Influencers have always featured prominently in cryptocurrency culture, but never more so than recently. When Elon Musk threw his weight behind the original meme cryptocurrency, Dogecoin, it sparked a wave of imitators, promoted by influencers on social media platforms such as TikTok.
Some call investing in meme coins insanity, others think of it as a cheap bet with the potential to realize 1000% profits. Whoever’s right, interest in meme coins or tokens has surged in recent months. Here's the lowdown.
What are meme coins and tokens?
Typically, a meme coin has no inherent value, and often no utility. As the name implies, these cryptocurrencies are often—but not exclusively—themed around Internet memes: jokes and images shared on social media.
The original meme coin, Dogecoin (DOGE), is based on the long-running Doge meme, which originated with a picture of a Shibu Inu dog. It runs on its own blockchain, and as such is distinguishable from meme tokens, which run atop an existing blockchain.
Two of the most popular meme tokens are Doge-imitator Shibu Inu (SHIB), an ERC-20 token built atop Ethereum, and SafeMoon (SAFEMOON), which runs on Binance Smart Chain. But there are dozens more, including PepeCoin (PEPE), which made the news in April when a crypto investor turned $250 into $1.02 million worth of PEPE.
Did you know?
There are over 80 meme coins and tokens listed on price aggregator CoinMarketCap. Many are Dogecoin imitators, and many others reference Elon Musk—either positively or negatively.
How have meme tokens become so popular?
Since Dogecoin was launched in 2013, it’s become much easier to create a cryptocurrency, and meme tokens can be launched rapidly on the back of events, or become popular due to their associations with influencers.
For example, in May 2021, Facebook CEO, Mark Zuckerberg posted a picture of his pet goats captioned “My Goats: Max and Bitcoin.” Soon afterward, a meme token called Aqua Goat saw its value increase by around 300% within hours of the social media post.
How do you buy meme coins and tokens?
As the leading meme coin, Dogecoin is available on a wide variety of crypto exchanges including Coinbase, Binance and Kraken.
Meme tokens tend to be available on a more limited range of exchanges. Shiba Inu, for example, can be traded at Binance, Crypto.com and KuCoin, as well as decentralized exchanges (DEXs) such as Uniswap.
Often, when they are first launched, meme tokens are given away.
How are meme coins and tokens different from other cryptocurrencies?
All cryptocurrencies rely on a strong community and influencer support. But meme tokens have gained popularity due to their disproportionate association with influencers, especially Elon Musk. The Tesla chief needs only to tweet about a topic, such as Baby Shark—based on a popular children’s song—to send the price of related meme tokens soaring.
Meanwhile, meme token developers use publicity stunts to drive up the price. The team behind Shibu Inu coin decided to give half of all SHIB tokens to Ethereum co-founder Vitalik Buterin. But he foiled their plan when he dumped the tokens (giving the proceeds to charity), asking that projects not give him coins without his consent and stating that "I don't want to be a locus of power".
What vb said pic.twitter.com/RPohnWE8Em
— VB Goat (@icebucket95) May 16, 2021
Meme tokens comprised around 1.69% of the crypto market cap in April 2023, and the sector is worth over $20 billion, according to one aggregator. But wild price swings are not unusual.
Typically, meme cryptos have a huge circulating supply—often in the quadrillions.
What are the dangers of meme tokens?
Not everyone sees the funny side to Dogecoin and its ilk. Thailand’s regulator ordered exchanges to delist meme tokens in June 2021, alongside NFTs and fan tokens.
There's also the ever-present danger of "rug pulls"—when developers hold a bunch of coins, get people to buy in, and then dump their coins. That causes the market to plummet, while they escape with their booty. Even experienced investor Mark Cuban has been a victim.
One way to mitigate the risk of rug pulls is to only buy coins and tokens that are vetted, audited, or have some sort of reliable third-party oversight.
Relying on crypto influencers to shill the next coin seems a fickle enterprise. But the ultimate success of individual meme coins and tokens is dependent on the strength of their communities, and influencer culture is not going away.
Inevitably, barring regulatory crackdowns (such as Thailand's), the crop of meme tokens looks set to expand, as the tools to make them become ever more accessible. Meme.com, for instance, is a marketplace where users can compare meme cryptocurrencies and mint their own “memetic tokens”, whose worth will be based on the perceived value of trends or memes they represent.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.