A beginner’s guide: What are meme coins?

The history of meme coins

Meme coins are a type of cryptocurrencies, the popularity of which is directly related to internet memes and viral marketing on social networks. As a rule, they are initially created for the purpose of a joke, without any practical function.

The meme phenomenon appeared long before cryptocurrencies. This ironic content created by ordinary Internet users can be divided into 2 types. The first is the reactions of the internet community–those humorous or sarcastic jokes are created in response to some incident and can go viral and spread spontaneously.

The second category includes characters who convey a particular emotion. These characters become an internet sensation, and their further spread is overgrown with reactions. The first and most famous meme token was Dogecoin, launched in 2013 based on a popular meme with a Shiba Inu dog. DOGE was originally created as a parody of Bitcoin. Learn more about Bitcoin in our article.

The name “doge” is a deliberate misspelling of “dog”. However, over time, this asset gained a billion-dollar capitalization.

The main difference between meme coins and traditional cryptocurrencies, such as Ethereum (ETH) or Bitcoin (BTC) is the lack of value and emission restrictions. Meme coins rarely have mechanisms like “burns” that remove coins out of circulation either, so the number of coins in circulation keeps rising. Their cost depends entirely on demand against the background of Internet hype. Because of this, meme coins are characterized by increased volatility.

Recently, there has been a tendency to give meme coins more practical significance. For example, SHIB and FLOKI developers create their own metaverses, NET platforms and educational ecosystems based on these assets.

Where do meme coins come from

Meme coins are still one of the biggest consumer products in crypto. A new wave of meme tokens popularity started in 2024. Users began to actively launch similar cryptocurrencies on the Solana blockchain, thousands of them appeared daily. Everything was decided by the simplicity of issuing your own token and low commissions, as well as the relatively simple functionality for adding an asset to a decentralized exchange in the Solana network.

In the past, creating a meme coin required some technical know-how. But now apps and websites have been developed that do all the hard work for you. They offer everything you need to create and launch your own meme coin.

To issue a token on the Solana blockchain, you need to download a wallet with support for this network (Phantom or any other will be good) and put a SOL token on it to pay commissions for transfers. In order to then list the newly minted asset on a decentralized exchange, it is necessary to launch a smart contract and place funds on it to ensure primary liquidity. It remains to attract potential buyers and create a stir around your asset in order to overestimate its value.

Some platforms became a popular way for how new meme coins are launched. Pump.fun is the meme coin launchpad on Solana where many new meme tokens were created in the last months. The platform, called Moonshot, also lets users launch their own tokens on Solana. Same as Pump.fun, any user can connect a wallet and mint their own token at a cost of around 0.02 SOL. Once the user adds a name, symbol and image, the token is ready for a launch. It is also possible to add some social media links.

How do meme coins work?

Meme coins work the same way as any other cryptocurrency, taking full advantage of the blockchain and related technologies. In particular, meme coins appeared on blockchains that use smart contracts, such as Ethereum and Solana. Today, more than 200 meme coins are circulating in these blockchains.

Main characteristics that distinguish meme coins from traditional cryptocurrencies:

meme coins are not intended to be used as utility tokens, but are intended exclusively for trading;
meme coins are highly volatile and subject to sudden changes in value over very short periods of time;
meme coins often meme coins often have a high or unlimited supply (exceptions are, for example, Shiba Inu);
the value of meme coins is determined by the current buzz around the token;
meme coins usually have a very low cost per token;
the sole use case for most meme coins is pure speculation.

And yet, crypto investors should not write off meme coins as if they were a waste. Fortunes were earned and lost in the space of meme coins. Consider the fact that someone who invested $1 in Shiba Inu coins in March 2021 could sell them for $8000 seven months later. Very few investments can offer such a quick return. And that's why investors shouldn't completely ignore meme coins, even if they make up only a small part of their investment strategy.

The key to making money from meme coins is to know what will go viral before it happens. By staying up to date with current and future trends, meme coins can become an incredibly valuable investment. This is especially true because their cost is so low that it allows investors to purchase a significant amount for a minimum amount of money. Even if you decide never to invest in meme coins, they are an important part of today's crypto market, and you need to know about them.

Popular meme coins

Let's take a look at some of the most popular meme coins in order to better understand the principles of their operation and the factors of value growth. In particular, we will look at such popular meme tokens as Dogecoin, Shiba Inu and Pepe Coin.

Dogecoin (DOGE)

Dogecoin appeared in December 2013 thanks to programmers Billy Markus and Jackson Palmer. The idea of creating a comic cryptocurrency arose amid the hype around the growing altcoins. A popular meme with a Shiba Inu dog was chosen as the logo.

