What Are Memecoins?
|— Memecoins are either coins or tokens that base their marketing on a specific meme or trend.|
— Memecoins tend not to have utility, meaning their prices are extremely volatile. However, some memecoins gain utility from their communities.
— Buying memecoins is inherently risky, but exercising good security practices can help you mitigate some of them.
Memecoins: The digital assets of a digital generation are still having their moment. These blockchain assets are the result of internet culture, something which crypto is inherently intertwined with. Naturally, web2 and web3 have a considerable overlap when it comes to culture, and so memes play a massive part in the crypto ecosystem.
With so many assets relying on trends, memes have become a huge part of crypto culture and as such memecoins have become an integral part of the space. Memecoins, also called “sh*t coins” may have started as a satirical and frivolous joke, but now they actually attract serious traders, believe it or not.
They don’t offer much in the way of solid use-cases. In fact, they often don’t offer much at all. However, these assets brighten up blockchain with their fun and lighthearted nature. And some get much further than you might expect.
You might be thinking, “How do I buy into them before they skyrocket”? And you wouldn’t be the first. But before you start thinking about “generational wealth”, it’s important to note that most memecoins fade into irrelevance along with their corresponding trend. Buying memecoins is incredibly risky and something you should only attempt armed with research and experience.
So, without further ado let’s dive into how memecoins go from meme to meaningful. But before we get there, let’s attack the basics. In fact, what are memecoins exactly?
What Is a Memecoin?
In simple terms, a memecoin is a type of cryptocurrency inspired by or promoted using a popular internet meme. But there’s a bit more to it than that. While the primary purpose of memecoins is simply for a laugh, some have branched out to build a whole ecosystem.
Yes—it’s possible to create a whole blockchain project out of a meme. Put simply, Internet culture and blockchain tech are intertwined. In fact, it’s rather difficult to know about one and not the other and so their audiences share some overlap. This means that coins and tokens inspired by memes can gain significant following. Their whimsical nature and low entry points mean that brave traders use them as a vehicle for profit. But take note, this is not a given!
It’s extremely important to note that memecoins are incredibly volatile, and their prices are typically driven purely by speculation. Plus, memecoins famously have no utility or purpose past that speculation— which may not be the best choice for your hard-earned cash.
But before we dive into their key features, let’s explore the history of memecoins so you know where the whole craze started.
The History of Memecoins
To understand their history, let’s start with the first memecoin in existence: DogeCoin. Dogecoin was created in 2013 by software engineers Shibetoshi Nakamoto (aka Billy Markus) and Jackson Palmer. However, these developers orchestrated the coin’s launch rather differently than other coins on the market at the time. They marketed Doge as a playful and satirical answer to cryptocurrencies like Bitcoin. While Bitcoin was serious, and focused purely on being secure, Dogecoin started as a joke—sort of like crypto counter-culture.
See, the biggest and most popular meme of 2013 was the “Doge” meme. If you’re too young to remember, it was essentially a meme format involving a very expressive looking pet Shiba Inu dog. Often the comic sans attached captions would include cute and wholesome jokes about how an adorable pet dog might react to something. The format was so popular it was dubbed one of the best memes of the 2010s, and it still remains one of the most memorable memes to this day.
Due to this strong cult following, DOGE also quickly gained a dedicated community. Then the next wave of popularity came when non-crypto natives started to notice Dogecoin too. For example, in 2014 the Dogecoin Foundation raised $30,000 to send the real Jamaican Bobsleigh team to the Winter Olympics. Then for the next (almost) 10 years following, this Doge meme would span across the world; ending up on phones, keyrings—and possibly most notably— all over the internet.
The pivotal moment for Dogecoin arrived with celebrity endorsements, notably from Elon Musk. Musk’s tweets referencing Dogecoin propelled its popularity and market value. As a result, in May 2021, DOGE reached an astonishing $88 billion market cap.
Following Dogecoin’s success, numerous other memecoins flooded the market. A good example of this is Shiba Inu (SHIB), which used the very same meme as Dogecoin and positioned itself as its rival. Despite not being the first, Shib experienced substantial growth, achieving a market cap of $41 billion in October 2021. Since then, many memecoins have tried their luck with the market, from WOJAK down to the more recent PEPE.
However, not all memecoins are as successful as DOGE or PEPE, no matter what “generational wealth” their marketers claim to offer. So what makes them all memecoins? Let’s take a look at some of their common features.
Common Features of Memecoins
While some memecoins can seem different from others, and many of them are, they tend to have a few key features in common. If you want to correctly identify a memecoin from a regular coin, here are a few things you might want to know.
