What are memecoins? Is it a good investment or not?

Last Updated on 4 March 2024 by CryptoTips.eu

Nowadays, some memecoins are more popular among investors than mainstream cryptocurrencies like Bitcoin or Ethereum. Dogecoin and Shiba Inu often appear in the top 10 and can surge 20% a day.

This article explains exactly what memecoins are, whether it’s smart to invest in them, where to invest in memecoins and some memecoin examples.

What are memecoins?

Memecoins are cryptocurrencies inspired by ‘jokes’ on social media. These jokes are images (memes) often with a sarcastic or humorous twist. A memecoin often does not represent a physical object or big development plans. The value of a memecoin depends on how popular a meme is on the internet. Thus, memecoins are quite susceptible to hype.

According to coinmarketcap.com, there are more than 1600 memecoins being traded as of this writing (there were only 124 in 2021), and this number is growing significantly in [jaar]. Bear in mind, everybody can create a memecoin.

Where can you buy memecoins in [jaar]?

Memecoins come and go, only a handful keep their value over time. It is essential for a memecoin to be listed quickly. Well-known exchanges are often hesitant to list memecoins and list them later.

Find out here where you can buy memecoins in [jaar]:

  • Extremely fast listing of almost all unknown and very risky memecoins: MEXC.
  • Listing of relatively well-known memecoins: Bybit.
  • Listing of only well-known memecoins: Bitvavo.

What is the difference between memecoins and mainstream cryptocurrencies?

Regular cryptocurrencies, such as Bitcoin, are specifically designed to stimulate cryptocurrency trading and to have as many transactions in cryptocoins as possible. A memecoin is not designed with a specific purpose. Often, there’s no philosophy behind a memecoin, or a philosophy is made up later.

Take, for example, a cryptocurrency like Ethereum (ETH). The whole idea behind this coin and the Ethereum blockchain is to decentralize financial services. That’s what the entire system is aimed at. A memecoin, in essence, is nothing more than a pop culture phenomenon, without a clear thought or goal.

This does not mean that you cannot make money from it, as memecoins are particularly popular.

Is it risky to invest in memecoins?

Volatility and cryptocurrency have been synonymous since the inception of Bitcoin. The price of a crypto can be completely different from one day to the next. Volatility is much greater with a memecoin. Memecoins are entirely dependent on their following. Their position on the crypto exchanges depends on their popularity on social media and the hype generated by certain influencers.

A good example of this is the CEO of Tesla, Elon Musk, who occasionally tweets about his favorite cryptocurrencies (often including memecoins). When a well-known person like Musk, in whom people have confidence, gives his/her opinion on a particular meme coin, it influences the price.

The fact that memecoins actually do not represent a fixed value or product and are entirely dependent on trends on social media makes it a risky investment.

In short, it is not wise to invest in a memecoin. Certainly not for the long term. However, their popularity comes from the extremely high volatility, making investors hope to make significant profits. This is a gamble by the investor, as the price can just as well go down.

Examples of memecoins

Dogecoin (DOGE)

This is the oldest meme coin. The coin originated in 2013 and initially started as a joke. Creators Billy Markus and Jackson Palmer thought it would be fun to come up with a new coin just for themselves. That turned out to be a good idea because, as of 2021, Dogecoin with a market capitalization of almost 20 billion euros is one of the larger players in the crypto world.

Shiba Inu (SHIB)

Shiba Inu is relatively young. The coin was launched in August 2020 and runs on the Ethereum network. Shiba Inu is named after a Japanese dog breed. The coin has more or less declared war on Dogecoin.

They call themselves the ‘Dogecoin Killer’. With a market capitalization of 17 billion euros, they are close by now. They owe their spectacular growth mainly to the aforementioned Elon Musk. When he tweeted a photo of his new puppy in a Tesla in October 2021. The breed of the puppy was Shiba Inu.

Dogwifhat (WIF)

A very popular memecoin on the Solana network, which is simply a dog with a hat. As you might guess, this token is about nothing, but it has already reached a market cap of nearly 2 billion euros.

FLOKI

Floki Inu tries to become the next Dogecoin and has a huge marketing budget. You might have seen a tram with Floki Inu advertising. They also bought bus ads in London and sponsor the Italian football club Napoli. This project advertises so much that they are being investigated in the UK. All this has led to a huge market cap.

  • Floki Inu is available via Bybit.

Pepe coin

A memecoin focused on the Pepe the Frog meme and is a major competitor of Dogecoin and Shiba Inu. Pepe was very popular in 2023 and this seems to continue into 2024. Pepe Coin has more development behind it, such as its own PEPE DEX and an NFT marketplace. Additionally, it uses a deflation mechanism, where Pepe tokens are burned during transactions.

Conclusion on memecoins

A memecoin is a coin or token, often without an underlying goal. They are driven by hype and promotion by influencers. This makes them extremely risky and highly volatile. This last point is what makes this phenomenon so popular. Investors see significant increases, get FOMO, and want to profit from the hype. This can end well or badly. Investing in memecoins is thus a gamble, where you can get faster profits but also faster losses. Holding onto a memecoin for the long term can eventually lead to losses.

Investing in memecoins is equivalent to gambling. When the hype dies down, the coin will also decrease in value. Is it then wise to invest in memecoins? I don’t think so.

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