Despite the clearly comedic orientation, the Dogecoin community has launched real charity projects more than once. The most notable was the fundraising for Jamaica's participation in the 2014 Winter Olympics in Sochi, Russia. In 2021, DOGE attracted the attention of Elon Musk, which increased the hype around the coin.

In May 2021, Dogecoin reached a historic high of $0.76, with a capitalization of $100 billion. Then the decline began because of the low practical value. Today, the value of DOGE is $0.1331, it has the 8th place in terms of capitalization - $19 billion. The indicator of DOGE's trading activity remains high–about $500 million of turnover per day. This confirms that Dogecoin is still a popular speculative asset focused on entertainment.

Shiba Inu (SHIB)

The goal of creating the Shiba Inu token in 2020 was to surpass the popularity of Dogecoin by using a similar image of the Japanese Shiba Inu dog breed. Shiba Inu (SHIB) was launched as the “Dogecoin killer.” The author of the project was an anonymous person or group using the pseudonym "Ryoshi".

Unlike DOGE, in addition to the coin itself, the SHIB ecosystem includes a decentralized ShibaSwap exchange, a token burning system, as well as a technical "white paper" (Woofpaper) for investors. This functionality is designed to increase the value and practical application of SHIB compared to a simple meme coin.

The price of $0.00008251 was fixed in October 2021, followed by a landslide decline of 90%. The current value of the token is $0.00001708, with a capitalization of over $10 billion. The coin ranks 13th in terms of capitalization among all cryptocurrencies.

PEPE

PEPE coin is a deflationary cryptocurrency created in 2021 based on the popular Internet meme "Pepe the Frog". It runs on the Binance Smart Chain blockchain, which provides high speed and low fees.

The total supply of PEPE tokens is gradually reduced by burning 2% commission from each transaction. This is intended to stimulate price growth in the long term as emissions decrease.

Due to the popularity of the original meme, PEPE's capitalization reached $1 billion, but then the market value dropped to $600 million. According to CoinMarketCap, the coin ranks 22nd. The current value of the token is $0.00001708, with a capitalization of over $10 billion. The current value of the token is $0.00001213 with a capitalization of over $5 billion.

Profitability of meme coins

The price increase for meme coins can reach huge values. For example, the Shiba Inu cryptocurrency, created in August 2020 in honor of the dog breed of the same name, from the moment of its appearance until May 7, 2021, did not exceed the price of 0.000001478 US dollars for a conditional digital coin. But already in October 2021, its value began to grow and increased by 25 times at record levels. That is, at this point, the invested $100 could bring the investor up to $2,500.

At the same time, similar jumps in the value of other meme cryptocurrencies could be provoked by statements of celebrities, which could also bring investors multiple profits. That is why meme coins are widely popular - investors want to get a quick income and get rich. However, such volatility always means that there is a comparable risk. Here are the essential tips for mastering risk management in crypto trading.

Risks of a meme cryptocurrency

A sharp increase in the value of a particular cryptocurrency may be accompanied by an equally sharp drop in prices. The main feature of cryptocurrencies is the market formation of their value. They will cost as much as investors are willing to pay. Therefore, the pricing of such assets is related to their popularity. This means that new meme cryptocurrencies can be actively created in the future. They can also sharply rise in price or become cheaper.

A similar thing happened with famous meme coin Shiba Inu, which, after taking off in October 2021, soon lost up to 50% of its value. The reason was that one of the founders of Ethereum owned 50% of all digital "coins" of this cryptocurrency. They were frozen in a special account, but when these assets were put on the market, the price per unit of cryptocurrency dropped sharply because of an oversupply. As a result, investors who invested money during the price increase lost some of their funds.

Among the risks of investing in meme coins are:

High volatility: meme coins can increase in value quickly, but they can also lose their value quickly.
Lack of fundamental value: a good deal of meme coins have no real use or support, making them vulnerable to loss of value.
Speculative nature: investments in meme coins are often based on hype and speculation, rather than on real financial indicators.

