What Are Meme Coins and Why Are They So Popular?

03/27/2024, 02:58 PM

What Are Meme Coins and Why Are They So Popular?

Meme coins are a subset of cryptocurrencies that originated from Internet memes, popular culture references or humorous concepts. Unlike traditional cryptocurrencies, meme coins often lack an underlying utility or purpose beyond the community and cultural phenomenon they represent.

Nevertheless, the popularity of meme coins has been evidently growing over the years.

Some crypto experts, like Andrew Kang, claim that meme coins will outperform all other altcoins in the upcoming bull run.

More precisely, he stated that the crypto market could expect an increase in the value of meme coins by up to 100 times.

Moreover, there has been a rise in the production of new meme coins, precisely due to the popularization of the existing ones.

How Did Meme Coins Originate?

The beginning of meme coins occurred back in December 2013, when the now widely popular Dogecoin was first introduced to the crypto market.

Dogecoin was created by software engineers Billy Markus and Jackson Palmer with the goal of producing a peer-to-peer digital currency that could reach a broader demographic than Bitcoin.

The newly created token was based on the then-popular Doge meme, which features a Shiba Inu dog accompanied by Comic Sans font representing the dog's internal monologue.

Such a "carefree approach" to creating a new cryptocurrency was the complete opposite of the often serious and technical nature of other cryptocurrencies, such as Bitcoin and Ethereum.

The process of creating meme coins is similar to other cryptocurrencies.

Developers choose a blockchain platform, often using the "forking" method to copy and modify the code of an existing coin, and then integrate a meme or theme that will define the identity of the new coin.

The success of Dogecoin inspired the creation of numerous other meme coins, each hoping to capture the same popularity by combining humor, community engagement, and the speculative nature of crypto investments.

The rise of meme coins also relies heavily on social media and community support.

Platforms like Twitter, Reddit, and Telegram play a significant role in spreading awareness and creating hype around meme coins.

The Most Famous Meme Coins on the Market

Dogecoin (DOGE)

Its Majesty, Dogecoin - the first meme coin that appeared back in 2013 as a "silly" alternative to the then-serious nature of cryptocurrencies.

Unlike Bitcoin, which is designed to have a limited quantity (and thus is resistant to inflation), Dogecoin was intentionally made to be available in unlimited quantities and without a maximum number of tokens in circulation.

Specifically, 10 000 new Dogecoins are released into circulation every minute.

That Dogecoin is not just another passing meme coin is also proven by the fact that it has had concrete use cases.

For example, Dogecoin sponsored several sporting events and teams, including the Jamaican bobsleigh team's trip to the 2014 Winter Olympics, a NASCAR driver named Josh Wise, and a project in Kenya called "Doge4Water".

It's also possible to pay with DOGE cryptocurrency on certain platforms and E-Commerce websites.

Where is Dogecoin accepted as a payment method?

The popularity of Dogecoin has grown so much over the years that certain companies have decided to introduce it as a payment method for purchasing their products.

For instance, it's possible to buy official merchandise and tickets for games of the American basketball team The Dallas Mavericks with Dogecoin.

Interestingly, airBaltic became the first airline in the world to allow its passengers to buy plane tickets with Dogecoin.

Besides these two examples, globally recognized companies like Twitch, Tesla, and GameStop have also adopted Dogecoin as a payment method.

Representation of Dogecoin in form of a coin.
Representation of Dogecoin in form of a coin.

Shiba Inu (SHIB)

Shiba Inu (SHIB) is an ERC-20 altcoin based on Ethereum's blockchain, also known for featuring a Shiba Inu dog on the coin (similar to Dogecoin).

This meme coin was created in August 2020 by an anonymous group of people (or a single person, it's not exactly clear) under the pseudonym Ryoshi.

The initial idea behind creating the Shiba Inu coin was to create a coin that is fully driven and developed by its community, earning it the nickname "Dogecoin killer" over time.

A key component of the Shiba Inu ecosystem is ShibaSwap, a decentralized exchange that allows users to trade between SHIB and other tokens, stake coins to earn rewards, and participate in so-called liquidity pools.

Interestingly, Shiba Inu experienced one of the most significant price surges in the history of the crypto market.

Specifically, in 2021, it recorded a return of an astonishing 43,800,000%!

In other words, if someone had invested just $5 in Shiba, they would have made a profit of an incredible $2,190,005.

However, of course, due to the volatile nature of cryptocurrencies, especially meme coins, such fluctuations are nearly impossible to predict.

Pepe (PEPE)

Pepe (PEPE) is another meme coin launched on the Ethereum blockchain.

It was created as a tribute to the internet meme Pepe the Frog, which gained popularity in the early 2000s.

The aim of this crypto project is to establish itself as one of the most famous meme coins alongside DOGE and SHIBA.

Given that it has been in circulation since mid-2023 and frequently ranks among the top 50 cryptocurrencies for trading, it could be said that it has succeeded in its goal.

The rapid rise of PEPE coin led to a jump in its total market capitalization to an incredible 1.6 billion dollars, sparking a real avalanche of meme coins.

