Crypto Investing
30 Dec 2021

What Are Meme Coins?

Akumbenla Jamir

Meme coins are essentially cryptocurrencies that originated from memes, popular internet jokes, or puns. As a broad thumb rule, Meme coins are cryptocurrencies that have no value or utility.

They exist because of the hype around them, and the FOMO (Fear of Missing Out) psychology of investors. 

Most meme coins were created as a joke, but some have defied all negative speculation and went on to become popular cryptocurrencies. Coins like Shiba Inu and Dogecoin have seen immense adoption by young investors all across the globe.

Evolution of Meme Coins 

Meme coins have evolved a lot over the years and garnered massive market value. One common trait about the ones that became popular is that they have a robust and dedicated community supporting them.

By investing in meme coins, one could either become an early adopter of a promising project, or a victim of a pump & dump scheme. There is no in-between, and it is just a matter of high-risk, high-reward. 

However, blacklisting and hating on cryptocurrencies that have shown such growth may be unwise. Sounds crazy? Hear us out.

Evolution of Meme Coins

Let’s first see why meme coins are seen in such a poor light.

Fundamental Reasons Why Meme Coins Are Criticized

  1. Unlimited SupplyMeme coins are different from other crypto coins in terms of their unlimited supply. For instance, Bitcoin’s supply is limited to only 21 mil, and Ether supplies are capped at 18 mil per year.
    Meanwhile, BitTorrent (BTT), a popular meme coin, has a circulating supply of 930 Billion BTT coins and a total supply of 990 Billion.

    To apply some basic economics rules, setting a supply limit creates scarcity, as investors know that additional tokens will not be created after a certain point. More tokens would dilute the value of their holdings.
  2. Risk Factors in Meme CoinsInvestors tend to shy away from meme coins due to the risk factor. But risk is always a factor when we look at investments in general. Whether it is stocks, mutual funds, gold, cryptocurrencies, or meme coins- risk is the common denominator.
  3.  Exit ScamsIn an exit scam, the developers launch the project, sell the coins and then disappear. Most exit scams involve a big marketing budget to promote the coin, which brings investors who are driven by FOMO. But with proper research and understanding of the project, an investor can identify if a particular coin is a scam.
    We’ll discuss ways to identify these scams in the latter part of the article.

Reasons Why People Still Invest in Meme Coins:

Some of the well-known meme coins in the cryptocurrency market today.

  • Dogecoin (DOGE)
  • Shibu Inu (SHIB)
  • Dent (DENT)

A common trend around cryptocurrency is that any coin can increase its value overnight. For instance, in October 2021, MANA crypto leapt in price after Facebook’s parent company rebranded to Meta. 

There might be people who stir away from meme coins, but there will always be investors who will still invest in them. Investors find meme coins attractive because they cost a few cents or even a fraction of a cent. The low price doesn’t mean much because these coins have huge supplies. Still, holding millions of a particular meme coin feels different than holding a fraction of ETH or BTC. With just a few dollars, traders can get thousands or even millions of DOGE, SHIB, or Akita Inu (AKITA) tokens.

If Dogecoin, a meme coin created as a joke, can evolve as a major player in the cryptomarket, other meme coins stand the same chance. 

In 2021, Dogecoin (DOGE) and Shiba Inu (SHIB) skyrocketed in price and market capitalization. As of November 2021, DOGE has gained over 8,000% since the beginning of the year and is ranking #9 by market capitalization on CoinMarketCap. Its competitor, SHIB, has pumped more than 60,000,000% since January. Such growth cannot be ignored or overlooked. Which is how these meme coins have garnered a faithful community of investors.

Let’s take a deeper look into how Dogecoin and Shiba Inu have grown over the years.

Dogecoin: A deeper look

Perhaps the coin that broke all the meme coin stereotypes and skyrocketed to be among the top 10 cryptocurrencies is Dogecoin. This particular meme coin was created in 2013 as a joke, not designed to have any real-world utility.  However, it became famous in the crypto space, whose vibrant community found and developed new use cases. Track DOGE price live here.

