How much is a joke worth? Apparently billions.
Sometimes clever, at other times completely random, memes will bring out a laugh in all of us. And in the world of cryptocurrency, meme coins can have a lot of potential value beyond a simple joke. Billions of dollars in meme coins are traded daily.
But why is something with no obvious value attracting so much attention in the market? Keep reading to discover more about the world of meme coins, and discover why some investors see the hidden potential within these oft humorous assets.
What are Meme Coins?
Meme coins are cryptocurrencies inspired by the social currency of the internet: memes. They could be directly inspired by a meme, like dog-themed coins – now a distinct subset within memecoins – with legacy projects Dogecoin (DOGE) and Shiba Inu (SHIB) being joined by newer entrants including dogwifhat (WIF)
Anyone with an internet connection can make and distribute a meme. And with the right technical knowledge, anyone can create and distribute a meme coin. Celebrity-inspired coins, like this Will Smith-themed coin, coins influenced by US Presidents past and present, as well as pet-themed examples show the breadth and diversity of this crypto sector Unlike their meme counterparts though, meme coins inspired by real people can be the subject of lawsuits.
Meme coins typically have a massive or unlimited supply, which accounts for their unusually low price.
Why are they so Popular?
What are memes? It all starts with a cultural idea that evolves through sharing across the web. Like the dancing baby animation from the mid-90s, memes grow on us. They strike a universal chord in the human psyche, leading to their eventual virality. A community forms around this one idea, keeping it alive through continued iterations and applied localisations.
A meme coin is no different. Meme coins leverage the existing popularity of a meme or attempt to become a meme on their own through the use of humour and an idea with viral potential. The average whitepaper or website for a meme coin is equal parts informative and amusing, such as the Jeo Boden project, which pokes fun at Joe Biden. This fun approach to cryptocurrency can be attractive to some casual investors. Especially in a market where everything can feel overly technical.
Meme coins tend to have a lower per-unit price, making it easier for an investor to own multiples of a coin versus a fraction of a higher-priced coin. This low per-unit price rarely has direct correlation to the perceived value of a coin. DOGE and Shiba Inu (SHIB) consistently rank among the top 20 cryptocurrencies by market cap.
When an investor recognises the meme attached to the coin, that “I get it” moment sets in. This, coupled with a typically low per-unit price, makes it easy for a casual investor to acquire a stack of their chosen meme coin.
Why do People Invest in Meme Coins?
While some meme coins claim to offer utility in the form of donations, scientific research, or other methods, most meme coins are simply just memes.
Though outside of cryptocurrency, memes are considered to be the “social currency of the internet”. They are a way for the world to share and exchange ideas quickly, in return for a good laugh or a new take on a subject. Those who “get it” form a virtual community around the meme, helping it grow and spread across the internet like wildfire.
If memes are the currency of the internet, then one might start to see why meme coins could have financial value. Memes are easy to understand, especially when stacked up against coins with a variety of complex use cases. Like every great joke, once you understand it, you become a part of an unspoken community of others who also get it. It’s so much easier to form a community around a simple idea.
And that’s the staying power of a meme. Leveraging community dynamics, meme coins continue to grow and maintain popularity. Investors of meme coins are actual fans of the coins they hold and will go out of their way to spread the word about how awesome they think the coin is.
So while they lack any value beyond the idea, investors get the feeling that they're involved in something greater and have a greater sense of connection to the story behind the meme coin. This is one of the reasons why many invest in meme coins.
The Elon Effect
Outside feeling involved in a community, there is another reason why people invest in meme coins, and even Bitcoin too: the mercurial Elon Musk.
Actions that Elon Musk takes both online and in the real world, have moved cryptocurrency markets in the past. Musk’s Twitter takeover offer saw DOGE prices spike overnight, while just last year the coin pumped 4% off a tweet with no explicit reference to the coin (see the tweet below) His acceptance of Bitcoin as a payment option for Tesla saw the coin’s value rise. And although short-lived, This tweet sent CumRocket’s price soaring.
Following Musk’s cryptocurrency interests is not a fool-proof investment strategy . Ultimately, it’s hard to know what he’ll do and how the market will respond to his actions. Nevertheless, his influence on the market— which he has faced legal action for —has driven some investors to purchase certain meme coins and that trend could well continue.
The Risks Associated With Meme Coins
When assessing risk in cryptocurrency, meme coins are considered to be riskier than most investments. Volatility is inherent in crypto, but with seemingly limited use cases, meme coins are completely reliant on sustaining popularity through growing their existing communities. If the trend dies off, the coin may become useless and the price can plummet.
Over the years rug pulls have occurred, causing investors to lose millions. Lack of regulation means that it’s even more important for investors to vet a meme coin project before putting money into it. As a result, Memecoins have caught the eye of lawmakers keen to protect investors against the potential pitfalls. Just this year, in reference to memes being shared to promote certain coins, the UK’s financial regulator the FCA said: “Consumers need to be alert to dubious adverts and scams online, but it is important that influencers ensure they’re on the right side of the rules and consider what would happen to their own reputations if they’re found to promote products illegally”.