Memecoins Come From Memes
It may seem obvious, but it can’t go without mentioning that memecoins must be based on a meme. But thanks to internet culture, there are plenty to choose from. Since people from all over the world can see the same news, at the same time, they benefit from globally shared experiences. Put simply; internet memes are born from these experiences. Don’t be fooled by their humor though. Although they may seem frivolous, memes hold a lot of power over people.
Memecoins Are Cheap
Memecoins usually have a low entry price. For example, buying a single coin of any of the top five memecoins won’t cost you more than $0.10. The idea is: If you get in early, you can make “generational wealth” if they skyrocket. However, most memecoins do not achieve this status. So, while their marketing team may suggest otherwise, you should always exercise caution before buying in.
Memecoins Don’t Have Utility…By Design
Memecoins don’t tend to have utility, at least at the point of their creation. Instead, they rely purely on the power of that meme. Unfortunately, this puts the coin at the mercy of a trend and how long it stays relevant. If it falls out of fashion, so does the coin’s use and that never bodes well for its price.
On the other hand, many memecoins gain their utility from their communities. This means holders often create novel use cases, such as accepting the currency in businesses or blockchain games. Don’t see this as a key feature, though. Most memecoins are designed to feed off the hype of a meme and are happily serving that purpose.
Most Popular Memecoins in 2023
So now you know what memecoins are and some of their common features, what about the most popular memecoins today? Well, there are many more to choose from than what you see in this list, but knowing about these three coins will certainly give you a good basic understanding of how these assets work.
Although already mentioned, a list of memecoins is not complete without Dogecoin. Launched in December 2013, it has a current market cap of $8.77 billion USD—Not too bad for a coin representing a joke. DOGE’s circulating supply currently sits at 139.96 billion and it has no max supply. To learn more, make sure you check out the full article on what dogecoin is.
Like Dogecoin, SHIB is inspired by the Doge meme, but it launched much later, in August 2020. Despite that, it gained attention for its decentralized ecosystem and community-driven approach and now boasts a market cap of $4.227 billion USD. Like Doge, Shib also has no max supply but there are currently 589.35 trillion coins in circulation so far. If you decide to buy shib, luckily Ledger has a dedicated Shib wallet you can try!
Pepe is the latest memecoin trend, launching in April of 2023. Unlike most memecoins, PEPE managed to launch in a bear market and still reach a market cap of $556 million USD. That puts it firmly in the top three memecoins by market cap, knocking (yet another) dog-inspired memecoin FLOKI off its spot. Unlike Doge and Shib though, Pepe does have a max supply of 420.69 trillion, of which 391.79 trillion is currently circulating—That’s already over 93%! If you want to buy pepe, you’ll need to have an Ethereum wallet. That’s because PEPE is actually an Ethereum token, more specifally an ERC-20 token.
Risks of Buying Memecoins
Like buying any cryptocurrency, memecoins come with their own risks. So what are those risks exactly?
First and foremost, memecoin prices can fluctuate massively. In fact, most bleed to absolute zero. Make no mistake—their prices are completely subject to speculation.
For example, if there’s a coordinated marketing effort, prices can skyrocket. However, this can also cause further volatility. New buyers try to enter and professional traders start trying to cash in on price swings. In most cases, those who “got in early”, dump large amounts of the coin on new unsuspecting buyers at a high price. Then the coin crashes inline with its demand and one party will lose out.
Unfortunately, this isn’t always unintentional. Although highly illegal in most countries, “pump and dump” groups exist to cash in on coins by artificially increasing their prices. To explain, they coordinate a group to buy a coin all at one time to inflate the price. Then the idea is to sell while the price is high and exit the trade at a coordinated time with the group. This action drains the coin’s liquidity, which crashes the price. Essentially it means any new buyer outside of the pump and dump group loses out.
Sometimes, the people causing this volatility are the founders themselves. Even investing in well-known NFT and crypto influencers comes with its own risk. For example, memecoin $PSYOP, by NFT influencer Ben.eth, was marred by presale issues. Despite capturing attention and receiving $7 million in ETH, the community became concerned over allocation. To clarify, Ben.eth held 90% of the tokens, and thus criticism and backlash followed. In fact, it even instigated a potential class-action lawsuit against him demanding the return of presale funds.
Influencers aside, many memecoin creators are anonymous. As a result, it’s difficult to determine who is genuine, and who is looking to make a quick buck. Thus, it’s actually incredibly easy for bad actors to launch a coin, drain its liquidity and never look back. This is one of the most common scams in crypto, more often called a “rug pull”.
Improper Legal or Technical Specifics
Checking the legal and technical specifics of a project is also important too.
