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.
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.