What affects the price of meme coins

Despite the apparent randomness, the dynamics of the value of meme cryptocurrencies depend on several factors:

The popularity of the original meme on the internet. The more attention a meme attracts on social networks and on popular sites like Reddit, the higher is the demand for the corresponding meme coin.
Large-scale marketing campaigns to attract new investors. The developers of SHIB organized a global Twitter campaign, which spurred the hype and doubled the price of the token in just a few days.
Listing on major exchanges. For example, after the appearance of SHIB on Binance, the value of the cryptocurrency jumped 4 times in a week due to the facilitated access of a mass retail investor.
Statements by celebrities and big businessmen about meme coins. As a rule, any mention affects a sharp rise in prices. The good example is the rise of Dogecoin after another tweet from Elon Musk.
The emergence of additional ecosystem elements. For example, after the addition of the decentralized ShibaSwap exchange and the Woofpaper document, the capitalization of SHIB increased 15 times in 2 months.
Announcement of mergers, acquisitions and partnerships of meme coins with other significant projects in the crypto industry. This raises the status of meme coins and attracts the attention of investors.

Despite the high unpredictability, there are a number of marketing tools and information guides that can stimulate the price rise of even the most exotic meme cryptocurrencies.

Where to buy meme coins

More and more investors are showing interest in investing in meme cryptocurrencies in the hope of multiple price increases.

There are several main ways to buy popular meme coins:

Exchange. Some of them provide an opportunity to buy meme coins for fiat or other cryptocurrencies. Most often, their supply is limited and only Dogecoin can be found. The exchange is quick and easy, anonymous and offers favorable rates.
Centralized crypto exchanges. Binance, OKX, and KuCoin provide the widest selection of meme tokens, including DOGE and SHIB. You will need to document your profile, so it is not suitable for fans of anonymity.
Decentralized exchanges. Uniswap and PancakeSwap allow you to purchase meme coins for other digital assets.
P2P platforms. LocalCryptos and Bitzlato are a great option for convenient exchange of meme coins for fiat or stablecoins directly between traders.
Mobile applications of multicurrency wallets. Trust Wallet and Coinbase offer in-app purchase of DOGE or SHIB.

There are plenty of available options for investing in meme coins today. The main thing is to choose the right option and pay attention to reliability, reputation, and ease of use.

What can you do with your meme coins after buying them?

Unfortunately, most meme coins do not offer clear use case or benefits. Remember that they are not intended to be used in the DAO or as a staking token. Instead, you can look for opportunities to buy when the meme token is low and sell when it is high. It's more of a pure investment than something you're going to use.

Where to store meme coins

After buying meme coins, the question arises – how to safely store them. The following solutions are suitable for storing small volumes of meme coins:

Online software wallets – Trust Wallet, Atomic Wallet, and Exodus are convenient for active use of meme coins, but there is a risk of hacking.
Mobile crypto wallets – Jaxx Liberty and Coinomi allow you to easily send and receive meme coin transactions via your smartphone.
Exchange wallets on Binance, OKX and other trading platforms. This option is beneficial for traders, but the funds are not controlled by the user.

For long–term storage of large amounts, hardware cold wallets like Ledger Nano X, Trezor Model T are better suited. They are isolated from the network and provide maximum protection against hacker attacks and fraud. Some of them support DOGE and SHIB.

The optimal choice depends on the amount of investment and the level of technical literacy of the user.

Are meme coins safe?

If you have carefully read everything that is written here about meme coins, then you probably already know that this is not the most stable investment. Their high supply and volatility make them inherently riskier investments. While Elon Musk (or some other celebrity) might tweet about Shiba Inu and raise its value, he could just as easily disappear into obscurity.

Remember, meme coins are based on internet memes. And as such, they have a lot in common with them, including the potential to go viral and become obsolete quickly.

However, it is safe to invest in meme coins and earn an incredible amount of money at the same time. But you need to keep the following tips in mind if you are going to avoid scams and frauds that are just waiting for unsuspecting investors.

What you should keep in mind when investing in meme coins:

Make sure that liquidity pools are held at burn addresses so that you don't end up investing in a project that will take your coins and launch.
Always make sure that a reputable third-party firm conducts an audit of the meme coin project.
Be careful with any coin where developers hold most of the tokens. Ideally, no one person or organization should control more than 5% of the total number of tokens.

By keeping these things in mind doing your own research (DYOR) on any coin you invest in, you will minimize unnecessary investment risks and get the best chance of success with meme coins.

Future trends of meme coins

Meme coin development is among the predicting 9 key crypto trends for 2024.

Although meme coins flew to the moon in 2021, they have largely returned to earth since then. But this does not mean that the fate of the meme coin has already been decided. There is still a lot of uncertainty about the future of meme coins such as Shiba Inu, Dogecoin and many others.

At the moment, it is unlikely that they will become as widespread as more stable digital currencies, such as Bitcoin and Ethereum, are approaching. However, this does not mean that they are in trouble. The main barrier for meme coins is the same as for other cryptocurrencies: many people are still not familiar with them. But awareness of cryptography is only growing. And if nothing dramatic happens, this awareness will continue to grow.