Dogecoin users have taken control of charity and sponsorship in the digital currency world. They contributed $30,000 to the Jamaican bobsled team’s Olympic bid. Another $55,000 was raised to support Josh Wise’s NASCAR #98 car. Over $30,000 was raised by Doge4Water to support clean water projects in Kenya. When @savethemhood donated 14,000,000 dogecoins, or $11,000, to the Doge4Water campaign, it set a new record for the largest single tip sent through Twitter. Dogecoin is making an impact, thanks in part to the sheer number of users.

Dogecoin has since evolved exponentially over the years. It sits with giant cryptocurrencies like Bitcoin and ETH in the top 10 category!

It has the full support of Elon Musk, who claims to be its “Dogefather”. With his influence, the price of Dogecoin soared to new heights in early 2021, with growth rates exceeding those of Bitcoin.

Elon Musk also recently announced that Tesla will start accepting Dogecoin for some merchandise. 

Convert DOGE to INR directly on CoinSwitch!

Shiba Inu: A deeper look

Following the success of Dogecoin, Shiba Inu is another popular meme coin based on the Ethereum ERC-20 token. The coin was created anonymously in August 2020 under the pseudonym “Ryoshi.” It successfully attracted a community of investors and even personalities like Elon Musk and Vitalik Buterin.

Shiba Inu was launched as a direct competitor to Dogecoin. The meme coin originated from a 2013 meme featuring the Japanese breed dog of the same name and has seen exponential growth. They even claim themselves as the “Doge Killer”. 

In September 2021, Coinbase listed Shiba Inu on their platform, causing Shiba Inu price to rise by over 40%  bringing the meme dog token into the spotlight.

As of December 17 2021, the SHIBA INU price is $0.000033 USD with a 24-hour trading volume of $914,606,930 USD. It has a circulating supply of 549,059,715,372,757 SHIB coins, and the max supply is not available. It has a market cap rank of 14 and is traded on 86 exchanges. Shiba Inu had an all-time high of $0.00007957 about 2 months ago. 

With the community they have built and their growing popularity in the crypto space, it will be interesting to see the growth of this meme coin. 

Buy Shiba INU with CoinSwitch Kuber

How To Identify And Avoid Unpopular Meme Coins

As some meme coins amass great popularity, it is easy to assume that all meme coins are safe to invest in. It is imperative to identify and be wary of unsafe projects. Here are a few ways you can do that:

  1. Know your developers: Before you invest, make sure to do your own research and make sure the developers are not a random group using fake names. The green flag to a crypto coin is perhaps the way a developer deals with their identity. If their identities are revealed, it is less likely to be a scam.
  2. The project seems copied or generic: You really have to go with your sixth sense here. Your crypto sense will naturally amplify once you start researching, so don’t worry; it will come to you. If a project’s website looks generic or uses a free domain, consider it a red flag. A well-developed project should not have a question of authenticity.
  3. Check the number of holders: Experts say any new coin worth investing in should have 200 to 300 holders, at least. Consider anything below this number as a red flag or not healthy, and they are not worth investing in.
  4. Check the liquidity pool: The liquidity pool is considered the backbone of most decentralized exchanges. Make sure that the project you’re investing in has at least $30,000. Low numbers should be considered a warning sign.

Conclusion 

2021 was an eventful year for cryptocurrencies – Bitcoin and Ethereum that reached an all-time high. At the same time, meme coins like Shiba Inu and Dogecoin shocked the cryptocurrency market with their growth. The so-called joke-theme cryptocurrencies have outperformed and are on the verge of outperforming major cryptocurrencies. 

So, to those naysayers of meme coins – looking at the crypto market stats of 2021, meme coins have the potential to take over mainstream crypto. 

And to meme coins fans – meme coins are highly volatile compared to other digital currencies and are largely community-driven and might crash unexpectedly, so like we always say, never invest what you cannot afford to lose and DYOR. 

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

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Akumbenla Jamir

Content Writer

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