6 Meme Coins to Look Out For in 2023
(Market caps correct as at 15 April, 2024)
Dogecoin [DOGE] ($22.2B)
Dubbed the original meme coin, DOGE started out as a satirical commentary on the idea of cryptocurrency by former Adobe product manager, Jackson Palmer in 2013. Eventually, the idea grew in popularity, and Palmer teamed up with software developer, Billy Markus, to make DOGE into an actual cryptocurrency.
It experienced brief record growth during the 2017/18 crypto bubble before falling in value. After an endorsement by Elon Musk in 2021, the coin rose once again. Its price rose once more after Musk’s takeover offer of Twitter in 2022. Although Dogecoin’s price has fluctuated many other times outside of these major shifts, it is currently one of the top cryptocurrencies by market cap.
Still some way off its all-time highs of 2021, the biggest memecoin by market cap is well-placed if and when memecoin season kicks back off.
Interested? Buy DOGE through your personal broker today. At Caleb & Brown, we offer DOGE and 100s of other cryptocurrencies to purchase or trade, with unlimited pairing on all trades.
Shiba Inu [SHIB] ($13.1B)
Shiba Inu is an Ethereum-based coin created in 2020 by the anonymous Ryoshi. The creator sees the coin as an “experiment in decentralised spontaneous community building”. And grow a community they did. The 500,000+ group of investors are known as the SHIBArmy and refer to SHIB as the “dogecoin killer”
While SHIB did not see much action in its first year, a tweet from Elon Musk of his pet Shiba Inu saw the market cap of SHIB quickly soar to $41 billion.
While conceived as a meme coin, SHIB’s ecosystem is trying to introduce utility; recently launched Shibarium, a Layer 2 network built on Ethereum for Shiba Inu launched, is evidence of the transition. In 2024, the project joined the Content Delivery and Security Association (CDSA), which advocates for “innovative and responsible delivery and storage of entertainment, software, and information content.” Shiba Inu’s blockchain technology is touted to tackle AI-related concerns in the entertainment world, such as deepfakes and plagiarism.
dogwifhat [WIF] ([$2.8B])
Unlike the historical roots of Dogecoin, Dogwifhat's origin story is shrouded in mystery. Launched in November 2023 on the Solana blockchain, it features a Shiba Inu dog sporting a pink hat, capitalizing on the popular internet meme.
Its meteoric rise to fame is attributed to a strong community and the general hype surrounding memecoins. Despite lacking real-world utility, WIF's value peaked in early 2024, reaching a market cap of over $2.9 billion. Fueled by community efforts and influencer attention, dogwifhat stands as the third-largest memecoin.
With no apparent utility, whether or not dogwifhat will be around for long remains to been seen. However, a voiceclip on the project’s website states the possibility that Kurdistan might: “adopt dogwifcoin as the national currency”, so keep your eyes peeled.
Pepe [PEPE] ([$430M])
Pepe is a hot meme coin that rocketed its way into the top 100 coins, with a market cap exceeding $1.5 billion shortly after launching in 2023. Demand was so fierce that one opportunistic investor turned an initial $250 investment into $1 million.
The frog-themed coin followed the meme coin recipe, proclaiming itself “the most memeable memecoin in existence” according to its creators, who brought the coin to market to rival the two tokens above and excite depressed investors in a bear market, which the market cap is proof of.
Floki [FLOKI] ([$1.4B])
Launched in mid-2021, Floki also takes inspiration from the Shiba Inu dog breed associated with Elon Musk's pet, Floki. Riding the wave of Dogecoin's success in 2021, Floki Inu aimed to share in its huge growth.
While it garnered some initial hype, its value primarily rests on speculation and community support. As a result, it sits in Dogecoin’s shadow, but that hasn’t stopped Floki from coming within 14% of its all-time-high (registered in 2022) as recently as March 2024.
Bonk [BONK] ([$1.0B])
Emerging in August 2022, Bonk is a memecoin built on the Solana blockchain with a mascot inspired by the "Bonk" doge meme. Its creation sought to gain traction by jumping on the dog-themed memecoin bandwagon and setting up in the thriving Solana ecosystem.
Similar to other memecoins, Bonk's value relies heavily on community sentiment and speculation. It gained attention through its association with Solana's most popular NFT collections. While Bonk's future remains uncertain, its connection to the established Solana community offers a potential edge in the memecoin space.
Your Meme Coin Questions Answered
Where can I buy meme coins?
Through an exchange (centralised or decentralised), or through a broker, like us.
Why do most meme coins have such a low unit price?
Many meme coins often have an unlimited supply or an excessively large limit on the number of units that can be created. For this reason, their unit price largely depends on perception or the current hype surrounding a particular coin.
What was the first meme coin created?
Created in 2013, Dogecoin is considered to be the first meme coin ever created.
Why are so many of these coins dog-themed?
Just like original internet memes undergo iterations and remixes by the wider community, so do meme coins. The popularity of Dogecoin, combined with Elon Musk’s support of the coin has prompted the crypto community to create a whole slew of dog-themed meme coins. Dogs in general are beloved by many. Crypto creators are hoping to capitalise on the success of DOGE through coins that are dog-inspired, Elon-inspired, or both.
How can I avoid being a victim of a rug pull?
Check that the developers of the coin (meme or otherwise) have a track record of success. Check to see if the project has completed a security audit. Consider projects in which the token allocation between developers and investors is reasonably fair.
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