For example, each memecoin is only as secure as the smart contract or blockchain that supports it. That means you should always be wary of risks such as honeypot scams, which trap investors with no means to sell. Of course, there are even less malicious smart contract risks, such as bugs, which could prevent the coin from functioning correctly. That’s why checking the tech specifics of a coin is so important.
Beyond that, you must also check that the owner of the coin has permission from the meme’s original owner. A good example of a project that didn’t is the more recent memecoin, Grumpy Cat coin. To explain, the founders behind grumpy cat coin did not seek approval from the meme’s original creator. This meant that the original creator took legal action against the coin which made it plummet in price. This is just one example of something that could go wrong—and there are countless others.
Before You Buy Memecoins
Before we explain how you can buy memecoins, we must stress the importance of doing your own research. Memecoins, in particular, can be highly volatile and speculative in nature. So you might want to do your homework before buying anything.
Start your research with a coin’s founders and roadmap. Will they introduce utility? Have the founders launched projects before? Looking into the founder’s past and checking if the project has the correct legal documentation can help you avoid unnecessary risk before you even consider buying a memecoin.
Beyond that, understanding a token’s maximum supply, allocation and tokenomics will put you ahead of a significant portion of the market. If you’re already a technical whizz, make sure you read the smart contract details before you jump right in. If you’re less technical, have a look at block explorers and online forums to see what others are saying about the coin’s specifics.
The bottom line is, even if you think a memecoin has a great founder and fantastic tokenomics, you should never buy more than you can afford. Not every cryptocurrency will appreciate in price, and you could easily lose it all. These assets are purely speculative, which means buying them is risky.
How To Buy Memecoins
If you do decide to buy memecoins knowing the risk involved, there are two main ways to do it with a Ledger device:
Option One: Buy DOGE or SHIB directly through Ledger Live
You can ensure the safety and ownership of your Dogecoin by using a Ledger hardware wallet. This hardware wallet provides secure storage and accessibility. Plus, you retain full control over your coins. Once you have your hardware wallet, use the Ledger Live app to conveniently purchase Dogecoin. Through this app, you can manage your crypto assets, including the option to buy Dogecoin directly from Coinify. Using a hardware wallet, you can automatically secure your Dogecoin. Alternatively, you can purchase Dogecoin from other platforms and safeguard it using your hardware wallet.
Option Two: Connect your Ledger to a third-party wallet to buy memecoins securely
If you want to buy your memecoins on a third-party wallet (like MetaMask) then you can do this safely with Ledger. To connect your Ledger device to a third-party wallet for secure offline transactions and access to decentralized exchanges (DEX), the process will differ from network to network.
For Ethereum, your best option is to connect your Ledger to Metamask. To do so, connect your Ledger to your computer via USB or bluetooth. Then, open MetaMask in your browser, and access the MetaMask menu. Click on “Connect Hardware Wallet” and unlock your Ledger device for detection.
Now you can safely transact, protect, and manage memecoins like PEPE using third-party wallets like MetaMask with the security of your Ledger device. However, it’s important to note that if you buy memecoins via this method, you will have to enable blind signing on your Ledger device. This means that you might not be able to read the transaction clearly in human-readable language.
The Future of Memecoins
While memecoins hold exciting possibilities, it is crucial to acknowledge the inherent risks and volatility associated with these assets. Memecoins are highly speculative, and their value can fluctuate dramatically.
That said, increasingly, there’s more to memecoins than just speculation. Today, they are finding practical applications in various industries. For example, mainstream businesses like Tesla, AMC, GameStop, Newegg, and Twitch have embraced memecoins such as Dogecoin and Shiba Inu as a form of payment. This acceptance indicates a growing recognition of their value.
Plus, many memecoins are exploring utility-focused models. For example, Shiba Inu developer Shytoshi Kusama is building the Shibaverse, a Metaverse for its community. Meanwhile, Floki Inu aims to establish a strong presence through its ecosystem, including an NFT gaming Metaverse, merchandise marketplace, and crypto education platform.
Regardless of their current worth, or possible challenges, it’s important to protect any store of value—potential or otherwise. If you want to store memecoins effectively, the only option is via a hardware wallet. Ledger devices offer security for all digital assets, safeguarding against potential hacking or loss of funds. Even if their current value may seem minimal, protecting assets is a prudent practice for any cryptocurrency holder.
So what are you waiting for? Now you know what memecoins are, their origins and how to mitigate risks while using them, the only thing left to do is get started! Only you can decide which memecoin is for you—if any at all. Because that’s what the ethos of self-custody is all about: Ownership and true independent control.