Originally created as a parody of the regular crypto market, meme coins surprisingly gained a lot of popularity among crypto enthusiasts. Their popularity first soared in 2021 after superstars like Elon Musk and Snoop Dogg supported Dogecoin, shooting it up to over 800% in just 24 hours. Nevertheless, as popular as they’ve become, not many newbies know about the virtual asset. So, what is a Meme coin? Here’s everything you should know.
Understanding Meme coins
Before we go into further details about this coin, here’s an answer to the question “What is a Meme Coin?”. Meme coins are primarily cryptocurrencies, such as Ethereum or Bitcoin, that pays tribute to a specific meme, which is an idea that people find funny or interesting. Memes are usually captured in a video, an image, or any other form of media. Meme coins are specifically designed to make waves, go viral and be shared, just like the memes they pay homage to.
Dogecoin (DOGE) was the first meme coin and variety leader by market cap. It was originally created in 2013 just as a prank to satirise the whole hype around mainstream cryptocurrencies like Bitcoin and Ethereum. The coin was developed by software engineers, Billy Markus and Jackson Palmer and they planned for Dogecoin to be just a fun and very accessible altcoin. This is why the coin doesn’t have any capped supply.
While meme coins were created just for fun, they are also considered highly risky investments. Also, note that they may hold just a little or no inherent value.
Dogecoin, Shiba Inu, as well as other digital currencies that offer users more fun than usability are categorized as very risky. When purchasing or trading meme coins, it’s crucial to learn and fully understand the risks involved. Doing this will help you to avoid unforeseen volatility and losses.
What are the characteristics of Meme coins?
To summarise what meme coins are all about, here are the important characteristics that distinguish them from conventional cryptocurrencies:
- Meme coins are too volatile and liable to extreme shifts in value over short periods of time.
- They have an excessively low value per token.
- The value of Meme coins is determined by the current buzz and hype surrounding the token.
- They usually have a huge or uncapped supply.
Exciting Read – Top 5 Benefits of Virtual USD Cards for online shopping
How do Meme coins work?
Meme coins operate just like any other regular cryptocurrency. It primarily takes advantage of the blockchain and other related technology. Generally, they are developed on blockchains that make use of smart contracts, such as Ethereum and Solana. Currently, there are more than 300 meme coins existing.
Meme coins as a cryptocurrency are loosely characterized as having a high-spirited online community of enthusiasts. This community backs up the currency’s growth. Sometimes, they are designated with animated characters or any animal meme image.
The volatility and value of Meme coins
As we stated earlier, meme coins are community-supported, hence, their value is regarded to be hypothetical and extremely volatile. When Mark Cuban and Elon Musk first promoted Dogecoin, its value and importance skyrocketed. However, its value and price also fell quickly after the hype died down.
Another main reason why meme coins experience such extreme shifts in value is generally because of the way they’re created. Unlike regular fiat currencies and most mainstream cryptocurrencies, meme coins generally have an enormous and uncapped supply. This makes their nature inflationary. One exception is the Shiba Inu coin (SHIB), which has a full supply of just 1 quadrillion tokens.
What are the benefits of Meme coins once purchased?
During its early days, Dogecoin was majorly used for ‘tipping’. Tipping is the practice of giving rewards to people on the internet for doing something good. Also, some meme coins provide utility and are now a major part of broader decentralised finance (DeFi) ecosystems. For instance, the Bone ShibaSwap (BONE) is the authority digital token of ShibaSwap, a notable decentralised exchange (DEX).
Are Meme coins safe?
Meme coins have a high supply and are extremely volatile and this makes them more hypothetical than other mainstream cryptocurrencies. Their value is majorly determined by hype. Any celebrity can just tweet about Dogecoin and send its innate value skyrocketing tomorrow. Also, it can just as effortlessly fade away into ambiguity after a few weeks.
What to keep in mind when buying Meme coins
Keeping all these things in mind and conducting proper research on a meme coin or any other coin you find interesting will help to cut down unnecessary risks.
- Confirm that liquidity pools are owned by burn addresses. This is to to avoid purchasing a cryptocurrency that may face malicious and fraudulent activity, like a rug pull.
- Always make sure that a respected third-party company has audited and ascertained the meme coin project.
- Be cautious of any meme coin where developers own most of the tokens. Normally, one person or organisation must not control over 5% of the digital token’s total supply.
Check this out – How stablecoins work and how to buy them on Bitmama
Pros & cons of Meme coins
Here is a list of the advantages and disadvantages of investing in meme coins:
Pros
The advantages of Meme coins include:
- Fun asset variety to use to understand cryptocurrency and how blockchain technology works
- Likelihood of gaining a profit whenever values rise
- Possible participation in an active and functional investing and trading community
Cons
The disadvantages of Meme coins include:
- High risk and extreme volatility
- Accusations of it being a pump-and-dump sham
- May even be technologically complex for some people
How can you buy Meme coins?
You can purchase meme coins by making use of a cryptocurrency exchange. Popular centralized cryptocurrency exchanges or online marketplaces. Some decentralized exchanges may need you to use a cryptocurrency wallet that allows you to maintain possession of the token outside the platform.
Can you create meme coins?
Anybody who has crucial technical knowledge is effortlessly able to develop a cryptocurrency. However, it is extremely difficult to make a coin or token into a meme coin. This has only been successfully accomplished a few dozen times.
What are the most popular meme coins?
According to data fromCoinMarketCap, the top four popular meme coins in relation to the market cap are:
- Dogecoin
- Shiba Inu
- Baby DogeCoin
- Dogelon Mars
Other meme coins include Doge Killer, Shiba Floki Inu, Samoyedcoin, Kishu Inu, Shiba Predator, and many others.
So, what is a Meme coin? Meme coins are cryptocurrencies that depict comical or animated memes. Their value is generally determined by hype. Although the monetary risk of investing in meme coins is extremely high, they are still considered an important aspect of the crypto market. Their role is so important that the market cap of the two most popular meme coins (Dogecoin and Shiba Inu), runs into billions. Also, staying up-to-date on cryptocurrency trends needs a deep understanding of how meme coins operate and how they’re modified.
As the best crypto exchange app in Africa, Bitmama offers a secure marketplace for crypto enthusiasts. Perform activities like crypto exchange, crypto staking, and creating virtual dollar or crypto cards for online payment. Get started today by downloading the Bitmama app on Android or iOS.
