Meme coins explained in the simplest terms [2023]

The success of crypto projects such as Dogecoin, Shiba Inu, and Floki has given rise to a new buzzword called meme coins.

In the early days of meme coins in 2013, people considered them to be jokes with no potential value. However, ten years later, in 2023, that same meme coin market will be worth over $20 billion . Unbelievable, right?

You may wonder why people buy worthless joke-based coins. To understand it, we first need to know about meme coins and their working principle.

Let’s take a look at meme coins!

What is a meme coin?

Memecoin is a cryptocurrency developed primarily based on jokes and memes. Similarly, these coins are also used to represent viral images and videos.

Launched in 2013, Dogecoin is considered the first meme coin in the cryptocurrency space. The coin was developed by two software engineers, Jackson Palmer and Billy Marcus.

Dogecoin started as a joke, but the meme coin reached a market value of over $90 billion in May 2021. Moreover, the average daily trading volume of the coin during this period exceeded $45 billion.

Following Dogecoin’s huge growth, meme coins started gaining great popularity among cryptocurrency inventors. Also, hundreds of similar coins are available on the crypto market.

Shiba Inu (SHIB), created in 2020, is the second most popular and largest meme coin. This coin is named after the Japanese dog breed, the Shiba Inu.

Dogecoin and Shiba Inu account for almost 93% of meme coin market capitalization. As of this writing, these two coins have a combined market capitalization of over $18.5 billion.

Now let’s take a look at some popular meme coins.

popular meme coins

#1. Dogecoin (DOGE)

Dogecoin (DOGE) , which started as a joke, is the oldest meme coin, with a market capitalization of over $11 billion in early 2023. Based on the current price of $0.081, you can buy over 12 DOGE coins for just $1.

DOGE follows a Proof of Work (POW) consensus mechanism and this dog meme-based coin has no fixed maximum supply. Currently, DOGE has over 132.5 billion coins in circulation.

#2. Shibu Inu (SHIB)

Shibu Inu (SHIB) is the second most popular meme coin after Dogecoin. The dog-themed coin has a market capitalization of nearly $7.5 billion.

Unlike most meme coins, Shibu Inu’s supply is limited to 1,000 trillion SHIB. Additionally, in this project, 50% of the tokens were burned for charitable donations.

#3. FLOKI

Floki (FLOKI) was launched shortly after Elon Musk’s tweet. He tweeted that his pet Shiba Inu’s name would be Floki.

Musk’s tweet was posted on June 25, 2021, and has received over 300,000 likes. FLOKI’s market capitalization is close to $200 million. Additionally, FLOKI is the fourth largest meme coin.

#4. Dogeron Mars (ELON)

Dogelon Mars (ELON), launched in 2021, is a successful dog meme coin following DOGE, SHIB, and FLOKI. This coin has a market capitalization of over $210 million.

ELON is built on Ethereum’s ERC-20 token standard. Like other meme coins, the Dogelon Mars project offers no real utility to investors.

#5. Safe Moon Dog (SMI)

SafeMoon Inu (SMI) is a meme coin powered by community support. Moreover, this coin also has a use case unlike its competitors.

You can use SMI coins to participate in Play-to-Earn based gaming platforms. SMI holders also receive a portion of trading fees from coin traders and investors.

Built on the ERC-20 standard, this meme coin was launched in May 2021. Additionally, SafeMoon Inu also allows players to buy, sell, and trade NFTs using SMI coins.

#6. Pitbull (PIT)

Pitbull (PIT) Meme Coin, built on Binance Smart Chain (BSC), is a community-driven crypto project. The project rewards investors based on an automatic stacking mechanism.

The Pitbull platform redistributes trading fees among investors. This method helps PIT holders to earn passive yield.

The Pitbull Project also has strong support from an online community. For example, Pitbull’s official Twitter account has nearly 200,000 followers. Additionally, their Telegram channel has over 37,000 members.

#7. Kate Coin (CATE)

You may have noticed that most meme coins are created based on dog memes. However, CateCoin (CATE) is the crypto industry’s first cat-based meme coin.

CateCoin was developed as a competitor to Dogecoin and Shiba Inu. CATE’s coin supply is limited to 100 trillion. Additionally, Catecoin allows users to stake and earn staking rewards.

Additionally, CateCoin grants CATE holders 1% of each transaction fee. Additionally, this meme coin can also be used in games and DeFi meme platforms.

Meme coins vs. traditional cryptocurrencies

Blockchain technology is behind the creation of meme coins and traditional cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH). Additionally, you can purchase both cryptocurrencies in the same marketplace.

So what makes meme coins different? Let’s get straight to the point.