PEPE's rise has literally made millionaires out of all those who invested early in this coin.

dogwifhat (WIF)

By now, you could have noticed that the most common mascot for a meme coin is - a dog.

In this case, it's a dog with a cap on its head, or dogwifhat (WIF).

Dogwifhat is a meme coin that operates on the Solana blockchain network and is another crypto project inspired by the Shiba Inu dog, but this one wears a pink knitted cap.

Now, why is a dog with a cap so popular that it ended up on our list?

Since its launch in December 2023, the value of WIF tokens has been steadily increasing, reaching a market capitalization of a whopping 2.2 billion US dollars when it was officially listed on Binance's exchange.

Several factors have contributed to the rapid growth in value of WIF:

  • The "playfulness" of this meme coin (sometimes, it's enough for investors to be amused by a coin for them to invest, no matter how absurd it may sound)
  • Meme coins are generally popular, so it was only a matter of time before they made a breakthrough in the market
  • It received support on Twitter from well-known individuals in the crypto community
  • It has a limited supply of tokens in circulation
dogwifhat (WIF) is also available on Bitcoin Store platform
dogwifhat (WIF) is also available on Bitcoin Store platform

Floki (FLOKI)

Floki (FLOKI) - yes, another meme coin featuring a Shiba Inu dog, but this one wears a Viking helmet - is also based on the Ethereum blockchain.

Floki (FLOKI) complies with both ERC-20 and BEP-20 standards.

Compliance with ERC-20 means that Floki Inu can easily be integrated with Ethereum-based portfolios, exchanges, and other services that support ERC-20 tokens.

On the other hand, BEP-20 extends the functionality of ERC-20 tokens to work within the Binance Smart Chain ecosystem, offering faster transactions and lower fees compared to Ethereum.

Interestingly, Floki came into being after Elon Musk tweeted in June 2021 the following:

My Shiba Inu dog will be named Floki.

And that's pretty much the answer to why this meme coin has gained significant popularity among crypto investors.

However, Floki had a turbulent start.

The first version of the token did not quite align with the goals of the Floki community, which is to become the most decentralized and at the same time fun crypto project.

Specifically, Floki's developer imposed a 20% tax on coin owners for transactions, pocketing the funds for himself.

The community revolted (like true Vikings) and in just a few days grew to over 20,000 followers on Twitter, 6,000+ community members on Telegram, and 8,000+ coin owners, determined to save the project.

They dealt with the first developer and formed a much larger team responsible for Floki's further development, since then known also by the slogan “the people’s cryptocurrency”.

Why Do People Invest In Meme Coins?

People invest in meme coins for several reasons, from the desire to be part of a community to the aspiration for potential financial gains.

Here are some key factors that attract investors to meme coins:

Being a Part of Communities

Behind most meme coin cryptocurrencies are communities of people.

Being part of these communities can be a fun and attractive experience.

Members of such communities share jokes, memes, and support each other's investment choices, creating a sense of belonging and friendship.

Potential for Quick Profits

The crypto market is known for its volatility, and meme coins often exhibit this with rapid price changes.

For instance, PEPE coin achieved enormous success shortly after its release in April 2023.

Specifically, it produced a return of 2000% for investors in less than a month.

This leads to the conclusion that investors are attracted by the possibility of quick, high returns, especially when they hear stories of early meme coin owners who made significant profits.

Viral Marketing and Social Media Influence

Meme coins often gain popularity through social media, support from influential people, and viral marketing campaigns.

For example, in February 2021, Dogecoin reached a then all-time high of $0.08 after being endorsed on Twitter by celebrities like Elon Musk, Snoop Dogg, and Gene Simmons (singer of KISS).

This is also a factor in the rapid price increase as new investors flock in, hoping to ride the wave of popularity for financial gain.

Accessibility and Low Prices

Many meme coins have a low price per unit, making them accessible to a wide audience.

This accessibility allows investors to buy millions or even billions of tokens with relatively small amounts of money, appealing to those who want to own large quantities of digital assets.

FOMO (Fear of Missing Out)

Witnessing the meteoric rise of coins like Dogecoin and Shiba Inu can induce a fear of missing out on potential gains.

This psychological factor drives investors to buy meme coins, hoping to catch the next big wave.

They're Funny and Entertain People

The fun and carefree nature of meme coins, often reflected in their branding and community activities, adds that "fun" aspect that isn't always present in more serious investments.

Thus, for some individuals, just participating in something quirky and the possibility of making a good profit from it is a compelling combination to invest a significant amount of money.

Shiba Inu - popular mascot for several meme coins
Shiba Inu - popular mascot for several meme coins 

Will This Trend of Meme Coins Continue?

At the time of writing this text, there are over 1000 meme coins listed on CoinMarketCap.

And it is expected that there will be many more in the future.

The trend of investing in meme coins will likely continue, driven by their deep roots in internet culture, strong community engagement, and the allure of quick financial gains.

Influences on social media and the low purchase price also play a significant role in maintaining interest in this type of cryptocurrency.

However, their future will also be affected by regulatory changes and market dynamics.

Investors should therefore approach with caution and consider the volatile and high-risk nature of investing in meme coins, as well as conduct thorough research and consider their broader financial strategies.