Cryptocurrency Explained: What Is Meme Coin In Crypto?
22 March 2022
There are many other cryptocurrencies out there, and Bitcoin isn’t the only one. Several versions of Dogecoin, such as Shiba Inu and Dogelon Mars, have sprung up in recent years, thanks in part to the popularity of meme-based currencies like Dogecoin. These include Samoyedcoin and Doge Dash, as well.
These coins, which are typically made up of pranks, have the potential to become popular. The market valuation of Dogecoin, for example, shot up dramatically in May 2021 before settling down to where it is now, according to CoinMarketCap. What do you think about meme coins? bePAY will explain with detailed information in this insightful post.
What Is Meme Coin In Crypto?
A meme coin (memecoin) is a cryptocurrency that was inspired by an Internet meme or has some other amusing feature. It may be used broadly to criticize the cryptocurrency market as a whole, including those centered on specific memes, such as “dog coins,” celebrities such as Coinye, and pump-and-dump scams like BitConnect.
The word is often disparaging, referring to the value or performance of certain cryptocurrencies in comparison to more established ones. On the other hand, supporters point out that several meme currencies have amassed significant market capitalizations.
It is not uncommon for meme currencies to see extreme price swings. They are mostly driven by the community and may become famous overnight owing to the endorsements of the online community and the fear of missing out (FOMO). If the market shifts its focus to another meme currency, the price of these tokens might fall abruptly.
Meme currencies typically have a large or infinite supply, which is another trait to look for in a meme currency. There is no maximum supply for DOGE, and over 100 billion tokens are currently in circulation. By comparison, Shiba Inu (SHIB) has a total quantity of 1 quadrillion tokens, whereas DOGE has no such limit.
Because meme tokens don’t have a coin-burning mechanism, their low pricing may be attributed to their massive supply. Millions of meme tokens may be purchased for only USD 1.
The Evolution Of Meme Coins
Before we go into the specific characteristics of a genuine meme currency, let us first make that distinction “meme coin.” Created in 2013, meme coins are often cryptocurrency initiatives themed on popular memes and animals. For example, Dogecoin (DOGE), the world’s first meme coin, was inspired by the Shiba Inu (a Japanese hunting dog breed) meme craze (an image of a happy Shiba Inu dog) that rocked the internet in the early 2010s.
Notably, Dogecoin’s popularity spawned a slew of additional dog-themed currencies, along with the self-proclaimed doge killer (Shiba Inu coin, or SHIB), which temporarily overtook the former in terms of market valuation early this year.
In contrast to other cryptocurrencies, meme coins are often not evaluated based on the usefulness they bring to consumers. Rather than that, more emphasis is put on the coin’s potential to generate a high level of community interaction. In summary, virality is the most critical metric for determining the success of meme currencies. With something in mind, how can you tell the difference between genuine and fraudulent meme coins?
How Do You Invest In Meme Coins?
There are already hundreds of meme coins competing for cryptocurrency investors’ attention. One hundred of them have the name “Inu.” While some may seem authentic, the vast majority of meme-inspired cryptocurrencies are essentially scam schemes looking to cash in on the burgeoning meme coin craze. You may mitigate the hazards associated with the project by ensuring that it is not prone to rug pull scams.
For those unfamiliar with the phrase, a rug pull happens when development teams abruptly sell all their coins after a price increase. Investors are the ones who get the rug pulled out from under them, leaving them penniless when the coin’s price falls to zero. Squid token and Snow dog are two recent instances of meme currencies that allegedly resulted in a rug pull.
Investing meme coins
To prevent falling victim to this sort of fraud, the following procedures should be taken:
Avoid Cryptocurrencies In Which The Majority Of The Tokens Are Held By Developers
As previously said, meme currencies that are concentrated in the hands of a few investors or the development team are high-risk endeavors. As such, guarantee that no one entity owns more than 5% of the total supply of the token.
Validate The Liquidity Pools’ Legitimacy
Meme coins are often dispersed by automated market makers (AMM). This implies that when a token is launched for the first time, the development team generates a new liquidity pool for investors to utilize to acquire the token. Liquidity pools are smart contracts that enable investors to trade cryptocurrencies without requiring the use of a third-party order book or counterparty.
For instance, an investor would most likely trade ETH on liquidity pools for a new Ethereum-based currency. The development team must ensure liquidity to do this. This is accomplished by investing both ETH and a certain quantity of meme currency in a liquidity pool. Inventors would use this liquidity to get the freshly issued currency.
Meme coins legit or scam?
The issue is that if the right safety mechanism is not implemented, the liquidity provider, in this instance the development team, may withdraw money. When such occurrences occur, investors are left with no way to exchange a currency whose value is rapidly dwindling. As a result, it is critical that you only participate in pools that are owned by burn addresses, which indicate that the liquidity has been permanently frozen.
>> Learn more: What is AMM crypto? Its vital role in the cryptocurrency world
Check Audit Status And Transparency
When it comes to digital assets, developers must advocate for an open and transparent environment. More significantly, the cryptocurrency’s underlying code should be reviewed by a respected third-party software auditing company, such as Certik or Hacken, to guarantee that the development team did not include back doors that may be used to launch an exit scam. Completed audits are often posted on social media and are readily discoverable via a simple internet search.
The grave dangers associated with investing in meme coins. While Dogecoin may seem to be a harmless initiative, investing in it or other joke currencies bears some risk.
Certain meme currencies have a significant market capitalization, while in others, the price per coin skyrockets thousands of percent within a few days, making some investors wealthy and effectively communicating to others that they, too, may be able to do so.
