Cryptocurrency and blockchain technology are two revolutionary technologies that have taken the world by storm. Blockchain technology enabled the decentralized and secure transfer of digital value, which led to the creation of cryptocurrencies.
Ever since the launch of Bitcoin in 2009, there have been many other crypto projects that have entered into the market. Some of these projects offer a high level of utility, while others have inspired a sort of cult-like mentality. The latter of these projects are known as meme tokens or meme cryptos.
This article will cover all aspects relating to meme cryptos/crypto meme tokens.
What is a Blockchain?
A blockchain is a distributed database that is shared among the nodes of a computer network. As a database, a blockchain stores information electronically in digital format.
Blockchains are best known for their crucial role in cryptocurrency systems, such as Bitcoin, for maintaining a secure and decentralized record of transactions. The innovation with a blockchain is that it guarantees the fidelity and security of a record of data and generates trust without the need for a trusted third party.
One key difference between a typical database and a blockchain is how the data is structured. A blockchain collects information together in groups, known as blocks, that hold sets of information.
Blocks have certain storage capacities and, when filled, are closed and linked to the previously filled block, forming a chain of data known as the blockchain. All new information that follows that freshly added block is compiled into a newly formed block that will then also be added to the chain once filled.
A database usually structures its data into tables, whereas a blockchain, like its name implies, structures its data into chunks (blocks) that are strung together. This data structure inherently makes an irreversible timeline of data when implemented in a decentralized nature. When a block is filled, it is set in stone and becomes a part of this timeline. Each block in the chain is given an exact time stamp when it is added to the chain.
What is a Cryptocurrency and How Does It Work?
Cryptocurrency is decentralized digital money that is based on blockchain technology.Bitcoin and Ethereum are the most well known cryptos out there, but there are almost 9000 cryptocurrencies in circulation at the moment.
A cryptocurrency is a digital, encrypted, and decentralized medium of exchange and unlike the U.S. Dollar and the Euro, there is no central authority that is in charge of managing and maintaining the value of the cryptocurrency. Instead, these responsibilities are broadly distributed among the crypto’s users via the internet.
Cryptocurrencies can be used to buy regular goods and services, but most people invest in cryptocurrencies like they would in traditional assets like stocks of precious metals. Although there is some excitement surrounding the novelty and relative newness of crypto, it can still be risky. This is why it is so important to do your own research to fully understand who cryptocurrencies work.
Bitcoin (BTC) was the first cryptocurrency and was first outlined in principle by Satoshi Nakamoto. He described Bitcoin as an electronic payment system based on cryptographic proof instead of trust. This cryptographic proof comes in the form of transactions that are verified and recorded on a blockchain.
Meme coins
In 2021, the meme coin market saw a huge spike in growth, especially in the dog-themed meme coins. The most popular meme coins are Dogecoin (DOGE) and its rival Shiba Inu (SHIB). In November of 2021, the price of DOGE skyrocketed by over 8000%. Now DOGE is ranked 11th in terms of market capitalization on CoinMarketcap.
Meme coins can be defined as meme-inspired cryptocurrencies. They are usually highly volatile when compared to bigger cryptos like BTC and ether (ETH). This is probably due to the fact that meme coins are highly community-driven tokens.
This means that the price of meme coins are usually influenced by social media and online community sentiments. This can cause a lot of hype surrounding the meme coin and can also cause feelings of FOMO (fear of missing out) amongst investors.
It is very possible for investors to become rich from memecoins, but it is important to acknowledge the fact that most people lose money due to the market volatility.
What are Meme Coins?
Meme coins are cryptocurrencies that are basically inspired by memes or jokes on the Internet and on social media.
The first meme coin created was Dogecoin. DOGE was launched in 2013 and was inspired by the popular Doge meme of a Japanese Shiba Inu dog.
As mentioned above, meme coins are very volatile. This is due to the fact that it is community-driven and the meme crypto can basically gain popularity overnight due to online community endorsements and FOMO.
On the other hand, their prices can plummet just as unexpectedly when traders turn their attention to the next best meme crypto.
Another characteristic of meme coins is the fact that they have a massive or unlimited supply. SHIB, for example, has a total supply of about 1 quadrillion tokens, while DOGE has no maximum supply and already has over 100 billion tokens in circulation.
The huge amount of supply means that the prices of meme coins are relatively low as they usually do not have a burning mechanism in place. This is also why it is possible for investors to buy huge amounts of crypto with just 1 USD.
How do Meme Coins Work?
Meme coins work like almost any other cryptocurrency using blockchain and related technology. In particular, meme cryptos have popped up on blockchains that use smart contracts like Ethereum and Solana.
