The cryptocurrency community has a ceaseless admiration for memes and pop culture. From its inception, meme coins have seen exponential growth in the crypto space. Recently, some have even become more popular than mainstream cryptocurrencies such as Bitcoin and Ether. CoinMarketCap ranks the top two meme coins, Dogecoin and Shiba Inu, within the top 20 cryptocurrencies by market capitalization.
What Are Meme Coins?
Meme coins are cryptocurrencies inspired by memes, jokes or trends on the internet and social media. The first ever meme coin created was Dogecoin (DOGE), launched in 2013 as a parody- inspired by the popular Doge meme of a Japanese Shiba Inu dog. Meme coins are generally highly volatile, low-value crypto assets. These coins are largely community-driven and can soar in value overnight because of community endorsements and the ‘Fear of Missing Out’ (FOMO). But just as meme coins can experience a sudden surge in prices, their value can also crash unexpectedly when the community turns their attention to the next meme coin.
Some Meme Coin Characteristics
- Based on an internet meme or joke. As the name implies, these cryptocurrencies are often themed around internet memes shared on social media. The two most popular meme coins, Doge and Shiba Inu, are inspired and branded around the viral image of the Japanese dog breed- the Shiba Inu.
- No utility, just trading value. Meme coins are not held by investors for their innate value. In fact, almost all meme coins hold no intrinsic worth or real-world uses. Rather, these assets are bought and sold purely for trading and arbitrage purposes.
- Highly volatile. Considering most meme coins have an unlimited supply and that their popularity is driven mostly by pop culture, meme coins are highly volatile crypto assets. For example, Shiba Inu (SHIB) has a total supply of 1 quadrillion tokens, while Dogecoin (DOGE) has no maximum supply, and over 100 billion tokens are already in circulation. As such, their value is subject to extreme changes over very short periods of time.
- Extremely low value tokens. Another characteristic of meme coins is that they are valued incredibly low. Compared with established crypto assets like Bitcoin and Ether, meme coins are relatively cheaper to buy. Dogecoin for example, the most expensive meme coin, still trades for less than $0.1 at the time of writing. Shiba Inu, the second largest meme coin, trades as cheap as $0.00001.
Investors with nothing to lose therefore feel confident spending money on meme coins since they’re worth relatively less than other crypto assets. So, whatever happens, their portfolios are not badly affected.
What Are the Most Popular Meme Coins?
According to CoinMarketCap, the three most popular meme coins by market cap includes Dogecoin (DOGE), Shibu Inu (SHIB) and Safemoon (SAFEMOON). Here’s a quick summary of each.
- Dodgecoin (DOGE). Dogecoin was invented by two developers by the names of Jackson Palmer and Billy Markus. The project began as a joke, but has since become a serious proposition since Tesla CEO, Elon Musk, began championing the coin in 2019. DOGE has seen its value climb in recent months, hitting a market cap spike of $88 billion at its peak in May 2021. Elon Musk is now working with the Doge developers to optimize its platform and reduce its carbon footprint.
- Shibu Inu (SHIB). Shibu Inu began in April 2021. The token was launched as an “experiment in decentralized spontaneous community building” and swiftly soared in value by over 2,000,000%. It then reached and all time high of 0.000325 in October 2021. SHIB has a total supply of one quadrillion tokens and is designed to allow users to hold billions or even trillions of them. Still, analysts have warned that it would need to climb about 12 million percent to hit its magic target of $1.
- Safemoon (SAFEMOON). SafeMoon offers a slightly more advanced tokenomic model than DOGE and SHIB. With Dogecoin for example, its infinite supply gives the token what’s known as an inflationary tokenomic model. Improving on Dogecoins supply system, SafeMoon employs a deflationary tokenomic model, which controls the long-term supply of the token. The system takes place as follows. Every time a Safemoon transaction takes place, 5% of it is burned and a further 5% is redistributed to the remaining token holders. Therefore, the total supply of tokens is designed to constantly decrease, ensuring “safe” gains and less susceptibility to an asset bubble.
Are Meme Coins Safe?
Meme coins are most definitely not a ‘safe’ investment choice. Their inflated supply and volatility make them an innately riskier investment. Although a tweet from Elon Musk endorsing Dogecoin could send its value soaring tomorrow, its value can collapse just as fast. Some governments also haven’t caught on to the funny side of meme coins. For example, Thai financial regulators recently banned meme coins as tradable assets in June 2021, alongside NFTs and fan tokens.
One of the main issues with meme coins is the susceptibility of scams in the form of ‘pump and dump’ schemes and ‘rug pulls’, where a developer creates a cryptocurrency with the intent of running away with investors’ funds. The infamous Squid Game Coin (SQUID) was a major crypto rug pull event.
