Meme coins are an integral part of the crypto ecosystem and have taken over the internet; from our daily conversations to social media, memes are everywhere. As the industry is evolving, it is only natural that crypto & DeFi have their own meme coins as well.

In this beginner's guide, we will explore what meme coins are, their popularity, and how they work, and the various factors you should consider before investing in them. We'll also discuss the benefits, risks, and the process of buying meme coins. So let us dive in!

What are meme coins?

The name does not leave much room for guessing but the meme coins are the type of cryptos that were created as a joke literally. The first meme coin Dogecoin (DOGE) was created in 2013 by Jackson Palmer to mock the existing cryptos.

Today, cryptos that are created on trending memes are broadly classified as meme coins.

Fun fact: Do you know meme tokens is only a broad category name given to meme-based cryptos? In reality, for a crypto to be called a coin it should have its own blockchain.

Also Read: What are Crypto Tokens

The popularity of meme coins

Meme coins became popular in a very similar fashion to how a meme becomes viral. It was created as a joke, and more and more people started sharing the joke and suddenly everyone is talking about it. The most significant driver is the internet culture, which has led to the rapid spread of memes and their subsequent impact on popular culture.

For meme tokens, it happened in 2021 when celebrities like Elon Musk and Mark Cuban started mentioning them on their Twitter. The massive following of the Twitter & SpaceX CEO gave an instant boost to the meme coins which were previously dormant since their inception.

Individuals gaining massive returns from investment in these meme tokens kept on fuelling the popularity.

How do meme coins work?

On a fundamental level, meme coins are similar to any other crypto available. They exist on a blockchain and use blockchain to secure and validate transactions. And, like any other crypto, they are available on different exchanges for buying, selling or storing for the long term.

A primary difference between meme tokens and other cryptos is meme coins typically exist purely for entertainment or speculative purposes. However, most crypto serve a practical purpose or utility.

Are meme coins a safe mode of investment?

It is important to weigh the risk and rewards of any investment. Meme coins like any other cryptos or investment class are subject to market volatility and fluctuations. Although, it is also true that meme coins are comparatively more volatile than some other cryptos. While some investors have made substantial profits from investing in meme coins, others have experienced significant losses.

Risks involved in meme coin investments

Since meme coins have no intrinsic value or utility of their own, the following cautions should be taken while dealing with them.

• Volatility: Meme tokens are highly volatile, with prices often experiencing extreme fluctuations in a short period.
• Market manipulation: The meme coin market is prone to manipulation due to influencers and "pump-and-dump" schemes being a common occurrence.
• Lacks Fundamentals: Many meme coins lack a clear use case or underlying value, which means their prices are primarily driven by hype and market sentiment.

Read More: What are Stablecoins?

Popular meme coins

There are more than 450+ meme coins and meme tokens listed on CoinMarketCap with several having 24-hour trading volume over a million USD. The most popular of them are:

Dogecoin (DOGE)

Doge is the meme coin that was in existence even way before when meme coins were a thing. With a market cap of over $11 billion with daily average transactions of 30,000. Dogecoin is based on the dog breed of Shiba Inu ( which is also the name of another meme coin). DOGE is one of the few meme coins which has its own blockchain. Although, it also exists on the BNB Chain. At the time of writing, DOGE was trading at $0.07986.

Token Type: Coin

ATH: $0.7376 on May 08, 2021

Total Supply: 139,111,916,384 DOGE

Also Read: Technical & On-Chain Analysis of Dogecoin

Shiba Inu (SHIB)

The second largest meme coin by market cap and users is Shiba Inu (SHIB) which was created in 2020 by an anonymous person or group named “Ryoshi''. SHIB is an Ethereum-based ERC-20 token that is often referred to as a “Doge killer”. Shiba Inu gained its popularity from Vitalik Buterin and Elon Musk. Vitalik was sent 50% of the SHIB’s initial supply out of which 10% was donated to India's COVID relief fund and the rest was burnt by him.

Token Type: ERC-20

ATH: $0.00008845 on October 28, 2021

Total Supply: 589,604,810,668,664 SHIB

Read More: Technical & On-Chain Analysis of Shiba Inu

Pepe Coin (PEPE)

Pepe coin is the new meme coin in the crypto town which has been the topic of discussion for the past few days. This meme coin is created as a tribute to the Pepe the Frog internet meme, created by Matt Furie, which gained popularity in the early 2000s.

