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What’s a Meme Coin?

What began as a joke has exploded into a popular cryptocurrency that has the backing of big names such as Elon Musk and Snoop Dogg. This briefly describes the history of meme coins, a cryptocurrency based on popular internet jokes.

History of the first meme coin

The first meme coin can be traced back in 2013 when Adobe product manager Jackson Palmer created Dogecoin as a humorous take at the hype over crypto at the time. Taking notice of the buzz over Dogecoin, IBM software developer Billy Markus reached out to Palmer to create an actual Dogecoin using his software.

Months later, the duo launched Dogecoin, which some experts now consider as a serious crypto asset that has paved the way for other meme-based cryptocurrencies today.

Characteristics of meme coins

Aside from being largely based on internet jokes and pop culture references, another common characteristic of a meme coin is having a relatively low valuation. Unlike Bitcoin and other mainstream cryptos, most meme coins are programmed to have a very high or unlimited number of units for mining.

This inflationary nature dents a meme coin’s value over time since there is no fear of scarcity that could control its price. Most meme coins also do not support “burning,” a process of permanently discarding a coin from circulation to reduce the total supply.

It is easy for anyone to create a meme coin since this crypto type does not require the same sophisticated technology or ecosystem required in more established cryptos like Bitcoin. A lot of meme coins also do not have value outside the cryptoverse, meaning you cannot use them to pay for goods or services. Meme coins are primarily hinged on market sentiment and whatever is trending.

For example, a group created a Squid Game meme coin last year to ride the popularity of the Korean Netflix survival series of the same name. After a brief surge, the coin eventually crashed in what observers call a “rug-pull” incident.

According to CoinMarketCap, there are more than 5,000 meme coins and token as of February 2022 and this number is likely to go higher as more people create their own versions. Despite their extremely volatile nature, meme coins remain an attractive investment option for those who have a big appetite for risky assets.

Examples of meme coins

Let us take a look at the top three meme coins based on market capitalization.

Dogecoin (DOGE)

As the pioneer of meme coins, Dogecoin has cemented its reputation as one of the more established alternative cryptos on the market. This coin has the face of the Japanese dog breed Shiba inu as its logo, a nod to the doge memes that took the internet by storm in early 2010s. It is a peer-to-peer open crypto built on the Litecoin blockchain and adopts a scrypt algorithm.

The most popular backer of Dogecoin is Tesla CEO Elon Musk, who confirmed in October 2021 that he owns the said meme coin along with Bitcoin and Ethereum. Musk’s tweets have proved to influence the price of Dogecoin, which went up more than 20% last December after the billionaire said Tesla would start accepting the alt coin as payment.

As of February 2022, Dogecoin is the 11th largest crypto by market capitalization, trading at around $0.1474.

Shiba Inu (SHIB)

Launched in August 2020 by an anonymous group/person called Ryoshi, SHIB is a spin-off of its predecessor, earning the moniker “Dogecoin killer.” It is based on Ethereum and is not supported by any asset nor does it back any smart contracts.

This token has seen massive popularity in recent months in part due to a community called SHIBArmy who have relentlessly hyped the coin on social media. The creation of the ShibSwap crypto exchange platform also helped pump up the coin’s price, creating an ecosystem consisting of three tokens:

SHIB: The foundational currency with a starting supply of 1 quadrillion

LEASH: Has a total supply of 107,646 tokens and offers various rewards and incentives

BONE: A governance token that allows SHIBArmy to vote on proposals. It has a total supply of 250,000,000 tokens.

The Shiba inu crypto is currently ranked 14th on CoinMarketCap, with a market capitalization of $16.84 billion.

Dogelon Mars (ELON)

Ranked 121st, Dogelon Mars is another alt coin banking on the popularity of dog-based tokens. Its ticker symbol pays an homage to Dogecoin supporter Elon Musk, although there is little known about what the coin is used for and what it does.

There are also no public records that give clues to its creators or roadmap. ELON started trading at $0.000000120 in May 2021 and is now at $0.000000983.

This article is for general information purposes only and is not intended to constitute financial, investment, or trading advice.

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