Meme cryptocurrencies are collectively known as “meme coins” or “meme tokens.” The word meme is derived from the Ancient Greek word “mīmēma”, which means “imitated thing”. Especially in today’s society, the meme as the basic unit of community culture plays the role of an intermediary between individuals and is also an important element of community behaviour. It is this influence of collective sentiment from buyers that helps drive the market narrative of such meme coins. But why are these meme coins so attractive?
Meme coins are inseparable from hype
There are many reasons why meme coins are popular, but there are two main ones:
- One factor is the emotional agitation of community culture and the serendipitous influence of narrative topics greatly boosting the momentum of meme coins. At the end of 2020, two legendary meme stocks, Gamestop (GME) and AMC Entertainment (AMC), were shorted by institutional investors. A month later, retail investors on the well-known social networking site Reddit jokingly proposed a plan to fight back and create a cryptocurrency equivalent to the market value of GME’s stock at the time (making Dogecoin more than 100 times more expensive). Unexpectedly, this joke came true. Tesla CEO Elon Musk later tweeted on social media, causing the price of Dogecoin to rise rapidly. Dogecoin’s price rose by more than 2000% in five days, hitting a record high of $0.73 per piece.
- Another factor that makes meme coins popular is their low cost. Because most of these meme coins cost only a few cents or less, traders on MEXC Exchange can hold millions of meme coins with just a few dollars. This creates a strong psychological effect that leads traders to believe that such meme coins are undervalued and cheap, which is very different from holding a blue-chip coin like ETH or BTC.
The above two factors combined to create a strong demand for meme coins and an inevitable equally strong supply of meme coins.
History of meme coins
In 2021, two dog-related meme cryptocurrencies, Dogecoin (DOGE) and Shiba Inu (SHIB) went parabolic thanks to the hype on social media.
Dogecoin (DOGE) was the first meme coin to be created. Launched in 2013 by software engineers Billy Markus and Jackson Palmer as a joke, it was meant to make fun of the wild speculation in cryptocurrencies at that time. DOGE was inspired by the Doge meme, which was a picture of a Japanese Shiba Inu that went viral. Today, the market value has exceeded 19 billion US dollars and has attracted much attention from investors, becoming one of the most popular cryptocurrency projects with great mainstream recognition after Bitcoin and Ethereum.
Shiba Inu Coin (SHIB) is a dog-themed meme digital currency named after the Japanese Shiba Inu. Shiba coin was created on the Ethereum blockchain in August 2020 by a mysterious developer named “Ryoshi”. The total supply of SHIB is 1,000 trillion. After the successful launch, Ryoshi locked 50% of the total supply in Uniswap, laying the foundation for the liquidity of Shiba Inu. Ryoshi transferred another 500 trillion Shiba Inu coins to Ethereum co-creator Vitalik Buterin, who burned 90% of them and donated the remaining 10% to the Indian Covid-19 Relief Fund.
Shiba Inu Coin attempts to justify the value of meme coin
For a long time, investors’ impression of meme coins was not very good with much fear, uncertainty and doubt about their actual value. The emergence of the Shiba Inu coin seeks to reverse this impression.
Shiba Inu’s ecosystem is named after canine terminology. According to the “WoofPaper ” (white paper), Shiba Coin is a community-driven project focused on creating a decentralized cryptocurrency. Shiba Inucoin was created in 2020 by an anonymous developer named Ryoshi to replace Dogecoin (DOGE) in the Ethereum blockchain. Therefore, Shiba Inu Coin is an ERC-20 token with broad application prospects and is constantly enriched.
For example, the Shiba coin has a decentralized trading platform called “ShibaSwap”. In addition, its roadmap also includes an NFT art incubator called “Shiba Artist Incubator”, and an NFT game – Shiboshi Game.
2021 was the year of the canine-themed cryptocurrency boom, with SHIB market value rising sharply. In November 2021, SHIB became one of the top cryptocurrencies by market cap, ranking 11th in CoinMarketCap. The reason why SHIB is qualified to be a “Dogecoin Killer” is that SHIB has not fallen behind in terms of the popularity of social media. This may be due to the large community base with more than 2,600,000 followers on Twitter and 87,000 members on Telegram. With the ever-increasing attention to the project, the size of the SHIB community continues to grow.
The Tesla founder seems to have a soft spot for meme coins. Whether it is Dogecoin or Shiba Inu, the presence of Elon Musk is strongly felt.
How to trade Shiba Inu, Doge and other meme coins
Users can log in to cryptocurrency trading platforms such as MEXC Exchange and select different trading pairs such as SHIB/USDT or SHIB/DOGE to buy and sell meme coins. With over 1,000 tokens available for trading, MEXC Global offers one of the best platforms for investors to buy and sell tokens easily.
Risks of current meme coins
The current meme coins’ high valuation boom is mostly related to social media and investors’ emotions, and the results of the hype are temporary. When traders switch to new meme coins, current meme coins prices may plunge unexpectedly.
Another characteristic of meme coins is that they tend to have a huge unlimited supply. For example, Shiba Inu (SHIB) has a total supply of 1000 trillion tokens, and while DOGE has no maximum supply, there are already over 100 billion tokens in the market. Since meme tokens generally do not have a coin destruction mechanism, the huge supply leads to their relatively cheap prices and potential dumping from investors who have accumulated large amounts early.
It has to be admitted that a considerable number of investors have made a fortune from meme coins, but the hidden financial risks are even greater. It is not uncommon for many investors who enter meme coins to suffer heavy losses due to market sentiment fluctuations.
The life cycle of meme coins is often short, because they may have no ecological and application support. This makes meme coins appear to have false valuations. The impact of policies such as the U.S. dollar quantitative easing can also affect meme coins’ value. In general, meme coins are unstable and it is important for beginners to be extremely vigilant about the potential trading risks of such meme coins.
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