Additionally, these meme-based cryptocurrencies are seldom genuine, meaningful initiatives, since they are frequently generated by copying and pasting code from another sort of cryptocurrency. Additionally, they often lack sizable development communities, which help maintain them safe and technologically current. Dogecoin development, for example, has come close to a halt at several points over its existence.
Check audit status and transparency
Additionally, many meme currencies are held by tiny groups of individuals that control significant market capitalizations and have very shallow liquidity pools. As a result, their prices are notoriously unpredictable, heavily affected by social media attitudes and “FOMO” (fear of missing out).
As a result, meme currencies are especially vulnerable to pump-and-dump operations, in which a person or group of significant coin holders hypes up the currency, enticing others to purchase and inflating the price before liquidating their holdings.
While one single person or group will ultimately profit handsomely, such a rapid sell might tip the market into the red, leaving everyone else “carrying the bag,” as they say in crypto. Uninformed investors who believed the value of their coins would increase find up with tokens worth far less than what they spent.
Purchasing Meme Coins
While meme coin marketplaces are notorious for their volatility, some investors continue to invest in meme coins. Investors may acquire meme coins on many of the same platforms they use to purchase more serious cryptocurrencies like Bitcoin and Ethereum, whether they’re interested in profiting from market manipulation or just want to participate in a goofy, crypto-insider market.
Should I buy meme coins?
But, where can I buy meme coins? Dogecoin and other popular meme coins may be purchased, sold, and traded on leading cryptocurrency exchanges such as Coinbase, Gemini, and Binance. Traditional stock investing and trading services such as Robinhood, WeBull, and SoFi now enable users to trade in cryptocurrencies such as Dogecoin.
Top Meme Coins List
Below is the top meme coins list on CoinMarketCap by market capitalization.
Software programmers Billy Markus and Jackson Palmer founded Dogecoin (DOGE) in 2013. As a parody cryptocurrency, it was inspired by a Shiba Inu meme. Tokens issued by DOGE are equivalent to Litecoin (LTC) and have no supply limit.
>> You may also like: How to mine Dogecoin? The completely step by step guide for newbies
Inu Shiba (SHIB)
A DOGE competitor, Shiba Inus (SHIB) is dubbed the “Dogecoin killer”. SHIB is a Japanese dog breed name. Developed by Ryoshi, an anonymous developer. That SHIB has a restricted quantity of 1 quadrillion tokens, 50% of which have been burned and given to charity is the major distinction between the two currencies. Also included in SHIB’s ecosystem are a decentralized exchange, NFT art incubator, and NFT gaming.
Dogelon Mars (ELON)
In terms of popularity, Dogelon Mars (ELON) is just behind the dogs. ELON is named after Tesla CEO Elon Musk and his love for SpaceX, as implied by the name. 557 trillion ELON tokens are in circulation. Since its inception in April 2021, ELON has risen 3,780%.
Litecoin fork Monacoin It’s built on the same online meme as Dogecoin. Monacoin is an ASCII cat that was popular in Japan in the late 1990s. The Monacoin platform’s native cryptocurrency is called MONA.
Monacoin has a 105,120,000 coin supply and processes new blocks every 1.5 minutes, compared to Litecoin’s 2.5 and Bitcoin’s 10. Having rapid block speeds allows for reduced transaction costs and effective on-ramping between crypto-assets and the Japanese Yen.
Solana-based Samoyedcoin (SAMO) Initially, 13% of SAMO was airdropped to community members. In addition to burning events, SAMO plans to create NFTs and a decentralized exchange. Recently, the price of Samoyedcoin skyrocketed, making it a popular SAMO surged 4,300% in a month. From $0.005 to almost $0.22 in 30 days in October of 2021.
FAQs About Meme Coins
Where Can I Buy Meme Coins?
We suggest using a crypto exchange to discover meme currencies. As a result, these platforms allow you to trade cryptocurrency from the comfort of your own home. You can take as references these exchanges: Coinbase, Binance, Kucoin, Crypto.com, etc.
Is Meme Coins A Good Investment?
Although investment in meme coins is conceivable, this sort of investment is very dangerous and more akin to gambling than actual investing. If you are fortunate enough to purchase and sell at exactly the correct times, you may profit. However, it is more possible that you will lose all or the majority of the money you invest. Is meme coins a good investment? Is a hard-to-answer question.
Is meme coins a good investment?
A more prudent method is to concentrate on assets that are expected to do well over time. Because cryptocurrency, in general, remains extremely speculative, no one can predict how it will perform over time. However, if you do decide to invest in cryptocurrency, make sure you choose currencies with solid foundations that are more likely to withstand the test of time.
How Are Meme Coins Different From Standard Cryptos?
It’s vital to remember that although meme coins are fundamentally still cryptocurrencies, they’re not the same as the normal ones. Bitcoin, Litecoin, Ethereum, and other prominent cryptocurrencies were designed to offer an alternative payment system over the Internet.
Meanwhile, meme coins aim to make fast cash (and some of them well, until the value decreases and everyone loses interest). They’re created to be traded, utilized on the market, and can serve no real-world utility.
Invest meme coins may contain many risks for you however it also brings potential rewards if you choose the correct time to buy and sell them. Many people consider 1000X to be a pipe dream since it entails a significant amount of risk. You must thoroughly research the project, starting with its team members and on through its tokenomics. You must also inquire as to where their money sources are located.
Finally, pay close attention to where they are mentioned. Some exchanges are safer and more reputable than others, while others are less safe and less reputable. Never rely on someone else’s findings while doing research of your own. Exploring other cryptocurrency topics, click here.