Meme tokens are not something new. Dogecoin, which is the biggest meme token on the market, was created all the way back in 2013. Meme tokens have unbelievably high volatility and tend to make some investors good profits, but for most, they are failed investments.
Whenever a meme token gets popular it gets flooded by people who are purchasing tokens just for fun. But as soon as the trend dies down, those meme tokens follow suit and generally become worthless. So are they worth gambling with?
“Actually, this is the first I’ve heard of it. What is Pepecoin?” - Matt Furie
Meme coins are the same as any regular cryptocurrency. They are cryptos that are based on blockchain and have no physical representation. But unlike other regular cryptos, they are conceived as a joke. For example, Dogecoin, which currently ranks as the 10th biggest crypto by market capitalization, was created in 2013 to make fun of cryptocurrencies and used the famous internet meme doge as its logo and name.
Just like Dogecoin, other meme coins are created just to make fun of something or just developers having fun with creating some absurd tokens. Shiba Inu, which was created in 2020 and currently is the 15th largest crypto by market capitalization, has a whitepaper that was named “WoofPaper”.
When we say that meme tokens are the same as regular crypto tokens, a question arises: What are the differences between them? To put it simply, their differences are their goals and utility.
When Bitcoin was created in 2009, its goal was to challenge traditional financial systems. Bitcoin's goal was to create a deflationary currency that would be outside the control of the central banks and governments. Satoshi Nakamoto put really big thoughts behind the project and built the system of deflation that by today's calculations would last until around 2140. The same thing could be said about Ethereum which was developed to improve peer-to-peer transactions and to have more functionality than Bitcoin.
On the other hand, Dogecoin, as we mentioned earlier, was created just to make fun of cryptocurrency speculations in 2013. It was created with no thoughts behind it and practically no usability.
This is what differentiates meme tokens from regular cryptocurrencies. Normal cryptos are created with some utility in mind or to improve some system that is deemed bad. While meme tokens are created just for fun. Dogecoins developers were the ones most surprised that their joke became one of the biggest cryptos in the world.
Why would you invest in something that even the developer is surprised is worth so much? The answer is volatility and the possibility to make big crypto gains with small investments.
There are many investors who are putting their money in meme tokens and taking rapid price movements to their advantage. There are also other types of investors, those who are investing in meme tokens just because it is trendy, and they want to be part of the conversations about investing in those meme coins.
When Elon Musk tweeted about Dogecoin and its price skyrocketed, most of the people who bought the token did so just so they could say that they own Dogecoin. Add the famous practice of pumping and dumping on top of this, and you have your answer. As a result, Elon Musk is now facing a $258 billion racketeering lawsuit accusing him of basically running a pyramid scheme to make money at the expense of others.
"Memecoin buyers are playing the crypto-equivalent of Powerball — with many “playing” in the hopes of scoring “life-changing money,” yet only a few will walk away with the jackpot" - Markus Thielen
When meme tokens become trendy there is big money that starts to flow into the token. This causes huge pumps and dumps. There are meme tokens that have seen 200%-300% rises in price and just a few days later their value drops to nothing. This is why people invest in them. They try to buy tokens for cheap knowing that the prices will skyrocket and then sell them for profits.
There are many different risks associated with investing in meme tokens. If these tokens were good investment opportunities, with huge potential, nobody would have called them “meme” tokens in the first place.
The crypto market is volatile by nature. But if we take meme tokens and compare them to regular cryptocurrencies, we might as well consider those regular cryptos frozen in time. Meme tokens are hugely volatile because their value is solely dependent on trends. When Elon Musk started tweeting about Dogecoin and people started investing in them, the price skyrocketed from being worth around 5 cents all the way to the 66-cent mark. In just a few days the trend of Dogecoin died down, and the price started falling rapidly. Now Dogecoin is worth around 5-6 cents and is back to its original state. It also needs to be mentioned that Dogecoin still holds big market capitalization even though it holds almost no value.
Whenever a new cryptocurrency is developed and released to the public, usually, there were a few years of development behind the token before developers released it. Creating high-quality crypto takes a lot of time and effort, but since meme tokens are there just to poke fun at something, or try to catch a ride on the hype wagon, these tokens are created within a few days or even hours. Developers usually just copy the codes from other open-source tokens, create logos for them, and release them on the market. This means that these cryptos are not secure and don’t have any long-term plans, which is crucial for investors.
Whenever new tokens are released, developers usually leave a certain amount of tokens for themselves. They usually leave a small number of tokens when compared to the whole supply, but this might not be the case with meme tokens. Original meme tokens such as Dogecoin were not created with huge profits in mind. They were there just to make fun of different things. But with recent cases of meme tokens exploding in price, people started developing meme tokens in the hopes of making a quick cash grab. To maximize their gains, developers usually hold the majority of the supply and when prices go up they start selling off their holdings and leaving other investors with practically worthless tokens.
There are now hundreds of meme tokens on the market. Most of them share some characteristics and usually have a history of skyrocketing in price and then falling rapidly. But there are some meme tokens that stand out, and some of them might even be worth considering for small investments.
Dogecoin is the biggest meme token on the market as it holds the No.10 spot by market capitalization. This token was created in 2013 to poke fun at the speculations that caused cryptocurrency prices to explode at that time.
One of the biggest contributors to Dogecoin's rise was Elon Musk. The SpaceX and Tesla CEO, made a series of tweets in early 2021, saying how he likes Dogecoin and became its number one supporter. This saw the price of Dogecoin jump from 5 cents to around 66 cents. Not long after it started falling and is now back to around the 5 to 6 cents price range. Despite this, it still holds a huge following and is one of the biggest cryptos on the market.
Shiba Inu was launched in late 2020 and made the meme token market even more interesting. Originally, Shiba Inu was released as a Dogecoin killer. It could not succeed with that goal, only overtaking Dogecoin once for just a few days. Despite that, Shiba Inu saw huge growth, as its price rose by 21,000% when it hit its peak of $0.00008 valuation and market capitalization of $39.05 billion in October 2021.
What makes Shiba Inu somewhat special, is that developers are not embodying this status of meme token and after this huge success they want to expand the project into something special. According to a blog post on their website, they are interested in creating their own metaverse called Shiba Lands, where they are going to sell digital land plots.
MonaCoin, alongside Dogecoin, is one of the oldest meme coins on the market. It was launched in 2013 and has a thriving community in Japan. It is a decentralized and open-source-based token, which operates using a peer-to-peer network. MonaCoin saw its popularity grow after it was advertised on Japanese TV.
MonaCoin can be considered the most successful meme token, as it saw the highest market price of any meme token when it hit an all-time high of $20.33 in late 2017. Currently, MonaCoin trades at $0.43.
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Most meme coins don’t have much value. What gives crypto its value is utility and longevity. Most of the meme coins don’t have those two crucial components and their price is purely based on trends, and they always lose their value really fast.
If you buy them at the right time, then yes, you can get rich from meme tokens. But predicting when is the right time to purchase these tokens can be hard to determine. Along with that, finding the right time to sell out is just as difficult. Way more people are losing money from meme tokens than those who get rich from them.
Meme tokens combine a few things that are trending right now; crypto, memes, and celebrities. People tend to gravitate toward funny things that they can get enjoyment from. Whenever a celebrity tweets about some funny crypto, or word gets out about it, people start to buy those tokens just for fun, which then gives them even more popularity.
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