8mins read
Published on: Aug 13, 2024
#Crypto 360
Meme coins are virtual assets that mock "mainstream” cryptocurrencies for their belief that the crypto economy’s rebellion against TradFi will disrupt the latter.
• A meme coin is a spoof of a “mainstream” cryptocurrency.
• Most meme coins lack a concrete use case, instead riding the wave of social media trends.
• Meme coins are cheap, highly volatile and risky.
• Dogecoin and Shiba Inu are among the most popular meme coins.
When the cryptocurrency economy debuted, it projected its financial model as a rebellion against the centralised order of traditional finance (TradFi).
The crypto industry dreamt big but not everybody took it seriously in the beginning. Meme coins owe their existence to this sentiment only. They were created to mock the hype around the burgeoning crypto economy.
But the trading community took to the category with such enthusiasm that the current market capitalisation of the meme coins segment is $40 billion. It means that meme coins occupy 2% of the combined market cap of the crypto industry. Though modest, the share is no mean feat for an asset class like meme coins that didn’t take itself too seriously in the beginning. In this blog, we will learn more about meme coins in the context of their relation to the broader crypto market.
Meme coins are digital assets that mock "mainstream” cryptocurrencies for their belief that the crypto economy’s rebellion against TradFi will disrupt the latter. We call them meme coins because they give a hat tip to memes that go viral on the internet.
A meme is a humorous idea or phenomenon, represented in the form of an image, video, piece of text, and more, that goes viral and spreads like fire on the internet. Meme coins are deeply intertwined with the internet culture, drawing upon trending memes for branding and community building. They are usually created by digital communities for entertainment. Their prices fluctuate as per the whims of these digital communities.
Just like Deadpool is a spoof of Superheroes, a meme coin is a spoof of a “mainstream” cryptocurrency. In fact, most meme coins seem to scoff even at their own existence in the crypto economy. Investors are drawn to meme coins because they have potential to yield quick returns. One tweet is enough for a meme coin to soar to unimaginable heights or plummet to unredeemable depths. The high-risk, high-reward model of meme coins attracts investors eager to capture the skyrocketing gains they offer.
In contrast to the more established cryptocurrencies which see a cyclical pattern, meme coins are cheap, highly volatile and risky. Unlike conventional cryptocurrencies, meme coins often lack a concrete use case, instead riding on the waves of social media trends and community hype.
2013 saw the birth of the first meme coin to mock the hype of crypto through memes, Dogecoin (DOGE) that mocked the first and largest cryptocurrency, Bitcoin (BTC). DOGE was inspired by the “Doge” meme featuring a very expressive Shiba Inu dog that went viral.
Recommended Read: Crypto's Top Dog: Dogecoin
Two developers, Shibetoshi Nakamoto (aka Billy Markus) and Jackson Palmer, created Dogecoin and didn’t think of it as much beyond a joke or an online prank. However, it went viral on popular social media platforms like Reddit. Celebrity endorsements added to the hype, such as from Elon Musk who made it wildly popular, even outside the circle of crypto natives.
In fact, the Dogecoin Foundation raised $30,000 to send the real Jamaican Bobsleigh team to the Winter Olympics in 2014. The success of DOGE paved the way for other meme coins to emerge and gain virality. Next, we saw the emergence of the Shiba Inu (SHIB) meme coin in 2020. It featured the eponymous viral dog, the very same as Dogecoin. SHIB quickly positioned itself as the biggest competitor to DOGE.
Today, DOGE and SHIB are the only two meme coins that feature among the largest 15 cryptocurrencies in terms of market cap. The rest of them are “mainstream” cryptocurrencies such as BTC, Ethereum (ETH), and Solana (SOL). The latest meme coin to create a buzz in the market is Pepe (PEPE) which was launched last year. It is a tribute to the “Pepe the Frog” meme and is the 24th largest crypto in terms of market cap.
A meme coin is a mock-serious cryptocurrencies that originate as a reaction to internet memes. Technically, a meme coin is a type of cryptocurrency only. Simply explained, it works just the way a cryptocurrency works.
A meme coin is built on a blockchain network which deploys the distributed ledger technology (DLT) to create a decentralised database. Unlike other cryptocurrencies such as BTC and ETH, a meme coin has no utility or use case. In contrast to these established cryptocurrencies which see a cyclical pattern, meme coins are cheap, highly volatile and risky.
Image: Floki Inu, Doge, and Pepe meme coins
Let's quickly summarise how a meme coin works:
Meme coins are based on viral memes such as the Shiba Inu dog, Pepe the Frog or the Will Smith-Chris Rock Oscar slapgate, etc.