Launched in April 2023, PEPE attracted a large community of supporters by capitalizing on the existing community of DOGE & SHIB.

Token Type: ERC-20

ATH: $0.0000004036 on Apr 20, 2023

Total Supply: 420,690,000,000,000 PEPE

Volatility of meme coins

Meme coins are notoriously volatile, with prices often experiencing dramatic fluctuations within hours or even minutes. This volatility can be attributed to the fact that their value is driven primarily by market sentiment and hype, making them highly susceptible to sudden price changes.

Benefits of investing in meme coins

Despite the risks, there are potential benefits to investing in meme coins:

• High returns: Meme coins have the potential for significant returns due to their volatility.
• Low entry costs: Many meme coins are relatively affordable, allowing investors to enter the market without a large initial investment.
• Community involvement: Meme coin communities are often vibrant and active, providing investors with a sense of belonging and camaraderie.

The Internet is filled with instances where investors earned marginally huge returns from trading and investing in meme coins. But, similar to every other investment, caution and research is necessary.

Read More: What are Altcoins

Disadvantages of investing in meme coins

While meme coins come with their set of advantages some disadvantages should be considered before deciding to invest in them. The disadvantages are:

• Limited Adoption: Meme coins are community driven but they still struggle with widespread adoption. Several investors and retailers refrain from trading or hodling memes due to their high uncertainty.
• Regulatory Scrutiny: Due to lack of fundamental utility and purpose meme coins face increased regulatory scrutiny from governments and financial institutions.

How to buy meme coins?

There are several ways to acquire meme coins. The early adopters or investors receive meme coins like any other cryptos at the time of launch through Airdrops or community distribution.

However, you can buy meme coins from the exchanges they are listed on. Meme coins are also available on Okto where you can buy them in a decentralized fashion and keep complete control over them with self-custody.

Okto also offers several liquidity pools to invest and earn from meme coins.

Factors to Consider Before Investing in Meme Coins

Meme coins should undergo the same level of scrutiny as other investments. Some of the factors to consider before investing in meme coins are:

1. Risk tolerance: Assess your risk tolerance and ensure you are comfortable with the high-risk nature of meme coin investments.
2. Research: Conduct thorough research on the meme coin's background, development team, and community engagement.
3. Diversification: Diversify your investment portfolio to reduce the overall risk associated with investing in meme coins.

What are Utility Meme Coins?

Meme coins are often termed cryptos with no utility. But, there are few meme coins that are created with some real-world utilities and are often termed utility meme coins.

Toncoin (TON)

Toncoin is one such coin which is created to enable fast micropayments. This meme coin was created on Telegram Open Network (TON), a blockchain developed by Telegram. However, the project soon died after the Telegram company abandoned the project.

Doge Cola (DOGECOLA)

This was another meme coin created with real-world utility. The token was tied with the real-world soft drink named after the token. This token uses Auto Boost functionality which buys the token from the market and burns them. Currently, Doge Cola is trading at $0.005516.

Shiba Inu (SHIB)

From being only a meme token to developing its own L2 Ethereum solution called Shibarium, Shiba Inu has turned itself into one of the most useful meme tokens. Launched in March 2023, Shibarium is currently in the beta stage that allows anyone to create dApps on the Ethereum blockchain.

Bottom Line

Meme tokens have existed over the last 10 years and given their popularity and the love of humans for memes, it is less likely that they will disappear anytime soon. Although, the fact cannot be denied that they are still highly volatile and the majority of them are still driven by sentiment. And, one must always deal with caution while investing in them.

FAQs

1. What does a meme coin do?

Meme coins are cryptos that were created as a tribute to a particular meme. And like every other crypto, they can be bought or sold. Additionally, the majority of them do not hold any real-world utility.

2. Which coins are meme coins?

Any crypto which is created on the basis of the meme is called the meme coin. The most popular meme coins or meme tokens are Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe coin (PEPE).

3. Can you create meme coins?

Yes, meme coins can be created like any other cryptos. You can either develop your own blockchain to create a meme coin or use existing blockchains like Ethereum or BNB chain as well.