Memecoins
more than just a trend, they are a phenomenon: Retail Technology Innovation Hub
The history of memecoins
The most famous example of memecoin is the first meme cryptocurrency Dogecoin, inspired by Elon Musk’s favorite meme featuring a Shiba Inu dog and created as a parody of Bitcoin.
The project was launched in December 2013, taking technical inspiration from Litecoin. The coin saw significant growth during its 2017 bull run, driven by the ICO craze, but suffered a decline in 2018.
Despite these hesitations and humorous image, Dogecoin maintains a devoted community significantly influenced by Elon Musk. The Tesla CEO championed Dogecoin as an intended payment method due to its low transaction costs. With every mention of the coin in his account, the price increased.
The Dogecoin case inspired other creators to develop cryptocurrencies with a similar “dog” brand like Shiba Inu. Released in 2020, the “Dogecoin killer” quickly grew to become the second most popular meme coin, with a market capitalization of around $6.5 billion, making it the 14th largest cryptocurrency overall.
In the wave of the 2021 bull run, named memecoins kept pace with traditional cryptocurrencies and also showed an increase in price and capitalization. This has caused many new meme projects. Thanks to the promotion of communities on social networks, tokens quickly gained popularity.
The way the price of meme coins rises, based on community and celebrity support, continues to move assets upward. Dogecoin, for example, attracted media attention as Elon Musk briefly replaced the X logo with the Dogecoin mascot. Guess what happened to the coin next?
The KITTY meme coin, named after streamer Keith Gill known as Roaring Kitty, increased in value more than 100 times after Gill made his first social media appearance in three years. Gill’s X post was the first post on his account since June 2021 and garnered more than eight million views in just a few hours.
What distinguishes memecoins?
So, what distinguishes meme cryptocurrencies from the rest, let’s summarize and highlight the main features:
1. Community and cultural movement: Memecoins are often inspired by internet memes and are known for their active and enthusiastic online communities. These communities play a crucial role in the promotion and introduction of the coins, while also increasing their market value.
2. High volatility and speculation. Due to their nature, community-driven memecoins can experience extreme volatility. Their prices can skyrocket thanks to celebrity endorsements or viral Internet campaigns, but they can also plummet just as quickly. This makes them a high-risk investment.
3. Limited usefulness outside of commerce: Unlike more established cryptocurrencies, many memecoins have no inherent utility or broader application beyond use as a vehicle for speculative trading.
4. Influence of prominent figures: The value and popularity of meme coins can be greatly influenced by public figures and celebrities. For example, tokens such as Dogelon Mars and Floki Inu have benefited from associations with Elon Musk.
Risks and benefits of investing in memecoins
Investing in meme coins can be profitable but also extremely risky. The success of such investments largely depends on the time of entry and exit from the market:
● Short-term speculation: Some traders try to take advantage of the volatility of meme coins by buying them at a low price and selling them when values increase due to the hype.
● Long-term investments: Long-term storage carries great risks, as many of these coins can lose their value or become completely unusable over time.
Meme coins are highly volatile and sometimes increase significantly in price, however, often not for long. Traditionally, assets feel good in a bull market, when small investors are in principle positively disposed towards any crypto asset.
And given that the initial capitalization of memecoins, especially new coins, is relatively small, it can be “pumped” infinitely.
Notable memecoins on the market
FLOKI (Floki Inu)
The token joins the memecoin line, making direct reference to the broader Dogecoin phenomenon and its most famous defender, Elon Musk. This coin is named after his dog, Floki. It quickly became popular among investors looking for the next big memecoin following the success of Dogecoin.
Emerging from memes, Floki has become a full-fledged Web3 enterprise, expanding its reach into decentralized finance (DeFi), non-exchangeable tokens (NFTs), and most recently, creating its Valhalla metaverse.
This breadth of application has earned it the nickname “Popular Cryptocurrency” among its followers.
Bon (Bonk)
Bonk is the first “dog” memecoin created on Solana. Exactly half of the initial release in the form of airdrop was transferred to the community of this ecosystem.
This was done to support the Solana ecosystem after the sharp collapse of SOL. Indeed, the emergence of BONK has provoked activity in the ecosystem: the release of new meme tokens, burning coin shares, the creation of NFT collections, and so on.
Over the past six months, the price of this cryptocurrency has grown by thousands of percent, largely thanks to the integration of the token into the Saga smartphone by the Solana developers, whose owners could benefit from the free distribution of BONK tokens.
dogwifhat (WIF)
A Shiba Inu dog again. The creators never claimed serious status as a coin and even insisted that the name of this cryptocurrency should always be written with a lowercase letter. WIF became one of the top altcoins in terms of growth in March, with a price increase of almost 400%.
The growth was largely facilitated by the addition of a token to the major American brokerage platform Robinhood. The capitalization of the project is $2.7 billion (as of March 2024);
In late February, analytics platform Lokonchain reported a trader who made nearly $1 million on WIF. In November 2023, he purchased 2.58 million WIF for $310 in the Solana cryptocurrency.
On February 27, the price of WIF rose to $0.57, and the value of the trader’s coins reached around $1.4 million. Therefore, his return on investment in the WIF token was 4500%.
PEPPER
Not dogs united 🙂 This memecoin is based on the popular Internet meme “Pepe the Frog”. Like most memecoins, PEPE is primarily designed to entertain and express cultural trends.
Today in the largest cryptocurrency exchange, Pepe is wearing a red cap, guess who he is referring to? Tip: Start at T and end at ramp. Therefore, the price of Pepe could potentially rise on the news, if Trump suddenly becomes president of the United States.
Conclusion
In summary we can say that memecoins are an integral part of the cryptocurrency market, a “positive” phenomenon. Yes, there is no serious concept or technology, but this risky asset undoubtedly contributes to its adoption cryptocurrencies.