluctuations, causing huge losses for investors.
- Lacks development updates
Most meme coins lack laid-out future development strategies that could boost their adoption and ensure sustainability in the future.
Conclusion
Meme coins constitute a major aspect of the crypto industry, with growing adoption in recent years. 2023 has been a year of meme coins frenzy as most tokens recorded explosive price rallies with increased investors’ participation.
However, meme coins are highly volatile and more susceptible to scams and rug pull. You should always research and apply due diligence before investing in meme coins. Also, remain updated on potential trends and changes that could trigger a decline in your selected meme coin investment.
Asad Gilani
Crypto Editor
