What Are Meme Coins? A Beginner’s Guide

Are you curious about meme coins? They have gained popularity in the crypto industry, and it’s understandable why. Meme coins are cryptocurrencies, like Dogecoin (DOGE), based on jokes and memes. It all started in 2013 as a parody, which naturally sparked a huge interest in the community.

What sets meme coins apart? These coins are secured or validated using cryptography and can be traded on decentralized exchanges. Through these exchanges, meme coins can also purchase goods and services.

Their creative nature has further spurred the popularity of meme coins. With the ability to commemorate or parody well-known memes, these coins have garnered attention over recent years. They’ve prompted the creation of several copycats, such as Dogecoin.

What Are Meme Coins?

Meme coins are cryptocurrencies based on internet memes or jokes, gaining traction on social media platforms. Dogecoin (DOGE), the first meme coin, emerged in 2013 as a humorous take on the widely-shared Doge meme featuring a Shiba Inu dog from Japan.

Meme coins are predominantly driven by their online communities, often experiencing rapid growth in popularity due to endorsements and fear of missing out (FOMO). However, they may also experience sudden declines when traders shift their focus to a new meme coin.

Furthermore, these coins typically possess vast or infinite supplies, contributing to their relatively low prices. For instance, Shiba Inu (SHIB) boasts a total supply of one quadrillion tokens, and Dogecoin (DOGE) has no upper limit, with over 100 billion tokens already in circulation. 

The Rise Of Meme Coins

Meme coins are digital currencies born from a joke or an Internet meme. For example, the very first meme coin was Dogecoin (DOGE). It was launched in 2013 as a parody, created in the likeness of a Japanese Shiba Inu pup – the same pup so famous for being featured in the Doge meme!

The price of meme coins fluctuates rapidly, with surprising ascents and falls. These cryptocurrencies are heavily driven by public interest and may shoot up in value after people find out about them online. However, traders tend to turn to the next big thing, which can result in the coins dropping back down suddenly.

It’s pretty remarkable how meme coins often come with an ample supply. Just look at Shiba Inu (SHIB), boasting one quadrillion tokens. Likewise, DOGE doesn’t have a maximum limit of tokens, with more than 100 billion tokens in circulation already. 

As meme coins don’t have any methods of reducing their total number, the enormous supply is likely the cause of their relatively low value. Believe it or not, with just one US dollar, you can purchase millions of meme coins.

How To Safely Invest In Meme Coins

Investors must know about meme coins, with the crypto investment space becoming increasingly crowded. Over 240 of these digital assets exist, and over a hundred feature the word “Inu” in their name. 

Though these tokens can appear legitimate, many scam projects were created to benefit from the popularity of meme coins. To lower the risk of investing in this type of asset, one should confirm that it is not vulnerable to rug pull scams.

Rug Pull Scams

Investors should be aware of rug pulls, which happen when the development team behind a coin suddenly sells off all their coins after causing prices to rise. This leaves investors in a difficult situation, as the price of that coin abruptly drops to zero. Two recent examples of rug pulls include Squid tokens and Snow Dog meme coins.

The Risks Of Developer-Controlled Tokens

Taking caution when investing in meme coins is critical when a small number of investors or the development team holds a large portion of the token’s supply. To reduce this risk, no single entity is advised to control more than 5% of the total token supply.

Validate Liquidity Pool Credibility

Investors can purchase meme coins through automated market makers (AMMs). This process begins when the development team creates a new liquidity pool and deposits both ETH and an amount of the meme coin into it. Then, investors can exchange ETH for the Ethereum-based coin without needing a third-party order book or counterparty. 

To reach this goal, the development team must provide enough liquidity in the pool to cover potential trades. By doing so, traders can acquire their newly launched cryptocurrency with ease.

Ensuring a high level of safety for investors is essential when engaging with liquidity pools. If the proper security measures aren’t taken, the development team can withdraw liquidity, leaving investors unable to exchange a coin, quickly losing its value. 

To ensure this situation does not occur, it is crucial to only engage with pools held by burn addresses as it indicates that the liquidity has been permanently locked.

Audit Meme Coin Transparency

Digital asset teams must create an open and transparent environment. Furthermore, the source code of their cryptocurrency should be assessed by a trusted third-party software inspection agency, such as Certik or Hacken, to guarantee that the development squad has not embedded loopholes that could enable them to engineer an exit scam. Results from these assessments are usually publicized online and can be quickly found through a simple online search.

What Are The Top Meme Coins?

Dogecoin (DOGE) and Shiba Inu (SHIB) are top leading the meme coin with the highest market cap. As a result of DOGE and SHIB’s success, numerous dog-themed meme coins sprang up during the latter part of 2021 and have become popular.

Dogecoin (DOGE)

Dogecoin, the first meme-inspired cryptocurrency, was established in 2013 and has recently caused lot of movement within the crypto space. The coin’s founder says it was made as a joke to make fun of the excitement about digital currencies. 