Meme coins are very cheap, given they aren’t serious at all and instead engage in highly speculative trading. For this purpose, the price of meme coins is as low as $0.1 so that a lot of enthusiasts can purchase them and participate in the related online communities.
Most cryptocurrencies are either used as an alternative financial system such as BTC or for making on-chain payments while developing decentralised applications (dApps) or smart contracts such as ETH. But meme coins never had such ambitions. In fact, they deliberately have no use case or utility. Meme coins only ride the virality of the memes they are based on and the support they receive from their online communities. Nonetheless, a few merchants in advanced economies have begun to accept payments in popular meme coins such as DOGE.
Confused on whether meme coins are good or bad for the overall crypto economy? Meme coins deride the decentralised finance (DeFi) and crypto system and mock its rebellion against TradFi as pretentious. Yet, both crypto natives and noobs love meme coins and are regularly popularised by celebrities like Musk. To understand the phenomenon, it’s time we look at the pros and cons of meme coins.
• Meme coins provide a fun way for new traders to familiarise themselves with the crypto market at nominal costs.
• A trader can engage in speculative trading and realise profits if the tide turns in favour of the purchased meme coin(s).
• With a meme coin, you become a part of a vibrant crypto community.
• The meme coin segment is rife with pump and dump scams. So, you better be careful with new meme coins.
• Meme coins are more volatile and riskier than conventional cryptocurrencies.
• It can be difficult for a newbie to understand and trade meme coins.
As per CoinGecko, the current market cap of meme coins stood at $43 billion. So, which meme coins are the largest in terms of market cap?
DOGE is the first meme coin that was created by software engineers Billy Markus and Jackson Palmer to mock the emerging crypto economy. It is inspired by the Shiba Inu, a viral Japanese dog breed.
• Launch: December 2013
• Price: $0.1097
• Market Cap: $15 billion
SHIB is a meme coin created by an anonymous person or group using the pseudonym "Ryoshi". As its name suggests, it was also inspired by Shiba Inu.
• Launch: August 2020
• Price: $0.0000144
• Market Cap: $8 billion
PEPE is a deflationary meme coin that was developed as a tribute to the Pepe the Frog meme.
• Launch: May 2023
• Price: $0.058640
• Market Cap: $3.6 billion
WIF is a meme coin based on a viral meme of a Shiba Inu dog wearing a pink-knitted hat. Yep, the meme coin community is in love with the Japanese dog breed.
• Launch: November 2023
• Price: $1.86
• Market Cap: $1.8 billion
A self-described “dog coin of the people,” BONK is a meme coin that was designed to support the Solana community.
• Launch: December 2022
• Price: $0.00002086
• Market Cap: $1.45 billion
FLOKI is a meme coin based on Elon Musk's pet dog, but the coin has since evolved to become a fully-fledged web3 project.
• Launch: July 2021
• Price: $0.0001291
• Market Cap: $1.25 billion
BRETT is a meme coin inspired by the eponymous character from the comic series "Boy's Club." Brett is well known for his laid-back attitude and love for video games.
• Launch: February 2024
• Price: $0.09895
• Market Cap: $981 million
POPCAT is a meme coin that is inspired by a viral meme featuring a domestic short-haired cat named Oatmeal.
• Launch: December 2023
• Price: $0.6017
• Market Cap: $593 million
MOG is known as the internet's first culture coin as it commenced as a fun meme amongst friends.
• Launch: July 2023
• Price: $0.051562
• Market Cap: $563 million
BOME is an experimental meme coin that aims to bring together meme culture, blockchain, DeFi storage etc.
• Launch: March 2024
• Price: $0.007435
• Market Cap: $514 million
DeFi is nothing but a blockchain-based decentralised financial system that isn’t dependent on or accountable to a centralised authority. Cryptocurrencies, meme coins, stablecoins, and non-fungible tokens (NFTs)... DeFi encompasses all these assets, and more. Meme coins are now leveraging DeFi tools to offer services like staking and other ways to earn rewards. Now, you might be wondering how meme coins are related to NFTs.
First, what is an NFT? To put it simply, an NFT is a digital asset representing a piece of art, digital content, or video that has been tokenised via a blockchain. Meme coins and NFTs, both parts of the DeFi ecosystem, share a few features. Both meme coins and NFTs are driven by the hype created on the internet by their online communities. As these communities create a fear of missing out (FOMO) in the market, the value of their assets rises.
Most meme coins and NFTs have no distinctive use case or utility. Popular NFT projects like CryptoPunks and meme coins like DOGE share this feature.
However, some NFTs have the utility of gaming skins or tickets. Similarly, some meme coins are being accepted by a few merchants.
