Meme Coins Explained in the Simplest Terms [2023]

The success of crypto projects like Dogecoin, Shiba Inu, and Floki led to a new buzzword called meme coins.

During the initial days of meme coins in 2013, people considered them a joke with no potential value. Yet, ten years later, in 2023, the same meme coin market is worth over $20 billion. Unbelievable right?

You might wonder why people buy jokes-based coins with no value. To understand that, you first need to know about meme coins and their working principle.

Let’s dive straight into meme coins!

What Are Meme Coins?

Meme coins are a cryptocurrency developed based mainly on jokes or memes. Likewise, these coins are also used to represent viral images and videos.

Launched in 2013, Dogecoin is considered the first meme coin in the crypto space. This coin was developed by two software engineers, Jackson Palmer, and Billy Markus.

Even though Dogecoin started as a joke, this meme coin crossed a market value of over $90 billion in May 2021. Moreover, the coin’s average daily trading volume exceeded $45 billion during that period.

Following the enormous growth of Dogecoin, meme coins started gaining massive popularity among crypto inventors. Also, hundreds of similar coins are available on crypto markets.

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

Dogecoin and Shiba Inu constitute almost 93% of the meme coin market cap. At the time of writing, these two coins have a combined market cap of over $18.5 billion.

Now, let’s look at the popular meme coins.

Popular Meme Coins

#1. Dogecoin (DOGE)

Starting as a joke, Dogecoin (DOGE) is the oldest meme coin, with a market cap 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 the 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. This dog-based coin has a market cap of close to $7.5 billion.

Unlike most meme coins, Shibu Inu has a limited supply of 1 quadrillion SHIBs. Moreover, this project burned 50% of its tokens for charity donations.

#3. Floki (FLOKI)

Floki (FLOKI) was launched immediately following Elon Musk’s Tweet. He tweeted that his “Shiba Inu” will be named “Floki.”

Musk’s Tweet was posted on 25th June 2021 and received over 300,000 likes. FLOKI has a market cap of close to $200 million. Moreover, FLOKI is the fourth largest meme coin.

#4. Dogelon Mars (ELON)

Launched in 2021, Dogelon Mars (ELON) is a successful dog-meme coin after DOGE, SHIB, and FLOKI. This coin has a market cap of over $210 million.

ELON is built on Ethereum’s ERC-20 token standard. Similar to other meme coins, the Dogelon Mars project doesn’t provide any actual utility for investors.

#5. SafeMoon Inu (SMI)

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

You can use SMI coins to participate in its play-to-earn-based gaming platform. Also, SMI holders receive a part of transaction fees from coin traders and investors. 

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

#6. Pitbull (PIT)

Built on the Binance Smart Chain (BSC), Pitbull(PIT) meme coin is a community-driven crypto project. This project rewards its investors based on an auto-stacking mechanism.

The pitbull platform redistributes trading fees among its investors. This method helps PIT holders have a passive yield.  

The pitbull project also has strong online community support. For example, Pitbull’s official Twitter account has close to 200,000 followers. Moreover, their Telegram channel has over 37,000 members.

#7. CateCoin (CATE)

You might have noticed that most meme coins are created based on dog memes. But, CateCoin (CATE) is the first cat-based meme coin from the crypto space.

CateCoin was developed as a competition with Dogecoin and Shiba Inu. CATE has a limited coin supply of 100 trillion. Moreover, Catecoin allows users to stake and generate staking rewards.

In addition, CateCoin rewards CATE holders with 1% of every transaction fee. Besides, you can use this meme coin on their gaming and DeFi meme platforms.

Meme Coins Vs. Traditional Cryptocurrencies

Blockchain technology is behind the creation of meme coins and traditional cryptocurrencies like Bitcoin (BTC) and Ethereum(ETH). Moreover, you can buy both cryptos at the same marketplace.

 So what makes meme coins different? Let’s get straight into that:

• Traditional cryptocurrencies provide utility to their holders. Meanwhile, meme coins don’t have a use case that solves a significant problem. For example, the idea behind creating such coins is just trending memes, funny images, or video clips.
• Meme coins have a minimal price compared to major cryptocurrencies. For instance, the price of one Kishu Inu, a meme coin, is just $0.000000000650. 
• Established cryptocurrencies come with a limited supply. For example, Bitcoin’s maximum supply is 21 million. However, most meme coins have an uncapped supply or huge supply. To clarify, the meme coin Kishu Inu has a maximum supply of 100,000,000,000,000,000 (100 quadrillions) KISHU coins.
• Traditional cryptocurrencies are volatile in nature; however, meme coins are extremely volatile. For this reason, you can witness a huge rise and fall in meme coin prices in a matter of hours or minutes.
• Traditional cryptocurrencies have huge market caps, so they rarely crash or rally following a single online activity. Whereas social media events highly influence the price of meme coins. Its price can rise or fall following a Tweet or post from a celebrity influencer.

