Meme coins are basically cryptocurrencies centered around an internet meme or even a viral joke. Unlike other crypto projects, meme coins are not concerned about providing utility to users. Instead of providing utility, they focus on growing a community of enthusiasts who fully adopt the coin and help it strife in the market.
The ease of deploying a token on any blockchain and the lack of regulation in the crypto space has made it possible for different cryptocurrencies to be launched even if they aren’t solving any problem. Meme coins do not actually solve any problem and have no utility. Having said this, it is important to note that they are just a joke and shouldn’t be taken seriously.
The rise of meme coins and the ‘Inu’ trend have also made it easy for dubious developers to launch different cryptocurrencies which they sell out to investors who hope for huge returns. Since the rise of meme themed coins like dogecoin, shiba inu, dogelon mars and many others, investors have seen meme coins as very profitable investments making it easy for mischievous developers to pull their rug.
CHECK OUT: WHAT ARE STABLECOINS?
TOP THREE MEME COINS BY MARKET CAP
Meme coins saw a huge boost in 2021 which led to the development of many others. Some gained wide adoption while so many others flopped. The rise of meme coins can be attributed to the efforts of the CEO of Tesla, Elon Musk who constantly dished out tweets and several comments about dogecoin. Thanks to Musk’s large following, doge saw a huge growth in 2021 alone and is currently sitting amongst the top 20 cryptocurrencies by market cap. Following the rise of dogecoin, people began to adopt various meme coins, leading to the huge growth seen in meme coins today. The top three meme coins by market capitalization are;
Launched in 2013, dogecoin is the largest meme coin by market capitalization with an image of a shiba Inu dog as it’s logo. Dogecoin (DOGE) is a peer to peer open source cryptocurrency which was initially launched by Jackson Palmer and Billy Markus following a popular meme featuring a shiba Inu (a Japanese breed of dog). After the creation of dogecoin, it gained a huge following and had a good number of supporters who traded it actively and used it as a tipping currency for contents on social media.
Dogecoin which was initially listed at $0.00008 peaked at $0.73 by May 2021 making it the most successful meme coin of all time. Thanks to the efforts of the CEO of Tesla, Elon Musk, dogecoin is ranked 11th by market cap in the crypto market. Following lots of tweets and comments by Elon, dogecoin rose and has been adopted by many individuals and even institutions who accepts dagecoin as a form of payment for various services provided. As at the time of writing this article, dogecoin is accepted as a form of payment by Tesla and so many other big companies and institutions.
Shiba Inu (SHIB)
Named after a Japanese breed of dog, Shiba Inu (SHIB) is a decentralized cryptocurrency created in August 2020 by an anonymous person or group known as ‘Ryoshi’. Shiba Inu which is known by it’s developers as the ‘dogecoin killer’ has seen wide adoption and has managed to grow a very large following which has led to it’s huge success. On creation of Shiba Inu, 50% of it’s total supply were locked and the other 50% sent to Vitalik Buterin. Vitalik burnt 90% of the supply sent to him and donated the remainder to the India Covid crypto relief fund.
Initially intended just as a meme coin to rival dogecoin, the developers have built an ecosystem named Shibaswap around it owing to the wide adoption gained in a short frame of time. Shibaswap consists of two tokens known as LEASH and BONE. At the time of writing this article, Shiba Inu sits as the 16th most valuable cryptocurrency by market capitalization.
Dogelon Mars (ELON)
Dogelon mars (ELON) is another dog themed cryptocurrency which aims to replicate the success of dogecoin while pointing out to Elon Musk’s vision to take over mars. It’s name was gotten by combining doge, Elon and Mars which all points towards Elon Musk. After launch, 50% of ELON was locked in Uniswap and the other 50% sent to Vitalik Buterin who donated them to various DAOs and foundations.
ELON has since gained wide adoption and has built of community of strong supporters. ELON is also tradable on many big crypto exchanges. At the time of writing this article, ELON is ranked as the 133rd most valuable cryptocurrency by market capitalization.