Meme coins can also be bought, sold, and traded like any other crypto. It is as simple as visiting a marketplace and making your purchase. Buying meme coins is just as easy as buying BTC and ETH.
In the past, it required some technical knowledge and expertise to create a meme coin, but today, apps and sites have been developed that do all of the hard work for developers. DxLaunch is an example of one of these apps and it offers everything you need to create and launch your very own meme crypto.
Although this is great for accessibility of meme coins, it still allows possible scammers to take advantage of new or less educated investors.
Why Are Meme Coins So Popular?
Although it is difficult to pinpoint exactly why meme cryptos are so popular, many believe it started during the Covid-19 pandemic when the crypto market grew as retail investors wanted to hedge against inflation.
Many also believe that meme coin popularity started after the “meme stock” saga of GameStop (GME) and AMC Entertainment (AMC) in late 2020, where the Reddit community was able to pump the prices of these shares by as much as 100 times in only a few months.
As a result of this, the Reddit community joked that it wants to do the same with DOGE and pump the price of the meme crypto just like it did with GME. This led to the trend catching on and people like Elon Musk also joined in.
Elon Musk is now almost renowned for his Tweets about DOGE which caused the price of the meme coin to rally. Because of this, the price of DOGE reached an all-time high of $0.73 USD after increasing 2,000% in just five days.
Just a few months after this, Musk publicly joked about DOGE which then, in turn, led to a price drop of the meme crypto. Many traders then shifted their attention to other projects like SHIB.
All of this caught the attention of retail investors and many were FOMOing into meme coins in the hopes of becoming millionaires overnight. This, yet again, caused a meme coin rally.
Another reason why mama cryptos are so attractive to retail investors is the fact that they typically only cost a few cents. This might not mean much in terms of price, but psychologically, it feels better to hold millions of a certain meme coin than only holding a fraction or ETHor BTC.
Apart from the lure of potential profits, the meme coin frenzy is also driven by their community sentiments. Meme cryptos are sometimes inspired by Internet memes that are considered inside jokes by the crypto community. This means that investors sometimes buy the token to show their support to the community as a whole.
The Most Popular Meme Coins
As mentioned above, DOGE and SHIB are considered to be the most popular meme coins. At the moment, DOGE and SHIB are both in the top 0 cryptocurrencies when it comes to market capitalization.
DOGE is ranked 11th and has a market cap of about $9.40 billion. SHIB is ranked 15th and has a $6.78 billion market cap.
Some other popular meme cryptos with the dog theme include: Dogelon Mars (ELON), Floki Inu (FLOKI), Samoyed Coin (SAMO), Hoge Finance (HOGE), Kangal (KANGAL), and Baby DogeCoin (BabyDoge).
Other popular meme coins that are not dog themed include cryptos like: Monacoin (MONA), Babano (BAN), Pepe Cash (PEPECASH), and Garlicoin (GRLC).
Potential Risks of Investing in Meme Coins
Although 2021 was a great year for meme cryptos, they still carry a high financial risk.
One of the biggest concerns surrounding meme coins are tokenomics. Bitcoin, for example, has its own blockchain, a well-written whitepaper, a well-established ecosystem and a deflationary nature. There is also an increase in the institutional adoption of Bitcoin.
On the other hand, emem coins are inflationary in nature with no maximum supply. Meme coin’s ecosystems, use cases and fundamentals are also often defined by internet jokes from the community.
In addition to this, there are only a few meme cryptos that were built on the technology of bigger cryptocurrencies. An example of this is DOGE, whose technology was derived from Litecoin (LTC). SHIB was also built on the Ethereum blockchain.
Another potential risk to consider is the fact that meme coins are almost fully community driven and are more speculative that the other big crypto in the market. The resulting volatility leads to the continuous pump and dump in the price of meme coins. The life-cycle of meme cryptos are also pretty short as a result of this.
Another risk to consider is the fact that it could be relatively easy for scammers to take advantage of the meme coin hype to scam investors.
A good example of this sort of situation is the Squid Game (SQUID) meme coin that was inspired by the very popular Netflix show.The price of SQUID surged more than 86,000% in a week.
Unfortunately, the development team executed a rug-pull, which led the price to plummet by 99%. To make things even worse, the SQUID holders were not allowed to sell their tokens. This is why it is important to do your own research on meme coins before investing.
What is Dogecoin?
