A sudden spike in Dogecoin’s price shocked the cryptocurrency world in the middle of 2021. This sudden spike was triggered by Twitter posts from celebrities such as Elon Musk and Snoop Dogg about Dogecoin.
Coindesk reports that meme coin prices surged by 55% after the posts. No wonder 2021 must have been one of the best years for meme coins ever.
However, many people may still be unfamiliar with a meme coin, so let us discuss what a meme coin is and how it gained so much traction throughout 2021. You will find the answers to your questions in the following paragraphs.
Meme Coins: What are they?
A meme coin is a cryptocurrency based on Internet or social media jokes and memes. The most famous meme coin is Dogecoin. It displayed an image of a Shiba Inu on its surface and was initially released during the first quarter of 2013.
Dogecoin was initially going to be a meme. However, it became one of the most popular cryptocurrencies as time progressed.
In contrast, anybody can now create a new currency with the evolving technology and adoption of cryptocurrency. Many developers have released tokens or coins based on Dogecoin’s success, such as the Meowcoin token or the Wolfcoin coin.
Dogecoin has many spinoffs, but only one of them has yet to achieve the same popularity as Dogecoin. In fact, according to CoinMarketCap’s data, there will be more than 5,000 tokens and meme coins in February 2022. As new coins and tokens are later announced, this number can still increase.
The internet considers meme coins a joke, but some investors believe that they deserve to be treated as cryptocurrencies because of their success. Some investors have even made huge profits by investing in meme coins
Meme Coins: Why Are They So Popular?
Jackson Palmer created Dogecoin in 2013 as a humorous mockery of the cryptocurrency trend. Unexpectedly, this ‘sarcastic’ coin became a sensation on a global scale.
With such a market cap, 2021 was the golden year for cryptocurrency and meme coins in general, both financially and in terms of popularity. However, if you wonder what makes meme coins so popular, you might want to check out this study.
Many new coins and tokens have entered the cryptocurrency market since the success of Dogecoin and the growing demand for cryptocurrencies. They have been popularized by social media posts from influencers and celebrities.
There are still many people who believe that the rise of meme coin popularity was caused by the growing popularity of Elon Musk, who likes DOGE. The more public figures talk about these coins on social media, the more the public is interested in them. Despite this, plenty of people still believes that the rise of meme coin popularity was because of Mr. Musk.
Various types of meme coins
In the cryptocurrency market, meme coins are still on the rise. Here are some of the most popular tokens and coins inspired by memes.
A meme coin created in 2013 after the internet’s cute Shiba Inu meme became highly successful, Dogecoin has since become the world’s most popular meme coin. Dogecoin was initially priced at US$010 for one DOGE, and people like Elon Musk have supported it.
The Safemoon token was first launched in March 2021. This token has always had full support from its community. Its most unique feature is that Safemoon has added many features to its protocols. Unlike other meme coins, this token has been upgraded a few times.
Shiba Inu (SHIB)
In April 2021, Shiba Inu embarked on a journey toward a spontaneous decentralization built by the community. Shiba Inu has often been compared to DOGE, but the two are two very different tokens created by different communities.
A comparison of meme coins and cryptocurrencies
One main difference between meme coins like Dogecoin and Shiba Inu and mainstream cryptocurrencies like Bitcoin and Ethereum makes them stand out from mainstream cryptocurrencies.
Cryptocurrency such as Bitcoin, Ethereum, and Litecoin was created and developed to address the real-world fiat currency issues. These cryptocurrencies are also widely accepted by global companies around the globe.
However, meme coins do not serve the same function as cryptocurrencies. In most cases, meme coins are designed for investors to trade and earn, while some are even made for entertainment purposes.
In some cases, the coins and tokens become popular because celebrities and public figures promote them on their social media accounts. Then, retail investors follow similar paths by promoting the coins online to raise their prices.
The very reasons behind this highly high volatility of these coins were already mentioned above. Although these coins have grown exponentially, their fundamentals are volatile.
The price of these tokens has increased dramatically over the past decade. Many investors are choosing to sell assets to maximize their profits because, despite their popularity, meme coins have no real-world use cases yet. Since they will not have any real-world application in the future, it is unlikely that they will still exist. However, once new cryptocurrencies or stocks replace tokens, these tokens and meme coins are likely to lose their value.
Meme coins are not just for laughter anymore. Meme coins, indeed, have a high valuation and popularity in the cryptocurrency market. For instance, when many public figures promoted Dogecoin, many investors started experiencing FOMO for it.
Nevertheless, you must carefully consider it before investing in any cryptocurrency. One good practice is not to invest all of your funds in tokens or meme coins. Their value might change dramatically over time, and you might end up losing money