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what are meme coins?

What are Meme Coins?

  •  May 23, 2023  •   

What are meme coins? A meme coin is a type of cryptocurrency associated with humorous or animated memes such as Pepe the Frog, or Dogecoin represented by the Shiba Inu dog breed. Meme coins are often supported by an enthusiastic online community. These coins are often highly speculative and may have little intrinsic value beyond their entertainment value. If you come across a token with a weird name, it’s likely that it’s a meme coin.

Meme Coins Trade on Hype and Cultural Trends

Meme coins are usually community driven. Token holders are sometimes incentivized to promote the token through social media and community platforms like Discord, Reddit, Telegram and Instagram. Groups like Reddit and Discord also have raids that spread hype and urgency to get other users to buy in.

Meme Coin Hype
Meme Coin Hype

Meme Coins are Traded mostly on DEXs

Besides Dogecoin and Shiba Inu, most lesser-known meme coins are not listed on CEXs, centralized exchanges, due to regulatory standards. However, some exchanges like Gate.io may list them if they have a certain trading volume. On DEXs, anyone can list a token, so you might have better luck finding Kitty Inu or Safemoon there.

Founders Often Proclaim that it is a Meme Coin

The easiest way to find out if a coin is a meme coin is if the founders say so on their designated websites. For instance, Floki Inu mentions that it combines “the power of memes with real utility and charitability”. The Baby Doge says it is “Birthed by fans of the doge meme community.”

Some Example Meme Coins…

Meme coins are coins inspired by jokes or internet memes that circulate within a community. For example, Dogecoin was created by Billy Markus to mock Bitcoin. It was based on a viral meme of a Shiba Inu, which explains the dog face on the logo.

Other meme coins include Shiba Inu, which was intended to mock Dogecoin, and Floki Inu, a fork of Dogecoin based on Elon Musk’s pet dog. Meme coins are intended as jokes and tend to gain popularity for a short period of time until they either die out or face standstill growth until the hype kicks in again.

Understanding Meme Coins: A Closer Look at the Cryptocurrency Phenomenon

Meme coins, also known as memetic coins, are a fascinating subset of cryptocurrencies that have gained popularity among online traders and enthusiasts. These coins are often accompanied by humorous or animated memes and are supported by enthusiastic communities. While meme coins can be entertaining, it’s crucial to recognize that they are highly speculative investments and may lack substantial intrinsic value.

Investing or trading meme coins requires a thorough understanding of the associated risks to avoid unexpected volatility and potential losses.

Key Characteristics of Meme Coins

Meme coins are a genre of cryptocurrencies characterized by their vibrant online communities, which play a crucial role in driving the growth and popularity of these currencies. These coins are often associated with animated characters or animal meme images. Notable meme coins during the recent cryptocurrency boom include Dogecoin, Shiba Inu, Baby Doge, and Dogelon Mars. Despite receiving less media attention, lesser-known meme coins like Baby Doge and Dogelon Mars still maintain significant market capitalizations.

What is the Difference Between Meme Coins and other Cryptos?

Meme coins, like other cryptocurrencies, rely on blockchain technology—a decentralized, distributed database used to track virtual assets, including cryptocurrencies and non-fungible tokens (NFTs). However, unlike utility currencies such as Ethereum that offer specific blockchain features, most meme coins primarily serve as trading instruments. Prominent cryptocurrencies like Bitcoin, Ethereum, and Polkadot generally do not fall under the meme coin category.

Are Meme Coins Legit?

Meme Coins, like all cryptocurrencies are highly risky investments. As with stocks, meme coins are a fund raising tool, that developers can use to raise money for a project. However, most meme coins do not have a project with extensive utility attached to it. In other words, they are issued purely for fun, or to see what will happen. If the meme coin, goes viral and becomes highly popular, the price can increase quite significantly (as with Dogecoin increasing from 1 cent to 76 cents after Elon Musk started tweeting about its merits.) It is not accurate to generalize that meme coins are legit or not. If you are buying in the hopes that the price will go up however, you should research thoroughly the project team and road map, and try to gauge its viral potential.

Volatility and Risk Factors

The CoinMarketCap website lists over 300 currencies in its Meme Coin section, although many of them are not actively traded and hold little to no value. Only Dogecoin, Shiba Inu, Dogelon Mars, and Baby Dogecoin have daily trading volumes exceeding $1 million, making them the more prominent meme coins in terms of market liquidity. However, it’s important to note that these currencies are generally considered risky and highly volatile assets.

While cryptocurrencies like Ether are required for transactions on the Ethereum blockchain, most meme coins lack additional value beyond collecting and trading. Additionally, some media outlets and investors have characterized meme coins as elaborate pump-and-dump schemes, which should serve as a cautionary signal for potential investors. It’s crucial to exercise extreme caution and approach meme coin markets with careful consideration.

How to Buy Meme Coins

To buy meme coins, you can utilize cryptocurrency exchanges such as Coinbase, Gemini, Binance, FTX, and Kraken. These centralized platforms enable direct buying and selling with other users through their online marketplaces. Alternatively, decentralized exchanges like PancakeSwap or Uniswap require the use of a cryptocurrency wallet that allows you to maintain custody of your currency outside of an exchange.

How to Create a Meme Coin

Creating a cryptocurrency requires technical knowledge, and while anyone can create a coin or token, transforming it into a popular meme coin is exceptionally challenging and has only been successfully accomplished a few times.

What are the Top 3 Meme Coins?

According to CoinMarketCap Memes Token section, the top four meme coins in terms of market capitalization are Dogecoin at $10B, Shiba Inu at $5B, and Pepe at $560M marketcaps respectively.

Final Thoughts On Meme Coins

Meme coins can be fun and potentially profitable, but it’s important to keep in mind the risks involved. Prices rely heavily on community sentiment and viral moments. It’s best to risk only a small part of your portfolio on these coins and proceed with caution.

Max K. Montague, Meme Coin Trader
  A Crypto Trader, Miner and Investor with 11+ years experience trading stocks, forex, crypto and meme coins. My hobbies are helping others make money online as fast as possible while managing risk tolerance.

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