What Is A Meme Coin?
Meme coins are cryptocurrencies that don’t take themselves as seriously as leading digital currencies like Bitcoin and Ethereum. Dogecoin (DOGE) — widely regarded as the first meme cryptocurrency — was created in 2013 by software engineers Billy Markus and Jackson Palmer. The Doge name comes from a popular meme at the time featuring a Shiba Inu dog named Kabosu. The creators had no idea that Dogecoin would go on to become one of the top cryptocurrencies by coin market cap.
Dogecoin’s explosion of popularity led to an ever-growing number of dog coins like Baby Doge Coin, SHIBA INU, Shiba BSC, and many more. However, Meme coins span everything from the very cute (Mini Baby Doge) to the very vulgar (DiarrheaCoin and CUMROCKET). Sometimes the only real purpose behind meme cryptocurrencies seems to be giving someone a laugh.
Meme Currencies Explained
Meme cryptocurrencies don’t need to have a purpose that is as closely tied to their underlying value, like Bitcoin and Ethereum. Bitcoin was the first decentralized cryptocurrency that created a way users could transact peer-to-peer privately without government intervention. Ethereum has created a blossoming DeFi ecosystem with smart contracts and yield farming. On the other hand, meme coins often seem to have the sole purpose of “going to the moon,” a phrase popularized by Dogecoin’s skyrocketing price in early 2021. Many seek to reward early investors with tools like reflection (awarding holders with additional coins) and coin burning (decreasing the coin supply to boost value).
There are a variety of different tokens and coins in the cryptosphere. Bitcoin acts as digital gold, privacy coins like Monero allow confidential untraceable transactions and utility tokens like Filecoin help utility users interact with the Filecoin decentralized data storage platform. Conversely, meme cryptocurrencies often follow a get-rich-quick purpose, or they exist as more of a joke than anything else.
What Does Elon Musk Have to Do With It?
As you may notice, many meme cryptocurrencies share the name (and even the likeness) of patron crypto meme saint Elon Musk. Musk has been involved with Bitcoin and crypto since around 2019 and 2020 and has even spearheaded Tesla accepting Bitcoin payments (at least for a few months). Musk is notorious for tweeting about cryptocurrencies like Dogecoin and drastically increasing or decreasing their value. This has earned him both love and hate from the crypto community, and many have questioned his seeming price manipulations, but he continues to be an influential figure in the space.
How to Buy Meme Coins
Some meme coins are available on popular centralized exchanges like Kraken, Robinhood or Coinbase. But more often than not, meme coins are not accepted by these exchanges for not meeting safety and value standards. Most often, meme coins are only available for trading or swapping on decentralized exchanges (DEXs) like PancakeSwap. You will already need to have a cryptocurrency to trade for meme coins like SpacePenguin (PNGN) or Tendies (TEND).
Learn more about buying cryptocurrencies with this guide.
How to Identify a Meme Coin
Most often, meme coins will be upfront about their status as a meme currency. However, it can be difficult to differentiate a “normal” cryptocurrency from a meme. New cryptocurrencies will always be trying to solve a serious problem in the blockchain and crypto world. For instance, Chainlink (LINK) connects blockchains to real-world data, has a serious whitepaper and has been recognized by the likes of MIT, The Wall Street Journal, Forbes, and CoinDesk. On the other hand, Diarrhea Coin (DIAH) has a muddier purpose with little value besides being “the most liquid asset ever created,” according to its website. Often the founders and developer teams of meme coins are also shrouded in anonymity.
Identifying a meme cryptocurrency is important to avoid schemes and malicious activity from token creators like rug pulling. It is important to be able to tell if a founding team is in it for the long haul with their meme currency project or if they are just trying to make a quick buck off of those who buy their tokens. If a token is listed on centralized exchanges, that is usually a good sign that many have done their due diligence on behalf of crypto investors.
Should I Buy a Meme Coin?
Purchasing cryptocurrencies is still seen as a high-risk investment by many. The crypto market is known to be volatile already, and meme coins are the most prone to drastic swings in price of all options. However, great risk can always mean great reward and some have become “Dogecoin millionaires” after the shift in price from around $0.0004 in 2013 to nearly $0.75 in 2021. This has led many to try their hand at creating their own meme currency, which is why we are now seeing a dizzying amount of new coins.
With any investment, it is always best to carefully weigh the value and the solutions presented by the product. Meme coins are a shot in the dark, and the vast majority will likely be defunct in a few years or months. Meme cryptos are mostly for holding or sharing with friends for a laugh, but, as we saw with Dogecoin, sometimes a laugh can turn into a serious investment. Choose wisely!