Inspired by the meme of a Shiba Inu dog, DOGE was designed to be a joke cryptocurrency to capture mainstream attention. Additionally, DOGE implements a Proof of Work (POW) system with an unlimited supply. Below are some key features of DOGE.

1. Easy to Use: Dogecoin allows quick transactions, making it effortless for anyone to transfer and receive funds.
2. Low Transaction Fees: With fees of around 0.01 DOGE, Dogecoin provides an affordable way to transfer funds.
3. Widely Accepted: Many businesses accept Dogecoin, increasing its popularity and real-world use.
4. Active Community: Dogecoin’s online community of fans actively supports and promotes the currency.
5. Infinite Supply: Dogecoin has no cap, meaning miners can continue to create new coins and maintain their value.

Shiba Inu (SHIB)

Shiba Inu (SHIB) has become a famous rival to DOGE and has earned the title of ‘Dogecoin killer.’ The Japanese Shiba Inu breed of dog inspired this digital asset. It was created anonymously by Ryoshi in August 2020. 

SHIB stands apart from DOGE since it is limited to 1 quadrillion tokens, of which 50% have been burned and given away for charitable. Moreover, its ecosystem comprises decentralized exchanges, an NFT art incubator, Non-Fungible Tokens (NFTs), and an NFT game.

1. Large Supply: Shiba Inu has a massive supply of 1 quadrillion tokens, making it widely accessible.
2. Decentralized: Shiba Inu is a user-led initiative, giving the community more significant influence over its evolution.
3. ShibaSwap: Shiba Inu offers its own decentralized exchange, allowing users to trade SHIB and other tokens.
4. NFT Marketplace: Shiba Inu supports an NFT marketplace, allowing creators and collectors to buy and sell unique digital art.
5. Growing Ecosystem: The Shiba Inu project continues to expand, creating new possibilities for its users and investors.

Dogelon Mars (ELON)

Dogelon Mars is a token project inspired by the success and vision of Dogecoin (DOGE) and its creator, Elon Musk. To start the project, the founders created 50% of the ELON liquidity in a Uniswap pool. 

Additionally, the other half was given to Vitalik Buterin, the co-creator of Ethereum, who then distributed it to DAOs and foundations. Token holders may have purchased their asset through the decentralized exchange (DEX) or received it as part of Vitalik’s donation. Some key features of Dogelon Mars are mentioned below.

1. Low Transaction Fees: With just $0.005 per transaction, ELON offers affordable trading for users.
2. Active Online Presence: Dogelon Mars’s vibrant online community promotes its growth and widespread adoption.
3. Token Burn: Dogelon Mars burns 50% of transaction fees, reducing the supply and potentially increasing value.
4. Automatic Rewards: Holders receive 50% of transaction fees, incentivizing long-term investment in ELON tokens.
5. Community Driven: Dogelon Mars is a community-focused project, giving users a say in its future direction.

SafeMoon (SAFEMOON)

SafeMoon is a new cryptocurrency that took advantage of the recent upswing in the market, launching in March 2021 as a BEP-20 token. Its unique incentive program awards long-term holders and penalizes those who opt to exit with a 10% fee divided between existing SAFEMOON holders and burnt coins. 

It experienced significant growth shortly after its launch. The SafeMoon token is traded on the Binance Smart Chain (BSC) blockchain platform. Here are some prominent key features of SafeMoon.

1. Automatic Rewards: SafeMoon rewards holders with a 5% fee from each transaction, encouraging long-term investment.
2. Token Burn: A 5% fee from every transaction is sent to a burning wallet, reducing the total supply and increasing value.
3. Secure & Transparent: SafeMoon’s smart contract is audited, ensuring a safe and transparent platform for users.
4. Growing Community: SafeMoon has a dedicated and active online community, promoting its growth and adoption.
5. Future Plans: SafeMoon aims to expand its ecosystem with projects like a wallet, exchange, and blockchain.

The Dark Side Of Meme Coins

Investors have noticed the upsurge of interest in meme coins lately. Due to their uncertain nature and limited practical usage, investors consider meme coins as potentially risky investments. Nonetheless, their rising demand continues to generate significant discussion.

Investors must exercise caution when considering buying into the crypto market, as it is not regulated, and coins could be a bubble that can burst, resulting in losses. Making sound decisions in this domain can be challenging due to a lack of regulation, leaving investors exposed to potential scams.

Conclusion

It is important to Do Your Own Research (DYOR) before investing in any new meme coins entering the market daily, with traders seeking to generate similar gains from DOGE and SHIB. Remember that meme coins are remarkably unpredictable compared to other digital currencies. 

Engaging in cryptocurrency trading or investment carries a high potential for risk; since these coins are driven by community sentiment, their value could drop suddenly, resulting in a significant loss of capital if one can not sustain the burden.