The history of these coins began as a joke but gradually evolved into one of the most popular offerings in the crypto world. According to Coinmarketcap, the most popular meme coin, Dogecoin, is now among the top 10 in terms of market capitalization. If someone had invested $1000 in Dogecoin in March 2019 and sold it in May 2021, they would have made $344,000. However, it's not that simple as meme coins have also resulted in significant losses. Let's delve into why that is.
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- 12 Jun 24
Beyond the Lols: Unveiling the Value (or Lack Thereof) in Meme Coins
From silly beginnings to surprising success, meme coins have taken the crypto world by storm. But are they just a fad, or is there real value behind the hype? We'll explore the rise of meme coins.
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What is a meme coin?
Before we dive into popular meme coins, let's define what meme coins are in general. Meme coins are a type of digital currency that is based on popular internet memes. Memes are humorous or interesting elements of information, such as expressions, images, videos, or audio clips that spread across the internet and social media. In other words, meme coins are digital currencies inspired by specific internet jokes or memes.
Which meme coins are the most popular?
In this article, we will explore three well-known meme coins: Dogecoin, Shiba Inu, and Pepe, and see how they have evolved over time.
Dogecoin (DOGE)
Dogecoin is the most famous and popular meme coin. It was created in 2013 based on a meme featuring a Japanese Shiba Inu dog with comical text in the form of "funny Shiba" messages. It gained prominence thanks to Elon Musk, who actively discussed it in his tweets. Despite its comedic nature, Dogecoin was created by programmers Jackson Palmer and Billy Markus not just for entertainment but to satirize the rise of other alternative cryptocurrencies.
Its popularity was also reinforced through social initiatives such as raising funds for the Jamaican bobsled team for the 2014 Winter Olympics and the "Doge4Water" campaign to provide clean drinking water in Kenya. Currently, Dogecoin ranks 8th in popularity among cryptocurrencies on the Coinbase platform and holds the 9th position in the market with a market capitalization of $10 billion.
Meme coins, including Dogecoin, do not possess a stable fundamental basis. They are associated with popular memes, and their demand often depends on the statements of influential individuals. In May 2021, the coin reached its all-time high, surpassing 76 cents, but since then, its price has been declining and currently stands at just over seven cents. In 2023, the value of Dogecoin only changed by 3%, which is a minor fluctuation for such a volatile asset.
Shiba Inu (SHIB)
This is another popular meme coin, occupying a 0.18% market share with a capitalization of over $4.5 billion. SHIB was created as a response to Dogecoin and is considered its "killer." Both meme coins share a common image - a Shiba Inu dog breed originating from Japan.
Behind the creation of SHIB is a person named Ryoshi, who aimed to ensure fair distribution and ownership of the coin. SHIB is not just a token; it is a whole ecosystem with the decentralized exchange ShibaSwap and a technical document known as the "woofpaper," which explains the project's goals.
Demand for Shiba Inu, like Dogecoin, has also decreased. Its peak was reached in October 2021, at $0.00008251. Since then, the coin's price has dropped by almost 90%. In January 2023, investors could observe some positive price movement, but then the price fell again and approached levels seen at the end of 2022.
PEPE
This meme coin was created in 2021. The creators of the coin were inspired by the popular internet meme "Pepe the Frog." PEPE coin operates on the Binance Smart Chain, which ensures fast and accessible transactions. According to Coinbase, PEPE coin ranks 72nd in the market with a capitalization of nearly $600 million.
PEPE meme coin functions as a deflationary token, meaning the total coin supply will gradually decrease. There is a 2% fee on each transaction, and a portion of that fee is burned, reducing the overall available currency.
The fame and popularity of the meme helped PEPE meme coin quickly reach a market capitalization of $1 billion. However, within just a few days, its value dropped by 40% and settled at $600 million.
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So, is it worth investing in meme cryptocurrencies?
Let's summarize what meme coins are and why they were created. Could their goal be to enrich their founders? Perhaps their popularity is exaggerated, and they are designed to deceive naive investors?
Most critics of meme coins agree that these coins lack a strong foundation and long-term value. However, despite this, such projects have their advantages. Firstly, rapid price fluctuations can be profitable for experienced short-term traders who close their positions within a day. These amusing memes can become overnight sensations, and their success is unpredictable. Those who can skillfully buy and sell at the right time can make significant profits.
Secondly, meme coins attract new people to the world of cryptocurrencies and introduce them to blockchain technology. They can serve as a stepping stone to broader opportunities in Web3 — the internet of the future, including GameFi gaming platforms or immersion in the metaverse.
However, it is important to understand that there is a high risk of potential failure for such projects. Regardless of how it may happen, negative experiences with meme coins can adversely affect the reputation of cryptocurrencies and attitudes towards investing in this field.
It is crucial to remember that before investing your money in any cryptocurrencies, including meme coins, thorough research should be conducted, and you should be prepared for potential losses. Investing in cryptocurrencies is a high-risk process, and everyone should make their decisions based on their personal circumstances and financial capabilities.
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