Software engineers Billy Marcus and Jackson Palmer created Dogecoin (DOGE) in late 2013. The DOGE logo was based on a popular meme at the time that featured a deliberately misspelled word “doge” to describe the Shiba Inu dog. According to the CEO of Bitwave, DOGE was created to poke fun at Bitcoin.
In the crypto’s early days, enthusiasts arranged public stunts to raise awareness for the meme coin like, for example, raising funds to send the Jamaican Bobsleigh team to the 2014 Olympics.
Dogecoin gained cult status on Reddit’s WallStreetBets message board in 2021. Here enthusiasts promised to propel the value of DOGE to the moon.
How Does Dogecoin Work?
Like many other cryptos, DOGE runs on its own blockchain. The DOGE digital ledger is constantly updated with all new transactions. The network also utilized cryptography to ensure that all the transactions are secure.
The Dogecoin blockchain uses a proof-of-work consensus mechanism. This means that miners use computers to solve a variety of complex puzzles in an attempt to process transactions and record them on the blockchain.
In exchange for their work, miners earn additional Dogecoin which they can either hold or sell on the market.
Dogecoin can be used for both payments and purchases, but it is not as effective to store value as a result of its volatility. It is also due to the fact that there is no lifetime cap on the number of Dogecoins that can be created through mining. This is also why DOGE is highly inflationary by design.
The fact that the blockchain miners receive rewards for creating new Dogecoins every day makes it even more difficult for speculative price gains in Dogecoin to hold up over time.
How to Buy Dogecoin
Investors can easily buy Dogecoin on exchanges like Binance or Kraken. On these exchanges, investors are required to set up and fund an account with U.S. dollars or cryptocurrency. This will allow you to buy and exchange cryptocurrencies, including DOGE.
Some exchanges like Robinhood and TradeStation, also allow investors to buy DOGE as well as traditional assets like stocks, mutual funds and bonds. They do not offer as many cryptocurrencies as other exchanges, but DOGE is usually one of the cryptos on offer.
One you have purchased DOGE, it is best to move your holdings to a crypto wallet. Wallets can take many forms. They can be online services offered by exchanges like Coinbase, app on your mobile device or even a more old school but safe physical hard drive.
Investors can increase the safety of their wallets by applying a private password. If your coins are held outside of the exchange, it adds an extra layer of protection as it is more protected against hackers and cybercriminals.
In the past, people used to be able to earn free coins for doing basic tasks online. These tasks include things like watching adds or taking surveys.
What is Shiba Inu?
Shiba Inu (SHIB), is an altcoin built on the Ethereum blockchain that features the Japanese hunting dog Shiba Inu as its mascot. Shiba Inu is considered to be the alternative of Dogecoin by its loyal supporters known as the SHIBArmy.
SHIB was launched in August of 2020 by the mysterious Royshi as an inside joke. According to the whitepaper of Shiba Inu, SHIB is an experiment in decentralized spontaneous community building and is designed to answer one single question: what would happen if a cryptocurrency project was 100% run by the community?.
Since the launch of SHIB, the project has gained over 500,000 members.
How Does Shiba Inu Work?
As an Ethereum-based token, Shiba Inu was launched on and is compatible with the vast Ethereum ecosystem. According to the whitepapers of the projects, Ryoshi decided to launch the meme crypto on Ethereum because it is secure and well-established. This, in turn, allows the project to remain decentralized and accessible to a big user base.
The SHIB ecosystem can be divided into three tokens. The first is SHIB, which boasts over 1 quadrillion coins. Ryoshi locked half of these coins in a liquidity pool and transferred the rest to the Ethereum co-founder Vitalik Buterin.
Leash is Shiba Inu’s second token. It has about 107,646 coins in circulation.
The third token is called BONE. BONE is Shiba Inus governance token that allows the SHIBArmy to vote on upcoming proposals. Bone has the second-most coins in the system at 250 million tokens.
Shiba Inu are best bought and sold in Shiba Inu’s decentralized exchange, ShibSwap. The ecosystem also has a Shiba Inu Incubator which aims to discover new artistic forms outside of the mainstream.
Shiboshi, which is a Shiba Inu-generated network with about 10,000 unique NFTs available on the Ethereum blockchain.
To Recap
Meme coins are one of the most prominent trends in cryptocurrency at the moment. These meme cryptos are coins that are built off of internet memes, trends or ideas that appeal to a small group of investors.
Dogecoin led this new era of fun and occasional fortune, with a whole bunch of other meme cryptos following in its wake. One of these meme coins is Shiba Inu, which was designed as an inside joke and to kill Dogecoin.
Although these crypto can on rare occasions make you rich quickly, they can still be very risky as their prices are community-based and are therefore extremely volatile.
