First, it was DOGE, then it was SHIBA. Now, it seems like there’s a new coin related to dogs every hour. Here’s what a “meme coin” is, and why it might not make the wisest investment.
Meme coins are cryptocurrencies that are based on internet memes. While many cryptocurrencies like Ethereum and Bitcoin tout technical features such as decentralization and anonymity, meme coins are different. Most of these tokens are characterized by a value proposition mostly derived from their association with a meme.
Some meme coins are satirical, acting as a critique of cryptocurrencies or other parts of internet culture. For example, Dogecoin (DOGE), one of the top ten largest cryptocurrencies globally, started as a “joke” by its creator. On the flip side, some meme coins are “scam coins,” which are currencies made purely to cash in a quick buck at the expense of others.
You might ask: why do people buy these coins? A lot of the value of a meme coin is speculative. People often buy these on the assumption that they’ll grow in popularity and value. While this sometimes pans out, such as Shiba Inu (SHIBA) and Dogecoin, many of these meme coins go by the wayside. Even people within the crypto space debate about whether or not people should buy these coins.
Value That Lasts… for a While
One thing to note about meme coins is how ephemeral they tend to be. While some meme coins such as DOGE have seemed to outlast their expected lifespan, most meme coins come and go in a very short period, both deliberately and unintentionally. Furthermore, whereas many mainstream coins try to illustrate a use case, such as an alternative financial instrument or a method of exchange in a video game, meme coins tend to have no practical usage other than to be bought and sold.
Many meme coins are also “scam coins,” which are cryptocurrencies that exist entirely to enrich the creator. Scam coins can take the form of multiple schemes, such as “pump and dump” schemes that call on people to buy a coin in massive numbers. Once the value is sufficiently high, the early owners of the coin will “dump” to make a massive profit. Alternatively, scam coins can be a “rug pull” where developers take all the money and completely abandon a project.
However, not all meme coins are scams. Some meme coins have useful functionality, like DOGE and SHIBA, and have primarily used the “meme” aspect to increase adoption. Members of the community also consider meme coins a vital way to get people interested in cryptocurrency, with public figures like Elon Musk frequently signal boosting meme coins.
A Few Meme Coins
Reading through a list of altcoins based on memes may feel surreal. To the skeptic, DOGE already sounds a little strange, with its entire visual identity based on a decade-old internet reaction photo. However, DOGE doesn’t even scratch the surface. Meme coins attempt to milk every internet trend imaginable, including other meme coins.
Here are a few absurd examples of meme coins:
- Cat Coin (CAT)
- Dogelon Mars (ELON)
- Garlicoin (GRLC)
- UFO Coin (UFO)
- Jesus Coin (JC)
- DogeBonk (DOBO), Doge Dash (DOGEDASH), Dogs of Elon (DOE), Dogey-Inu (DINU), DogeCash (DOGEC), DOGESWAP (DOGES)
The list above is just a tiny sample of the vast world of meme coins. There are so many meme coins that there’s an entire meme section on the consolidated crypto tracking website CoinMarketCap. There are coins with profane language and coins named after people who did not consent, such as “CoinYe,” named after Kanye West. There are dozens of spin-offs and offshoots of DOGE alone.
Some currencies are just an amalgamation of various other memes, such as Dogelon Mars. This coin is a combination of Doge, Elon Musk, and his ambitions to take the human race to Mars in the future. Musk did not endorse or create this coin.
Cryptocurrencies aren’t the only financial instruments to turn into viral internet sensations. The last few years have also seen the rise of “meme stocks.” For example, in 2020, the value of gaming company Gamestop’s stocks rose rapidly after a massive influx of online users from the Reddit community r/WallStreetBets purchased huge amounts of shares.
These purchases were made as part of a “short squeeze,” where financial institutions and investment firms who bet against the company’s value lost massive amounts of money. Many consider Gamestop the original meme stock, with companies like AMD and Bed, Bath, and Beyond following soon. These purchases frequently go against the traditional tenets of investing, which usually calls for close inspection of a company’s long-term viability.
There are also non-fungible tokens, often called “NFTs.” These are individual assets on the blockchain that can be bought and sold between users, such as art or images. While online arguments continue to happen regarding the legitimacy of NFTs, many people have taken advantage of the massive craze to sell iconic memes as NFTs. This includes the original files of some of the world’s most recognizable internet figures, such as Disaster Girl and Nyan Cat.
How to Spot a Meme Coin
Before you buy any coin, you should make sure that you’re buying something legitimate. You should investigate any potential scams, which meme coins are rife with.
If a coin has anything related to “DOGE” or “SHIBA” in the name, it’s probably a meme coin. One good place to figure out whether something is a meme coin or not is through the project’s website. If the creators spend very little space talking about potential uses for the currency and their page has numerous references to Elon Musk and cute animals, then it’s likely a meme coin.
Alternatively, you can refer to the handy list on CoinMarketCap that tracks all meme coins. Do your due diligence before you spend money on a volatile investment like crypto.