Next, we will discuss how meme coins work.

How Do Meme Coins Work?

The working process of meme coins is the same as other cryptocurrencies. Crypto developers deploy smart contracts to create tokens based on their favorite meme, video, or image.

The popularity of meme coins has reduced the difficulty of creating one. Now different platforms help you to create and launch meme coins easily.

Most meme coins have a shorter life cycle. The price of such coins increases significantly in a few days or weeks. Once the hype is over, their price crashes drastically.

Social media promotions and marketing are important factors for meme coins’ growth. For example, Elon Musk’s supportive tweets played a crucial role in the success of Dogecoin (DOGE).

Meme coins also focus on building a stronger community with active members. Besides, these members buy and hold the tokens for longer.

Recently, the crypto market also witnessed the launch of meme coins with utility, and the Tamadoge project is the best example. You can earn this coin by playing Tamadoge’s Metaverse game. In addition, you can use this meme coin to buy in-game NFTs.

How to Invest in Meme Coins?

You might now have understood that meme coins are not a stable form of investment. However, you can buy these coins from crypto exchanges if you still want to invest.

You can find popular meme coins on centralized exchanges such as Binance, Coinbase, and Kraken. In addition, you can buy newly created meme coins from decentralized exchanges like PancakeSwap or UniSwap.

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

• Visit the website of the Binance exchange or open its mobile app.
• Log in with your Binance user credentials. New users need to create a Binance account and complete the user verification.
• Choose “Trade” and then click “Spot.” Now you’ll be taken to Binance’s spot trading platform.
• SHIB/ USDT and SHIB/BUSD are the high-volume trading pairs on the Binance exchange. So, load your wallet with USDT or BUSD. 
• Now select SHIB/ USDT or SHIB/BUSD.
• Then choose the amount of USDT or BUSD accordingly.
• Next, click “Buy SHIB.”

Finally, you’ll receive SHIB coins in your Binance wallet within a few minutes. You can also follow these steps to buy other meme coins.

Risks Involved in Meme Coin Investing

Now that you know to invest in meme coin, let’s also consider the risks present:

#1. Sharp Price Fall

Meme coin investments involve high price variations. For example, during a bearish crypto market, meme coin prices can crash a lot.

Moreover, the majority of these coins don’t have strong fundamentals. In this case, the price recovery is also less likely to happen.

#2. Little or No Use Case

Cryptocurrencies like Bitcoin or Ethereum have strong use cases that help maintain investors’ trust and value. However, almost all meme coins don’t have valuable use cases.

So, most investors don’t find it worth holding during a huge price fall. In most cases, investors exit their positions during a price crash.

#3. Flawed Tokenomics

The founding members hold the majority of the coins during the issue of meme coins. This investment method results in a high concentration of ownership among a few people.

In this situation, even if a big token holder sells his shares, the token’s price will drop drastically. Moreover, this ownership concentration also encourages crypto scams.

#4. Lack of Transparency

Most of the new meme coins don’t provide many details related to the project. Instead, they mostly create coins based on current trends to generate quick profits.

The meme coin projects mostly don’t reveal the name of their founders or team members. For example, the creators of Shiba Inu stay anonymous behind the name “Ryoshi.”

Few Points to Note 📝

• Avoid investing serious money into meme coins. The risk involved is very high, and there is always a possibility of losing all your investments.
• If you want to be a part of a meme-based crypto project, consider investing in a small fund. Also, ensure to invest an amount that doesn’t affect you financially in the worst-case scenario.
• Avoid unnecessary tips and investment advice from social media influencers. Online influencers play a crucial role in promoting meme coins, so avoiding such paid campaigns and promotions is always better.
• Avoid fear of missing out (FOMO). It’s basic human psychology to chase surging meme coins. Unfortunately, in most cases, such tendencies lead to huge losses. 
• Finally, do your own research (DYOR) before trading or investing in any meme coins.

Final Thoughts

Meme coins generated unbelievable returns for investors during mid-2021. However, there is always a high risk associated with investing in meme coins with no actual use cases.

Finally, it’s better not to deploy your hard-earned money on crypto coins that don’t have any actual utility. Instead, you can buy a few meme coins for fun or as a collection. 

Next, check out cryptocurrency wallets to store your crypto securely.