What Are Memecoins? Such Success, Much Wow… or Not?

The whole ordeal of cryptocurrency can seem pretty complicated and stressful at times, but this doesn’t mean that crypto doesn’t also have a fun side; let me introduce you to memecoins. 

Memecoins have become an integral part of the crypto market. They provide a more casual and accessible avenue into the crypto bubble, making them a welcome addition to the industry. 

However, they have also become associated with scams and fraudulent actors over the years, so let’s dig into what they are, how they differ from crypto, and how you can stay safe buying them. 

What Is a Memecoin? 

Memecoins are a type of cryptocurrency that is often based on characters from internet memes or pop culture. 

Unlike traditional cryptos like Bitcoin (BTC) or Ethereum (ETH), for example, memecoins usually aren’t designed with long-thought-out ideologies or goals in mind during their development.

Instead, they are more like casual social experiments, primarily based around community building and getting away from the stresses of trading high-risk tokens on the market. 

Despite this, memecoins still shouldn’t be written off as one-time fads since there have been several throughout the years that have proven to be successful through community support. 

History of Memecoins 

In 2013, software engineers Jackson Palmer and Billy Markus created Dogecoin (DOGE), a token with the Shiba Inu dog meme as its logo. The intent behind the creation was to parody the feverish level of hype that Bitcoin had begun generating at the time, with DOGE being a lighthearted form of satire. 

Much to the developers’ surprise, though, Dogecoin exploded in popularity thanks to its mainstream appeal, seeing its value rise by almost 300% in just two weeks. 

DOGE would keep riding this wave of momentum until its first major copycat, Shiba Inu (SHIB), arrived in 2020 which garnered a large audience thanks to social media promotions and celebrity endorsements. 

By 2021, memecoins had flooded the market. While some others aside from DOGE and SHIB also saw success, like Akita INU (AKITA) and Kishu INU (KISHU), this is also when many scamcoins began to appear.

Thankfully, the Pepe coin (PEPE), based on the Pepe the Frog meme, restored a lot of confidence in memecoins when it dropped in 2023, dedicating itself to community building and participation. 

However, memecoins today are still viewed with moderate skepticism since there are so many, but only a few will survive in the long term. 

How Are Memecoins Different From Other Crypto?

In crypto, cryptocurrency other than Bitcoin usually gets lumped into the ‘altcoin’ category. Yet, memecoins will always be defined as separate entities, but why is that? 

The truth is that they have a few key differences that make them inherently different in their purpose and design. 

Use Cases

When a cryptocurrency is developed, the developers usually have a particular use case in mind. For example, Ripple (XRP) is primarily designed for making overseas payments cheap and fast, while stablecoin Tether (USDC) is pegged to the US dollar and can be used for paying customers in a company. 

Memecoins, however, lack a use case. They don’t harbor the lofty ambitions or long-term goals as other crypto assets because they are simply not given as much thought, but this isn’t necessarily a bad thing. 

This has made memecoins not only easy to create but also, from an investor standpoint, an accessible alternative where they don’t need to worry too much about complex investment strategies. Instead, it’s all about seeing where the project can go through support and interacting with the community that surrounds it. 

Uncapped Token Supply Limit 

Another reason memecoins are so accessible is that, unlike most cryptocurrencies, most memecoins don’t come with a maximum supply limit. This results in individual coin prices being lower than their crypto counterparts since there’s an abundance. 

Think about it: If there’s a collection of only 10 limited edition sports cards, then their rarity will fetch them a lot of value, but if anyone can get one at any time, the price for each card would be much lower. 

If anything, the more tokens, the better, since memecoins are all about getting as many people involved in their projects as possible to evolve and gain recognition.

Reliance on Hype 

By this point, you might wonder, if memecoins have a max token supply and no specific use case, how do they generate value?

Memecoins will rise and fall in value depending on the amount of ‘hype’ surrounding them to facilitate supply and demand. ‘Hype can be anything from celebrity endorsements to news headlines or even a meme suddenly reemerging in internet culture. 

These external influences can also affect other cryptocurrencies, but memecoins entirely rely on them, meaning their prices harbor even more volatility than your average crypto. For example, DOGE’s price rose by over 30% after Elon Musk changed the Twitter logo to the DOGE symbol briefly, only for prices to plummet no more than a few days later. 

Because of this dependency on external excitement, memecoins are considered risky long-term investments for anyone looking to pour a lot of money into them. This is because it’s virtually impossible to predict when or if a token will gain attention, especially due to the lack of use cases. 

What Makes Memecoins so Appealing?

There are many reasons why many memecoins, including the ones above, have become so popular over the years and attracted large audiences. 

‘Crypto for Good’

Firstly, and this primarily applies to DOGE, memecoins are often used in charity efforts since they tend to be cheaper to buy and sell for investors. For example, the DOGE community raised enough money to allow the Jamaican bobsled team to participate in the 2014 winter Olympics.

Meanwhile, the Ponyo (PONYO) community raised $865,000 in crypto donations for the Coral Restoration Foundation in 2024. These sorts of “crypto for good” causes can inspire people to look into and participate in memecoin communities to be part of a worthwhile effort. 

Mainstream Meme Appeal 

Meme culture has existed since the dawn of the internet, and if there’s one thing that memes are based on, it’s humor. 

