In mid-2021, the cryptocurrency world was shocked by the skyrocketing price of Dogecoin. This phenomenon was due to many public figures, such as Elon Musk and Snoop Dogg, who posted Dogecoin-related stuff on their Twitter accounts.
According to Coindesk, the meme coin price jumped by 55% after the posts. No wonder 2021 was probably the glorious year of meme coin.
Many people are probably still unfamiliar with this type of cryptocurrency. So, what is precisely a meme coin? What made it gain so much popularity throughout 2021? You will get all of your questions answered after reading through this article.
What is a Meme Coin?
A meme coin is a token or coin inspired by the internet or social media jokes or memes. The first and most popular meme coin in the cryptocurrency world is Dogecoin. It is a cryptocurrency featuring a Shiba Inu face on its surface, first launched in 2013.
At first, the coin was meant to be just a typical meme. However, as time went by, Dogecoin became one of the most successful cryptocurrencies.
On the other hand, with the evolving technology and adoption of the cryptocurrency industry, anyone can now create a new currency. Many developers released tokens or coins featuring unique names after reflecting on the success of Dogecoin.
Most of these coins are Dogecoin spin-offs, but one of them has yet to break the popularity as Dogecoin has. In fact, according to CoinMarketCap’s data, there were more than 5,000 tokens and meme coins in February 2022. This number can still rise as more coins or tokens are yet to be released.
Meme coins are seen as a joke of the internet. However, many investors believe that those coins deserve to be considered like other cryptocurrencies. Some investors even managed to make huge profits from investing in meme coins.
Why Are Meme Coins so Popular?
Dogecoin is the first meme coin in the cryptocurrency ecosystem, created by Jackson Palmer in 2013. Back then, Palmer intentionally created this coin to mock the cryptocurrency trend.
Unexpectedly, this ‘sarcastic’ coin went beyond famous. At the time of writing in February 2022, the trading volume of Dogecoin, according to CoinMarketCap, has already reached US$19.692.954.021.
With this market cap, 2021 was undoubtedly the golden year for cryptocurrency and meme coins, both in values and variations. Now you might be wondering, what factors make meme coins so popular?
With the success of Dogecoin and the increasing demand for cryptocurrencies, many new coins and tokens began to flood the marketplace. Their popularity is often impacted by social media posts from influencers and celebrities.
The more public figures post about these coins on their social media accounts, the higher public interest in them grows. Nevertheless, many people still believe that the rise of meme coin popularity is due mainly to Elon Musk, who is a loyal fan of DOGE.
Types of Meme Coin
The number of meme coins involved in the cryptocurrency market is still rising. Here are some of the most famous meme-inspired tokens and coins.
Dogecoin (DOGE)
Dogecoin was created back in 2013 with the initial price of US$0.10 for 1 DOGE. Inspired by the internet’s cute Shiba Inu meme, Dogecoin has become the most successful meme coin up to this day. As for now, Dogecoin has received worldwide support from big names, including Elon Musk.
Safe moon (SAFEMOON)
Safe moon was first launched in March 2021. The token is supported by its communities. The unique thing about Safemoon is that this coin has inserted many features into its protocols, so it has some upgrades, unlike other meme coins in the market.
Shiba Inu (SHIB)
Shiba Inu was created to attempt a spontaneous decentralization built by the communities. It first launched in April 2021. This Shiba Inu token is often linked to DOGE. However, both of them are two different coins.
Meme Coin vs. Cryptocurrency, What are the Differences?
Meme coin is a part of cryptocurrencies. However, one main difference puts apart meme coins such as Dogecoin and Shiba Inu from other mainstream cryptocurrencies such as Bitcoin and Ethereum.
Like Bitcoin and Ethereum, cryptocurrencies are created and developed to become a solution to real-world fiat currency issues. In addition, these cryptocurrencies are accepted by global business communities.
On the other hand, meme coins don’t have the same purpose as cryptocurrencies. Most of them are created for investors to trade and earn, while some are made just for a joke.
Some of these coins and meme tokens become popular because they are promoted by celebrities and public figures on their social media accounts. Retail investors then follow this path by promoting these coins online to hoist the price.
These very reasons are the cause behind the extremely high volatility of these coins. They might grow exponentially, but their overall fundamentals are practically unstable.
As the price of these tokens increases, many investors choose to sell their assets to gain as much profit as possible because, despite their popularity, meme coins don’t have any real-world use case yet. Therefore, it is unlikely that these coins will still exist in the coming years or decades.
The moment investors switch back to stocks or new cryptocurrencies, these tokens or meme coins would have probably lost their valuation.
Conclusion
Meme coins might be born out of internet jokes or memes, but they are no longer to laugh. Meme coins have a high valuation and popularity in the cryptocurrency market. For example, when many famous public figures promoted Dogecoin, many investors ended up experiencing FOMO towards it.
It is best not to put all your funds in a token or a meme coin. Their price might change significantly over time, and you might lose money. However, it would be best to consider it thoroughly every time you want to decide on any cryptocurrency.
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