But there is a crucial difference too. There is one peculiar way in which NFTs are different from meme coins or any other DeFi products. NFTs derive their value from the “exclusive” nature of their projects as they are created as original digital arts that are much sought after. Meme coins have no such lofty ambition.
Image: Crypto punks and BOME
There are some projects that bring together the best of meme coins and NFTs – one such project is BOME. It's a Solana-based meme coin that was launched by a leading NFT artist Darkfarms. It is the 10th largest cryptocurrency with a market cap of $514 million.
While meme coins bring a much-needed element of fun to the crypto economy, there is a certain kind of financial nihilism that accompanies the segment. It cynically scoffs at the lofty goals of the burgeoning DeFi economy and doesn’t seem to have any faith in DeFi’s ability to challenge TradFi.
Meme coins are also known to be extremely volatile and high-risk assets. Besides, several of these projects have proven to be pump and dump scams, with anonymous developers creating FOMO, profiting from it, and then disappearing. It is always better to be cautious before engaging with a new meme coin project.
We recommend that BitDelta traders should follow the Do Your Own Research (DYOR) strategy before investing in a meme coin. How about asking a few questions first...
• What's the new fun element this meme coin brings to the table?
• Is there any utility to this meme coin?
• If yes, what’s the roadmap for the next 4-5 years?
• Who are the founders? Have they launched any successful DeFi projects earlier?
• What's the tokenomics?
• What are the risks involved?
If you don’t get answers to at least such fundamental questions, it is not recommended to trade these coins. We had already mentioned how meme coins are more volatile and high-risk than conventional cryptocurrencies such as BTC or ETH.
In fact, even the current prices of the two leading meme coins, DOGE and SHIB, are approximately 85% lower than their all-time highs. Note that successful meme coins are an exception to the rule. Otherwise, most of them fade into oblivion and most traders are left with heavy losses.
Nonetheless, if you can assess the future possibilities of a meme coin, you can certainly hit the jackpot and make millions. So, we recommend BitDelta traders to DYOR and not get manipulated by FOMO while deciding to invest in meme coins.
While meme coins can be both fun and entertaining, they are highly speculative. Additionally, while most meme coins have no inherent use cases or utilities, new ones tend to have some applications in different industries, particularly mode of payment.
Software provider Microsoft, American theatre chain AMC, Musk’s electric vehicle manufacturing company Tesla, European airlines AirBaltic, and Amazon’s online streaming service Twitch are among the leading companies that accept meme coins such as DOGE as modes of payment.
We can expect this trend around meme coins to continue in the future. There are other use cases of meme coins too. Meme coins such as FLOKI power play-to-earn (P2E) NFT metaverse games.
Recommended Read: Game Finance (GameFi)
We also expect meme coins to assume an artistic skin like NFTs, given memes are indeed a part of our culture. In conclusion, we expect meme coins to offer a few utilities as well while retaining the wildness they bring to the table.
At BitDelta, we are committed to providing you with a highly secure trading experience where "Every trade counts." You can buy leading meme coins such as DOGE, SHIB or PEPE on the BitDelta exchange by following the simple steps below:
• Log in to the BitDelta platform.
• Click on the Trade>Spot button.
• Select the meme coin you wish to purchase.
• Place the order and make the payment with your debit or credit card.
• Once the order is confirmed, the purchased meme coin is reflected in your account.
Learn how you can buy meme coins on BitDelta by going through these detailed guides:
A meme coin is a digital asset that is inspired by a viral meme. It mocks the seemingly “pretentious” and “self-serious” nature of conventional cryptocurrencies.
The unique features of meme coins are:
• Meme coins are inspired by viral memes on the internet.
• Meme coins have no utility unlike conventional cryptocurrencies.
• Meme coins are very cheap but highly volatile too.
While conventional cryptocurrencies have their use cases, meme coins have no such purpose. While the crypto market is volatile, meme coins are particularly volatile.
The largest meme coins in terms of market cap are Dogecoin, Shiba Inu, Pepe, dogwhifhat, and Bonk.
Meme coins are also known to be extremely volatile and high-risk assets. Several meme coin projects have proven to be pump and dump scams. However, some of the rare meme coins are extremely successful. Traders should DYOR and not get manipulated by FOMO while deciding to trade any meme coins.
This article is for informational purposes only and not intended as investment or financial advice. It contains opinions and speculations that are subject to change without notice.
The author and publisher disclaim any liability for decisions made based on the content of this article. Readers are advised to conduct their own research and consult a financial advisor before making investment decisions.
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3min
Oct 29, 2024
Crypto