• Traditional cryptocurrencies provide utility to their holders. Meme coins, on the other hand, do not have use cases that solve serious problems. For example, the idea behind creating such coins is a trending meme, funny image, or video clip.
• Meme coins have minimal prices compared to major cryptocurrencies. For example, the meme coin Kishu Inu costs just $0.000000000650.
• Established cryptocurrencies have a limited supply. For example, the maximum supply of Bitcoin is 21 million. However, most meme coins either have an uncapped supply or a huge supply. To clarify, the maximum supply of the meme coin “Kishu Inu” is 100,000,000,000,000,000 (100 quintillion) KISHU coins.
• Traditional cryptocurrencies are inherently unstable. However, meme coins are highly volatile. Because of this, you can witness meme coin prices rise and fall significantly in a matter of hours or minutes.
• Traditional cryptocurrencies have large market capitalizations, so they are unlikely to crash or rise after a single online activity. On the other hand, social media events have a significant impact on meme coin prices. Prices can rise or fall depending on celebrity influencer tweets and posts.

Next, we will explain how meme coins work.

How do meme coins work?

The working process of meme coins is the same as other cryptocurrencies. Cryptocurrency developers deploy smart contracts to create tokens based on your favorite memes, videos, or images.

The popularity of meme coins has made it less difficult to create meme coins. It is now easy to create and launch meme coins on various platforms.

Most meme coins have short life cycles. The price of such coins increases significantly in a matter of days or weeks. Once the hype ends, prices will plummet.

Social media promotion and marketing are important factors for Meme Coin’s growth. For example, Elon Musk’s supportive tweets played a key role in the success of Dogecoin (DOGE).

Memecoin also focuses on building a strong community of active members. Furthermore, these members buy tokens and hold them for a long period of time.

Recently, the cryptocurrency market has also seen the launch of meme coins with practical utility, and the Tamadoge project is a prime example. These coins can be earned by playing Tamadoge’s Metaverse games. Additionally, you can also use this meme coin to purchase in-game NFTs.

How can I invest in meme coins?

You may now understand that meme coins are not a stable form of investment. However, if you still want to invest, you can buy these coins from cryptocurrency exchanges.

Popular meme coins can be found on centralized exchanges such as Binance, Coinbase, and Kraken. Additionally, you can also purchase newly minted meme coins from decentralized exchanges such as PancakeSwap and UniSwap.

Let’s check the steps to buy Shiba Inu (SHIB) on Binance.

• Visit the Binance exchange website or open the mobile app.
• Log in using your Binance user credentials. New users must create a Binance account and complete user authentication.
• Select “Trade” and click “Spot”. This will take you to Binance’s spot trading platform.
• SHIB/USDT and SHIB/BUSD are high volume trading pairs on the Binance exchange. Therefore, load your wallet with USDT or BUSD.
• Then select SHIB/USDT or SHIB/BUSD.
• Then select the amount of USDT or BUSD accordingly.
• Then click “Buy SHIB”.

Finally, you will receive your SHIB coins in your Binance wallet within a few minutes. You can also purchase other meme coins by following these steps:

Risks associated with meme coin investment

Now that you know how to invest in meme coins, let’s also think about the risks that are present.

#1. sharp price decline

Investing in meme coins involves large price fluctuations. For example, in a bearish state of the cryptocurrency market, the price of meme coins could plummet.

Furthermore, the majority of these coins do not have strong fundamentals. In this case, price recovery is also less likely to occur.

#2. Few or no use cases

Cryptocurrencies such as Bitcoin and Ethereum have strong use cases that help maintain investor trust and value. However, almost all meme coins lack a valuable use case.

Therefore, most investors believe that it is not worth holding while prices are falling significantly. In most cases, investors exit their positions when prices crash.

#3. flawed tokenomics

When a memecoin is issued, the founding members will hold the majority of the coin. This investment method concentrates ownership in a few hands.

In this situation, even if large token holders sell their shares, the price of the token will decline significantly. Furthermore, this concentration of ownership also facilitates cryptocurrency fraud.

#4. lack of transparency

Most of the new meme coins do not provide many details about the project. Instead, they create coins primarily based on current trends and generate quick profits.

Memecoin projects often do not reveal the names of their founders or team members. For example, the author of “Shiba Inu” remains anonymous under the name “Yoshishi.”

A few things to keep in mind 📝

• Avoid investing large amounts of money in meme coins. The risks involved are very high and there is always a possibility of losing your entire investment.
• If you want to participate in meme-based crypto projects, consider investing in a small fund. Also, try to invest an amount that will not affect you financially in the worst case scenario.
• Avoid unnecessary tips and investment advice from social media influencers. Online influencers play an important role in promoting meme coins, so it is always wise to avoid such paid campaigns and promotions.
• Avoid fear of missing out (FOMO). It is basic human psychology to chase the rapidly increasing number of meme coins. Unfortunately, in most cases such trends lead to huge losses.
• Finally, please do your own research (DYOR) before trading or investing in meme coins.

final thoughts

Meme coins delivered incredible returns to investors in mid-2021. However, investing in meme coins without real-world use cases always carries high risks.

Finally, it is better not to invest your hard-earned money in crypto coins that have no real use. Instead, you can purchase some meme coins for fun or collectibles.

Next, check out our cryptocurrency wallets to safely store your cryptocurrencies.