The Phenomenon of User-Generated Brands & Memecoins
Memes have always been a part of the crypto world. Certain social media memes have now developed into full-fledged, major cryptocurrencies in their own right. While some regard meme coins as childish fads, others see them as legitimate investment opportunities. So, who’s right?
What are meme coins, anyway?
Meme coins are cryptocurrencies that are based on internet memes. Dogecoin (DOGE) is seen by many as the original meme coin. Dogecoin was created in 2013 as a joke response to wild speculation in the cryptocurrency market. However, thanks to its low transaction fees and a lower listing price than other coins, DOGE became an attractive first foray into the cryptocurrency world for new investors.
Recent trends for retail investors
A recent tweet by Elon Musk in December sent Dogecoin’s price soaring by more than 20% in one day. This surge in price is symptomatic of a broader trend: niche financial products like a joke cryptocurrency are hyped up on social media to the point that thousands of posters are churning out and engaging with free content about it, eventually exchanging that hype for tangible cash.
Musk’s promotion of DOGE does not get all of the credit for the unprecedented growth of meme coin markets. The recent rise in popularity of meme coins can be traced back to a group of retail traders who banded together on Reddit and decided to drive the stock price of DOGE higher.
Besides Dogecoin, here are some other notable examples of memecoins and their hype history:
Shiba Inu Token (SHIB) — market capitalization $3.1 billion.
In order to compete with DOGE, the Shiba Inu (SHIB) token was created and is self-described to as the “Dogecoin killer.”
When the hashtag #Shib went viral in China, it quickly became a trending topic on Weibo, the country’s microblogging platform. Within a day, approximately 55 million people read and engaged in 3,465 posts on the topic.
Safemoon (SAFEMOON) — market capitalization $1.8 billion.
SafeMoon is a new DeFi token on the Binance Smart Chain.
The project is driven by the community and focuses on static rewards and liquidity staking. SafeMoon’s protocol includes a one-of-a-kind feature that discourages the sale of its native meme token, SAFEMOON.
Harnessing meme coins for good
With 105 meme coins currently listed on CoinMarketCap, the market capitalization of the entire group exceeds $32 billion, with daily trade volumes reaching more than $3 billion in the most active days. With such financial power, can these coins be harnessed for good? Some meme coins are known for doing so, quite directly.
For example, DogeMoon’s commitment to charity is unmistakable; helping charitable courses is a key focus of its founders, having previously assisted UEFA Children’s Charities and Able Child Africa. In collaboration with these charitable organizations, the project has promised to increase the size of donations as it continues to grow in size.
Dogecoin’s creators set out to create a witty cryptocurrency free of the squabbles that surrounded the previous generation of coins. The Dogecoin team has frequently fundraised for charitable causes, including for the 2014 Winter Olympics and for NASCAR in 2014 and 2021.
Risks involved in meme coin investments
Meme coins can provide significant returns to investors, particularly in a speculative market. However, because of the potential for massive price volatility, investors are also exposed to significant downside risks.
Not everyone is amused by the likes of Dogecoin. Meme tokens, NFTs, and fan tokens, were all ordered to be delisted by Thailand’s regulatory body in June 2021. Matt Wallace was one of the first to tell the story and the implications in this video:
THEY ARE BANNING DOGECOIN NOW ⚠️
There’s also the risk of “rug pulls,” which occur when influential people hold and promote a cryptocurrency only to sell their holdings as soon as the market price reaches a certain point. As a result, the market plummets, and they are able to escape with their loot.
Are memecoins a dangerous fad or a vessel of good?
Some may argue that meme coins are worthless, while others may argue that the coins increase adoption and make investing more entertaining and accessible to a broader range of people.
Unless you’re particularly pro or anti meme coins, there’s rarely a simple answer to this. Regardless of their comical origins, there is no denying that this trend has been successful in the market. It’s not so much about what has happened or is happening now, but more so, about what could happen if utilized effectively.
Learn more about trading meme coins at Tokenplace!
Stay tuned for more info and follow us at:
- Website: tokenplace.com
- White Paper: tokenplace.com/white-paper
- Twitter: @TokenplaceTOK
- Telegram Community: @tokenplace
- Telegram Announcement channel: @TokenplaceAnnouncement
- FAQs: tokenplace.com/faq
