What Are Meme Coins? Are They Worth Investing In?

At its peak, Musk’s endorsement propelled Dogecoin to a market cap of $88 billion in May 2021 and became a pop culture phenomenon. If you look up the word “meme” in the dictionary, it’s a humorous image, video, or piece of text that is copied, usually with slight variations and spread rapidly by internet users. Keeping these things in mind and performing research (DYOR) on any coin of interest will help to minimise unnecessary risks. This refers to the concentration of control within the network, which can impact security and decision-making.

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Research the governance model of each project and assess its impact on decision-making processes within the ecosystem. Selecting a reputable platform ensures that you can transact with confidence, knowing that your assets are well-protected. By opting for a secure wallet, you can enjoy peace of mind while navigating the dynamic crypto content. Dogecoin is down 60% in 2022, Shiba Inu has fallen 64%, while many of the smaller meme coins have gone to zero and are being abandoned. Shiba Inu (SHIB) launched two years ago as the “Dogecoin killer.” The crypto even imitates the Dogecoin branding in so far as using the same Shiba dog.

These cryptos are subject to more volatile factors than mainstream cryptos like Bitcoin and Ethereum, and the value of a meme coin can plummet overnight. Many meme coins are often held by a small group of people who own large concentrations. According to the data from IntotheBlock, 48% of DOGE is controlled by seven crypto wallets. That number is even more stark for SHIB, where 69% of ownership is concentrated among 15 wallets. While these characteristics suggest that meme coins offer some underlying utility or value, the truth is that nearly all of them lack anything like fundamental value or unique use cases. Some in the media and investing world characterize meme coins as elaborate pump-and-dump schemes—often, that is precisely what these coins are.

For most investors, it’s best to avoid putting in more than you can afford to lose. But there’s a tiny chance that if you pick the next big coin before online fans send it “to the moon,” you could become the next crypto millionaire. So, when it comes to risky meme coins, it’s best to proceed with caution and do your research. Centralized cryptocurrency exchanges such as Coinbase, Gemini, Binance, FTX, and Kraken let you buy and sell directly with other users through their online marketplaces. Decentralized exchanges like PancakeSwap require a cryptocurrency wallet that lets you maintain custody of the currency outside an exchange.

Best Crypto Wallets: Top Picks for 2024

After that, the price may continue to go up if the coin manages to create a strong community. Unlike many meme coins, Shiba Inu does place a limit on how many cryptocurrency tokens can be minted — but that limit is high. The extremely high number of SHIB coins in circulation keeps its price point low, and high transaction volume makes its value extremely volatile.

Dogecoin was an instant success upon launch and surged in popularity on platforms like Reddit. The coin became a staple of the crypto space in early 2021 when celebrities like Elon Musk, Mark Cuban, and Snoop Dogg backed Dogecoin, sending it soaring more than 800% in 24 hours. From Dogecoin and Shiba Inu to lesser-known variants, learn all about meme coins, what they are, and how to trade them. When considering investments in Solana-based projects, evaluate how decentralization aligns with your investment goals.

Characteristics of Successful Meme Coins on Solana

It can help compare an actual white paper (like Ethereum’s) to a meme coin’s (like Bonk Coin). Find the project’s development pages (such as on GitHub), and read some of the discussions. Also, read over any social media postings—like Reddit or X—there will be people and groups discussing the coins you’re looking at. Software engineers Billy Markus and Jackson Palmer created Dogecoin, which was released in 2013. Dogecoin was originally created as a joke, aiming to poke fun at Bitcoin enthusiasts.

Can You Create Meme Coins?

During the COVID-19 pandemic, the crypto market grew as retail investors looked for ways to hedge against inflation. Amidst the hype, meme coins boomed, increasing in both market capitalization and variety. The phenomenon gained momentum after the “meme stock” saga involving GameStop (GME) and AMC Entertainment (AMC), where the Reddit community significantly boosted the prices of these assets. When trading meme coins, it’s crucial to be aware of common scams that can lead to significant financial losses.

1. “Meme coin” is a term used to refer to cryptocurrencies named after characters, individuals, animals, artwork, or anything else that can be mimicked.
2. Broadly defined, a meme is usually a popular phrase, image or idea that is shared on the internet.
3. When choosing a wallet, prioritize platforms that offer robust security features such as multi-factor authentication and encryption.

The Original Meme Coin: Dogecoin

The safety of meme coins is a significant concern for many traders, given the high-risk nature of these digital assets. Unlike established cryptocurrencies like Bitcoin or Ethereum, meme coins often lack a solid foundation in technology or utility, making them highly speculative assets. Meme coins often gain traction due to their strong and often enthusiastic online communities. These communities drive the popularity of the coin through social media buzz, memes, and viral marketing, which can create a sense of belonging and shared identity amongst holders. The fun and lighthearted nature of meme coins appeals to those looking for a break from the seriousness of traditional finance, turning trading into a more entertaining experience. While the financial risk of investing in meme coins is high, they’re still an important part of the cryptocurrency market.

It runs on a proof-of-stake consensus mechanism, which does not support mining. More recently in 2021, Dogecoin saw another price surge as celebrities, including Tesla CEO Elon Musk and rapper Snoop Dogg, began to encourage investors to buy Dogecoin. On May 7 of that year, the price of Dogecoin went as high as 74 cents before tumbling back down to its current price of about 6 cents. The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments. Launched in 2022, BONK gained attention after 50% of its total supply was airdropped to the Solana community.

Dogecoin’s success inspired many developers to create their cryptocurrencies tied to a popular meme. Since 2013, hundreds of different meme coins have been released to the public, but few of them achieved similar popularity. Shiba Inu is the only other meme coin with a market cap of over a billion dollars and is currently ranked as the 12th largest cryptocurrency by market cap, which is a little over $6 billion.

The creators of Dogecoin used a popular meme of how to withdraw usd from poloniex a dog (purposely misspelled “Doge”) as the logo for their cryptocurrency. Below is a list of the seven largest meme coins listed on CoinGecko.com, ranked by market capitalization. In these schemes, a group of shilling traders artificially inflates the price of a meme coin by purchasing large amounts and spreading positive, often misleading information to attract more buyers. As the price rises due to increased demand, the original traders sell off their holdings at a profit, causing the price to crash. Latecomers to the scheme are left holding devalued tokens, often resulting in substantial losses.

Meme coins are cryptocurrencies that have been produced as a lighthearted joke. Nevertheless, some meme coins have ballooned in value, gained multibillion-dollar market caps and garnered celebrity endorsements. For example, ether is used to pay validators for verifying transactions on the Ethereum blockchain. Meme coins often use other blockchains—one of the more popular meme coins, Shiba Inu, is an ERC-20 token that runs on the Ethereum blockchain.

Their value is primarily driven by social media trends, community hype, and sometimes even celebrity endorsements, rather than underlying financial fundamentals. Despite its ups and downs over the years, Dogecoin has consistently maintained a passionate community and, at one point, surpassed Bitcoin in daily transaction volume. This guide leans heavily towards Solana meme coins, but it is also applicable to other chains like  Base and Ethereum. You can acquire Solana (SOL) by either exchanging fiat currency for SOL directly or by using other cryptocurrencies in your possession. When buying with fiat currency, ensure that the chosen exchange supports your preferred payment method. On the other hand, if you plan to use another cryptocurrency for the transaction, verify whether the exchange facilitates such transactions.