What Are Meme Coins and Tokens?

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Such digital assets are prone to experience a price slump if the major token holder decides to dump (sell off) their coins. Therefore, it is advisable to go for a meme coin whose circulating supply is not concentrated among a handful of investors. Additionally, many meme coins are owned by small groups of people who hold large, market-moving quantities of it, along with thin liquidity pools. As such, their prices tend to be highly volatile, influenced significantly by social media sentiments and “FOMO” (fear of missing out). Additionally, the memecoin market is prone to market manipulation, including pump-and-dump schemes, where prices are artificially inflated and then crash suddenly.

Conclusion: The future of meme coins in the crypto world

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What are meme cryptocurrencies and should you buy them?

This article originally appeared in Crypto for Advisors, CoinDesk’s weekly newsletter defining crypto, digital assets and the future of finance. Please note that an investment in crypto assets carries risks in addition to the opportunities described above. These purchases were made as part of a “short squeeze,” where financial institutions and investment firms who bet against the company’s value lost massive amounts of money. Many consider Gamestop the original meme stock, with companies like AMD and Bed, Bath, and Beyond following soon. These purchases frequently go against the traditional tenets of investing, which usually calls for close inspection of a company’s long-term viability.

Meme coins have established themselves as a relatively new facet how to buy a raven of the cryptocurrency market, presenting both opportunities and risks. Meme coins can be an attractive investment opportunity due to their virality and strong community formation. Some cryptocurrencies have reached very high market capitalisations within days.

Is Memecoin a Good Investment?

Meme coins are then, perhaps, a form of highbrow humor for people who are in the know. Driven by Reddit forums and social media hype, meme coins start off as a viral joke until, eventually, the joke is on the system itself. Some meme coins have useful functionality, like DOGE and SHIBA, and have primarily used the “meme” aspect to increase adoption. Members of the community also consider meme coins a vital way to get people interested in cryptocurrency, with public figures like Elon Musk frequently signal boosting meme coins.

Read our University article about Dogecoin to learn more about the meme coin that started it all. Dogecoin was an instant success upon launch and surged in popularity on platforms like Reddit. The coin became a staple of the crypto space in early 2021 when celebrities like Elon Musk, Mark Cuban, and Snoop Dogg backed Dogecoin, sending it soaring more than 800% in 24 hours.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. As of the date this article was written, the author does not own cryptocurrency. DOGEN’s got a little something special for its hardcore believers — an airdrop!

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• GameStop, AMC and other seemingly forgotten stocks rose around the same time Dogecoin gained steam.
• Originally conceived as a parody of the Bitcoin hype, Dogecoin has built a loyal following and is used for tips on the internet and charitable purposes.
• But meme tokens have gained popularity due to their disproportionate association with influencers.
• Despite their often humorous origin, trading meme coins requires an understanding of crypto market trends and risk management, as they are known for their high volatility.
• These purchases frequently go against the traditional tenets of investing, which usually calls for close inspection of a company’s long-term viability.

The Kiss frontman has encouraged his fans to do their own research, but he seems like the type to take crypto more or less seriously. FLOKI (FLOKI), named after Elon Musk’s dog, is another meme coin attempting to build on the popularity of Dogecoin and Shiba Inu. With the goal of developing a wide range of applications, including games in the NFT gaming metaverse and an educational ecosystem, FLOKI aims to go beyond the status of a simple meme coin. It represents an attempt to combine the cultural virality of memes with practical applications and utility within the crypto space. When it comes to digital assets, development teams need to promote an open and transparent ecosystem.

It runs on a proof-of-stake consensus mechanism, which does not support mining. We believe everyone should be able to make financial decisions how to trade cyrptocurrency 2020 with confidence. AMC, ExpressVPN, Tesla, and Twitch accept meme coins like Dogecoin and Shiba Inu.

Since Dogecoin was launched in 2013, it’s become much easier to create a cryptocurrency, and meme tokens can be launched rapidly on the back of events, or become popular due to their associations with influencers. The original meme coin, Dogecoin (DOGE), is based on the long-running Doge meme, which originated with a picture of a Shibu Inu dog. It runs on its own blockchain, and as such is distinguishable from meme tokens, which run atop an existing blockchain. Software engineers Billy Markus and Jackson Palmer created Dogecoin, which was released in 2013. Dogecoin was originally created as a joke, aiming to poke fun at Bitcoin enthusiasts. The creators of Dogecoin used a popular meme of a dog (purposely misspelled “Doge”) as the logo for their cryptocurrency.

The news sent Bitcoin and many other cryptocurrencies into a tailspin, but the price of Dogecoin jumped up 300%. Meme coin prices are largely driven by popular culture and social media, and Dogecoin’s price surge demonstrated that their price movements have a low correlation to price changes in the larger cryptocurrency market. The following month, Dogecoin’s trading volume was higher than all other cryptocurrencies combined, according to crypto platform Gemini.