Meme Coins: Definition & Characteristics

These coins and tokens aim to transfer the humorous and often ironic nature of memes to the cryptocurrency market, creating a new form of digital currency. Another idea behind their development was that meme coins could offer a lower entry barrier, allowing people without a deep understanding of the cryptocurrency market to participate and benefit from potential market gains. Consequently, meme coins quickly gained a considerable following and significant market capitalisations, leading to the development of numerous other meme-based cryptocurrencies after the initial introductions. Memecoins are characterized by high volatility, with prices subject to extreme fluctuations over short periods, often driven by social media trends and celebrity endorsements. This makes them highly speculative investments as memecoins typically lack intrinsic value or real-world utility, making their value heavily dependent on community sentiment rather than fundamental factors. In most cases, meme coins are distributed via automated market makers (AMM).

Learn how to spot credible and fake meme coins

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. Instead, crypto investors often buy meme coins to be part of a community or for entertainment value. 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. Meme coins are an interesting crypto-asset but may not be appropriate for most investors. There’s a very small chance that you might pick the next big coin before fans send it “to the moon.” However, meme coins are much less likely to earn the returns most investors would prefer to earn. But Fochtman uses a lesson taught to him by his grandfather, an “old school” commodities investor who liked crude oil stocks.

There’s the sense of community and belonging that comes with being part of a shared joke or meme. Investors often find it fun and engaging to be part of these communities where they share memes, jokes and investment tips. In this article, we’ll dive into the world of memecoins, exploring what they are, their unique features and what to watch for when investing in memecoins. Any estimates based on past performance do not a guarantee future performance, and prior to making any investment you should discuss your specific investment needs why white label crypto exchange software is the smart choice for startups or seek advice from a qualified professional. The value of crypto assets can increase or decrease, and you could lose all or a substantial amount of your purchase price.

Are meme coins worth an investment?

Elon Musk is taking Doge to the White House, but not as cryptocurrency or an internet meme. The term “meme” comes from Richard Dawkins’ 1976 book “The Selfish Gene.” A genetic meme, as described by Dawkins, is a gene that copies itself and proliferates throughout the species by way of Darwinian natural selection. A cultural meme is, similarly, a behavior or idea that spreads throughout a culture even faster. If I devops engineer pega senior lsa utrecht software development share a joke with you and you share it with your friends, we create a ripple effect until the joke is known on a collective level, changing the species forever.

Meme coins aren’t too different from this dictionary definition of a meme—they’re nothing more than cryptocurrencies that memes and internet jokes have inspired. Meme coins are a cryptocurrency genre generally advertised as having an exuberant online community supporting the currency’s development and growth. They are sometimes identified with animated characters or animal meme images.

• Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range, can also impact how and where products appear on this site.
• But the ultimate success of individual meme coins and tokens is dependent on the strength of their communities, and influencer culture is not going away.
• It brings altcoins more mainstream, and now more and more companies I believe are going to start a kind of domino effect where they’re just going to start falling and accepting crypto,” he said.
• Its ecosystem includes projects like BONKSwap, a decentralized exchange, BONKbot, a Telegram bot for easy token management and BONK Rewards, a program incentivizing token locking.

Dogecoin became a phenomenon in 2021, with Musk and other prominent figures and celebrities endorsing the cryptocurrency. The „memecoin“ became so popular that its market value rose to $45 billion in April 2021. Enter memes, the supposed future of money according to enthusiastic crypto investors and, of course, Twitter. Here’s what a „meme coin“ is, and why it might not make the wisest investment. The problem however is that the liquidity provider, which in this case is the development team, can withdraw liquidity if the appropriate safety system is not put into place.

All cryptocurrencies are still considered to be alternative investments due to their newness and volatility. And of all the cryptocurrencies available, meme coins are typically the most volatile due to their supply and trading volume. Traditional financial wisdom would argue that alternative investments should account for the smallest percentage of your portfolio. Meme coins (sometimes spelled „memecoins“) are cryptocurrency tokens that are based on internet memes.

What Are Meme Coins and Tokens?

Fochtman also has solid emergency savings and lives comfortably paypal will start letting users buy and sell bitcoin on his income with plenty of cushion. Still, every successful meme coin comes to a pivotal moment that can make or break it. For Randi Hipper, an influencer known online as Miss Teen Crypto, meme coins are worth a second look when serious investors step up to claim them.

Several mainstream businesses, however, have expressed an openness to meme coins. Knowing Elon Musk’s appreciation for meme coins, it’s not surprising that the Tesla store has begun accepting Dogecoin for certain items. Legitimate projects typically have a vibrant community that engages in meaningful discussions, asks critical questions, and receives transparent answers from the developers. Be cautious of overly promotional content, exaggerated claims, or communities that discourage critical thinking.

Examine the Community and Social Media Presence

While no single factor guarantees a coin’s legitimacy, a combination of thorough research and cautious scepticism can help traders avoid scams and identify projects with genuine potential. To steer clear of pump and dump schemes, be wary of sudden, unexplained price surges and perform research rather than relying on hype or tips from unknown sources. From Dogecoin and Shiba Inu to lesser-known variants, learn all about meme coins, what they are, and how to trade them. He’s researched, written about and practiced investing for nearly two decades. As a writer, Michael has covered everything from stocks to cryptocurrency and ETFs for many of the world’s major financial publications, including Kiplinger, U.S. News and World Report, The Motley Fool and more. Michael holds a master’s degree in philosophy from The New School for Social Research and an additional master’s degree in Asian classics from St. John’s College.