From the new Covid variant Omicron to introducing the world to the vaccine against the Coronavirus, from the Tokyo Olympics to Taliban capturing Kabul, 2021 was an eventful year. One more phenomenon that has gathered pace this year was the rise of meme cryptocurrency.
May 2021 saw a huge rise in the popularity of meme cryptocurrencies like Dogecoin. According to CoinMarketCap, Dogecoin currently stands at the eleventh rank in market capitalization (as of December 20, 2021).
Yes, that cryptocurrency has a meme dog on it.
Just like Dogecoin, more innumerable meme cryptocurrencies enter the market every day. But these were just created as a joke, right? One would think so. Investing is a serious task. How could anybody take cryptocurrency so earnestly? Ah! They might have started as a joke, but many meme cryptocurrencies, including Shiba Inu, Mona Coin, and Hoge Finance have entered the mainstream market, all thanks to so many people investing in them.
WHAT IS MEME CRYPTOCURRENCY?
Meme cryptocurrencies or meme coins are those that are inspired by popular memes, i.e., a joke, image, or text that is very popular among internet users. While other mainstream cryptocurrencies were created to boost trading and transactions, meme cryptocurrencies, on the other hand, are usually not created with such specific goals or to gain profits. Also, unlike traditional cryptocurrencies that have only a finite number of coins to mine, meme coins offer unlimited supplies.
Meme crypto was initially started as a joke or a mockery of the cryptocurrency market, more like a critique of mainstream cryptocurrencies. But in recent years, they have garnered a lot of popularity and support. And as they are getting popular, their value is also rising in the market, and they are beginning to compete with other mainstream cryptocurrencies. According to CoinMarketCap, DogelonMars, MonaCoin, and HogeFinance made it to the top 10 cryptocurrencies in terms of market capital after Dogecoin and Shiba Inu as of October 19, 2020.
The flagbearer of meme cryptocurrency, Dogecoin, was created in 2013 by two software engineers, Billy Markus and Jackson Palmer. Started as a joke payment system, this meme coin aimed to make fun of cryptocurrencies like Bitcoin and the wide speculations that surrounded it. But since its inception, it has gained a lot of popularity with over a million visits on its website, dogecoin.com within the first month of its launch.
Created in August 202 by an anonymous person under the pseudonym Ryoshi, it claimed itself to be direct competition to Doge-coin and even named itself the Dogecoin-killer. It was an Ethereum-based substitute for Doge. Banking on the popularity of Dogecoin, it is the second most popular meme cryptocurrency after Doge.
Within 30 days of its inception, Dogelon Mars has also registered itself as one of the 100 biggest cryptocurrencies according to its market capitalization for some time. Although its true founder is not known, there are speculations in the market that Dogelon Mars was created by Elon Musk, but there is not enough evidence to prove such a claim, and Elon Musk has never been explicitly proclaimed to be the creator of this coin.
Inspired by Elon Musk’s dog Floki who is of a Shiba Inu breed, Floki-Inu was developed by some unknown team who were members of the Shiba Inu community. It was created on June 25, 2021, when Elon Musk announced the name of his dog. Foki-Inu considers itself to be the Doge and Shiba killer and runs on both the Ethereum blockchain and the Binance Smart Chain (BSC) network. By September 12, 2021, the price of Floki-Inu soared by more than 250,000%, the meme coin reaching all-time highs. Shiba Floki, Floki Shiba, Flokinomics, and Baby Floki Inu are some of the other meme coins inspired by Elon Musk’s dog.
WHY ARE THEY GAINING SO MUCH POPULARITY?
Meme coins are highly community-driven. A tweet by a famous personality, hype created by influencers, and the popularity of the meme on social media can swell the value of a meme coin hundredfold. One of the greatest examples of such a case can be the tweets by Elon Musk, a multi-billionaire and the founder of Tesla and SpaceX. Since the creation of Dogecoin in 2013, the tweets made by Elon have had a lot of effect on the prices of meme coins.
SpaceX launching satellite Doge-1 to the moon next year
– Mission paid for in Doge
– 1st crypto in space
– 1st meme in space
To the mooooonnn!!https://t.co/xXfjGZVeUW
— Elon Musk (@elonmusk) May 9, 2021
Floki Frunkpuppy pic.twitter.com/xAr8T0Jfdf
— Elon Musk (@elonmusk) October 4, 2021
Tweets like these have helped meme coins like Dogecoin, Shiba Inu, and Floki Inu millions of dollars.
How much is that Doge in the window? pic.twitter.com/bxTkWOr50V
— Elon Musk (@elonmusk) May 20, 2021
This tweet has helped Dogecoin’s value shoot up to its highest and jump by 22% within 24 hours.
Floki has arrived pic.twitter.com/2MiUKb91FT
— Elon Musk (@elonmusk) September 12, 2021
This ‘Floki has arrived’ tweet helped surge the price of Shiba Floki coins to 958.9, and the value of Floki Inu rose to 60% within 24 hours.
As they have a strong community base, these cryptocurrencies often see an increase in their value when members of the community start showing their support. In the late 2020s, we saw a huge surge in the value of these meme coins due to a meme stock war that started with WallStreetBets, a Reddit community that inflated the value of GameStop’s stock. Taking inspiration, another Reddit community tried to do a similar thing by inflating the value of Dogecoin.
Meme cryptocurrencies have billions of units in circulation, do not have a finite number, and generally do not have a mechanism that can remove coins permanently from circulation. Their numbers just keep rising. This leads to their lower worth per unit, making it cheap for everyone to buy even at large amounts, thus contributing to their popularity.
WHAT ARE THE RISKS INVOLVED WITH INVESTING IN MEME CRYPTOCURRENCY?
Cryptocurrency is a very volatile market. The risks are greater with cryptocurrencies like meme coins as they are still relatively new, and their success mostly depends on speculation. News and social media trends can easily influence the position of a meme coin in the market. The price of a particular meme can rise and fall depending on how much the community is interested in increasing its value. We saw how much a single tweet can have such a massive impact on the value of a meme coin.
Similarly, taking advantage of the popularity of a particular meme or a trend, some meme coins can easily inflate their value, but it generally lasts for a short period. Also, many people take advantage of this bandwagon to scam people. A recent case is the Squid Game Scam, where, taking advantage of the popular Netflix Show, a Squid Game-based Coin reached an insane value of over USD 2,000 per coin but quickly disappeared with everyone’s money.
Before investing, one has to be extra cautious and research properly beforehand so that one can make an informed decision and be able to differentiate between credible and fake meme coins. One needs to ensure that there are many investors, and no single entity should control more than 5% of the token’s supply. Try to invest in more rather than risking all your savings in only one crypto and try to understand how strong is the community base for the meme coin.
Written by: Aashna