Humor is an international language. Anyone from anywhere can find an image of a Shiba Inu or a Pepe funny, and that’s why they have become so popular. According to BBC journalist Helen Brown, memes are “a language in themselves” that hold the “Capacity to transcend cultures and construct collective identities between people.”

Therefore, seeing a coin with the image of a popular meme can make it more recognizable and relatable than traditional crypto, which tries to stand on its own. 

Community Control 

The second point of appeal is that memecoins are considered very decentralized, often more so than traditional crypto. To be clear, decentralization is an integral term within crypto, which refers to acting without the interference of a third party, like a bank or a lead developer calling the shots. 

Memecoins often don’t have big teams running things from behind the scenes or even roadmaps or whitepapers to set out a plan of action. Therefore, a lot of power is handed over to the community to create the network they want to see through continued participation.

Celebrity Tokens 

Finally, some memecoins will be based on celebrities, automatically pulling in fans of the person in question. 

Whether it’s Iggy Azalea’s MOTHER, Caitlyn Jenner’s JENNER, or Jason Derulo’s JASON, there are many celebrities who will launch tokens to interact with their loyal fans. 

Celebrity memecoins have also branched into the political realm with Donald Trump’s MAGA token, which fluctuates wildly depending on the politician’s public perception. Considering how immensely popular celebrities are, it’s not hard to understand why these types of memecoins have caught the eyes of so many investors. 

Popular Memecoins – Such Success, Much Wow

Getting a memecoin off the ground can be tricky, but that isn’t to suggest that there haven’t been any success stories. Some have even managed to reach the top 10 market capitalization thanks to their continued community support, with the coins below being among the most popular as of Q4 2024. 

1. Dogecoin, Market Cap = $16B
2. Shiba Inu, Market Cap = $10B
3. Pepe, Market Cap = $4B
4. Bonk, Market Cap = $1.5B
5. Floki, Market Cap = $1.3B

However, memecoins reaching this level of popularity is rare, especially considering that scams and rug-pulls have scared many investors away from the market. 

Scams and Memecoins

Scams are, unfortunately, nothing new in the world of crypto, but they are especially rampant in the memecoin market. 

Remember, memecoins don’t need to be made with a purpose. Because of this, it’s very common to see advertisements claiming that a new token will be “Going to the moon” pretty soon, even though this is either a fraudulent scheme or a highly unlikely scenario. 

This makes it easy for developers to create and market a memecoin, without actually having any intention of seeing it through in the long term. 

There’s even evidence to back this up. In a 2024 Chainplay report, it was determined that over half (55.24%) of all memecoins have proven to be malicious and that the average lifespan of a memecoin is only one year – a third of that for regular cryptocurrencies. 

The most important statistic is that a reported 97% of memecoins have all but died out since their inception. This is why the memecoin market as a whole is often met with caution and skepticism from investors since finding a reliable token is like looking for a needle in a haystack. 

How to Avoid Scam Coins

Thankfully, there are a few safety measures investors can follow to avoid these fraudulent tokens. 

1. Find a Community Presence: Try to figure out how big and vibrant the online community of a memecoin is on platforms like X and Reddit. An active and positive community can indicate that a token is in a good state and looking hopeful for the future. 
2. Check Token Distribution: Is the token only being held in a small number of wallets? Or is it being shared with the community? The latter is positive, but the former can indicate the developer is hogging tokens for themselves.
3. Research the Developers: Speaking of developers, look up their crypto history and past projects to determine their intentions, and whether they seem reliable. 
4. Don’t Fall for FOMO: FOMO( fear of missing out) is an influential tool scammers use to entice people into buying their coins. The truth is that no memecoin is guaranteed to take off, so try to ignore buzzwords that make it seem like this will be your last chance to invest. 
5. Use Reliable Crypto Exchanges: A quick but important disclaimer: never use unknown or unverified websites to buy and sell memecoins. Your best bet is to stick with traditional cryptocurrency exchanges, which have high-security standards and have established a community base over several years. 
6. Analyze the Memecoin’s Price: If a token’s price has suddenly skyrocketed overnight, without any external hype or headlines to facilitate it, it’s likely a scam and should be avoided. 

Are Memecoins a Worthwhile Investment? 

So when everything is said and done, are memecoins worth the time and money? Or are they simply a sub-class of crypto that should be skipped over? 

This entirely depends on what you’re seeking as an investor. If you’re someone looking to buy big and want a token that seems like its value will grow and its recognition will flourish in the coming years, you’re better off checking out traditional crypto. 

Sure, the likes of DOGE and SHIB have proven that memecoins can reach a high value in the long run, but these are very much exceptions since most of them don’t see this kind of surge in value. 

Memecoins are more so for those who want an easy gateway into crypto where they can become a part of a community that they can feel truly involved with. Additionally, memecoins can be an interesting addition to a portfolio alongside other digital assets and currencies, offering entertainment and financial gains. 

So in a sense, they’re usually side-projects, rather than being seen as primary investments.

On the Flipside

• The prevalence of memecoin scams has made many investors wary about approaching the memecoin market.
• This has resulted in a lack of mainstream recognition and an abundance of memecoin ‘deaths’.

Why This Matters

The original memecoin may have started out as nothing more than a joke, but this sub-class of tokens has proven that they’re here to stay. 

Considering how prevalent memecoins are nowadays and the risks and benefits they come with, they are an important topic for anyone entering the crypto ecosystem for the first time. 

FAQs