CHECK OUT: WHAT IS CRYPTOCURRENCY STAKING?
HOW DO MEME COINS GROW?
Since meme coins mostly are a joke and do not have any recognized utility, it is questionable as to how they get to strive in the crypto market. Many projects with good use cases do not even perform half as well as meme coins like DOGE and SHIB. This has led to the conclusion that the most important factor responsible for growing a crypto project is the community. Utility without a very strong community will not in any sense grow a crypto project.
Meme coins such as DOGE and SHIB have performed so well due to the large number of loyal supporters they have been able to gather. Well recognized industry giants such as Elon Musk and many others have been known to support meme coins such as DOGE leading to wide level of adoption.
Some meme coins donates to big celebrities who in turn help to spread the word and gather a good following around the project. This kind of marketing which is known as influencer marketing has proven to be very effective and has since been adopted by actual projects with good use cases. In simple words, a huge level of marketing helps them grow even without any notable utility.
WHAT YOU SHOULD KNOW BEFORE INVESTING IN MEME COINS.
Many investors jump on to invest in meme coins because of the huge success of DOGE, SHIB and other notable meme coins. Investing in meme coins is risky as is investing in crypto generally. Since many investors tend to jump on the ‘Inu’ trend, many dubious developers have used it as an opportunity to fraud investors. A notable example of a meme coin scam is the squid coin rug which was pulled following the squid game movie trend.
Some of the things to be taken into account before investing in meme coins are;
CHECK OUT: NEVER BUY A COIN ON THE FIRST DAY OF LISTING
1. Meme coins have a 50-50 chance of growing
Since meme coins have no utility, it is important to note that it has a high probability of not performing well. Many meme coins have been launched by different developers with only few going viral. The key to viral adoption for meme coins is growing a large following. Growing a following can be very expensive and can only be afforded by big game players. Growing a following typically involves getting celebrities and known public figures to market the coin in question. Sometimes, these celebrities may ask for huge sums of money which can only be afforded by big players. As a result of this, it is important to note that investing in meme coins do not always turn out well and there are high chances of losing in the end.
2. Proper research is important
Doing a proper research is very important when investing in meme coins particularly. Since any tech savvy individual can typically launch a token and sell out to investors, it is important do a proper research to avoid falling into the hands of fraudsters. Some of the key points to look at before investing in meme coins are:
- Team: Researching the background of the team launching the meme coin is important so as to ascertain the experience and authenticity of the team. Many teams behind a meme coin prefer to remain anonymous and this is a red flag in actual sense except the team is doxxed by a recognized body.
- Community: Since the community is the major driving force behind a meme coin, it is important to research on the strength of the community. If the meme coin doesn’t have a good number of loyal supporters, it will most likely not perform well. Run!
- Tokenomics: The tokenomics of the coin in question matters a lot. If the project developers or any other individual has access to as much as 20% of the total supply, it is a red flag because they can easily dump the token price by selling.
- Access to liquidity after launch: The team behind the project must not have access to the liquidity after launch in the sense that the liquidity must be locked permanently in a smart contract locker. This is important to make sure that the project team cannot pull out the liquidity after launch.
3. Diversify your portfolio
Investing in meme coins can make you rich but it is also of importance not to put all your eggs in one basket. Meme coins are not always successful and to avoid losing your capital completely, it is wise to always diversify your investment. Do a proper research and pick a number of good projects to invest in. Using this approach will help mitigate possible losses.
Investing in cryptocurrencies is very risky due to the volatility of crypto assets and it is even riskier investing in meme coins. Since there’s no utility, it is majorly driven by the community and public sentiments. This means that negative announcements or even comments from notable figures can drastically affect the price of meme coins. Having gone through this article, it is important to carry out a proper research before investing in meme coins to avoid falling into the hands of fraudsters.