More and more companies are accepting meme coins as currency! This awareness has been spurred by several major businesses that have expressed openness to meme coins. Knowing how Elon Musk values memes, it's not surprising that the Tesla store started accepting Dogecoin for certain items.

But Musk is not the only businessman who is open to meme coins. GameStop, Newegg and Nordstrom have already started accepting meme coins such as Dogecoin and Shiba Inu. And other businesses, including AMC, have announced their plans to start accepting them in the future.

So, is it worth investing in meme cryptocurrencies? Let's summarize what meme coins are and what they were invented for. Maybe their goal is to enrich their founders? Maybe their popularity is exaggerated, and they were created in order to deceive naive investors?

Most critics of meme coins agree that these coins do not have a solid foundation and long-term value. But despite this, such projects have their advantages. Firstly, rapid fluctuations in price can be beneficial for experienced short-term traders who close trades during the day. These funny memes can become a real hit overnight, their success is impossible to predict, and anyone who can skillfully make a purchase and sale will make a significant profit.

Secondly, meme coins attract new people to the world of cryptocurrencies and introduce them to blockchain technology. They can become a kind of springboard to the broader possibilities of the Web3 Internet of the future, including games on the GameFi platform or immersion in the metaverse.

However, it should be understood that there is a high risk of possible failure of such projects. No matter how this may happen, a negative experience with meme coins can negatively affect the reputation of the cryptocurrency and the attitude towards investments in this area.

It is important to remember that before investing your money in any cryptocurrencies, including meme coins, you need to conduct a thorough study and be prepared for the loss of funds. Investing in cryptocurrencies is a high—risk process, and everyone should make their own decisions based on their personal circumstances and financial capabilities. Learn more about crypto trading strategies explained for beginners in our article.

Top 10 Meme Coins to Invest in 2024

Investing in meme coins can be attractive because of their potential for rapid growth. However, such investments are fraught with high risks. Meme coins often experience sharp price fluctuations and can be subject to speculative influences. In addition, many of them do not have a clear long-term strategy or practical application.

Below are the Top 10 meme coins to invest this year:

1. Smog ($SMOG) - the best meme coin on the Solana platform, preparing for the largest airdrop of 490 million tokens.

2. Meme Kombat ($MK) - a game token with the ability to earn (play-to-earn) and an annual interest income (APY) of 112%, has attracted more than $8 million in investments.

3. Wall Street Memes ($WSM) - a hot meme coin that has raised over $25 million in presale.

4. Scotty the AI (SCOTTY) - an artificial intelligence-themed cryptocurrency aimed at using advanced algorithms for security.

5. ApeCoin ($APE) - a meme coin inspired by the NFT Bored Ape Yacht Club collection.

6. Dogelon Mars ($ELON) - a meme coin combining Elon Musk, Shiba Inu dogs and rockets flying to the moon.

7. PepeCoin ($PEPE) - one of the most explosive cryptocurrency memes of 2023.

8. Shiba Inu ($SHIB) - a popular and famous meme coin, now with new features on the Shibarium network.

9. Milady Meme Coin ($LADYS) – a meme coin with volatile price dynamics.

10. Dogecoin ($DOGE) - a very first meme coin that started everything, with a current market capitalization of $19 billion.

Explore the 5 trading strategies and tips you need to know for 2024 here.

Conclusion

Investing in meme coins can be exciting, but it comes with high risks and instability. Their popularity largely depends on social media trends and public attention, which makes them unpredictable investments. These coins can offer significant growth potential, but they can also lead to significant losses.

Despite all the absurdity, meme coins have already proven their ability to provide ultra-high returns at the peak of speculative hype. Huge positive price waves in a matter of days or weeks are real.

However, such success in most cases is short-term, accidental. In the long run, as Internet popularity declines, the value of most meme coins tends to zero. Another thing is that new memes and trends are constantly emerging.

But why do internet users believe in meme coins? It's simple, the desire to get a quick and huge profit with minimal investment. However, in cases with such coins, the one who comes last pays. Of course, investors earn only earlier on coins such as Dogecoin and Shiba Inu, and those who come now will only help them fix profits. Therefore, investing in meme coins is a lottery.

After the hype on meme coins will end, Dogecoin and Shiba Inu will be replaced by other meme coins. So, do not succumb to the general hype, think very carefully before investing.

We advise you to consider meme coins more as gambles than investments. The Dyor app is a great place to explore new meme coins on Base, Ethereum and Binance Smart Chain.

And which meme coin would you launch?