The meme coin market experienced substantial growth, particularly in dog-themed meme coins. Among the notable representatives in this category are Dogecoin (DOGE) and Shiba Inu (SHIB). As a result, DOGE and SHIB emerged as prominent players within the meme coin landscape, witnessing a great price and market capitalization surge.
Basics
Meme coins are cryptocurrencies inspired by memes or jokes on the Internet and social media. The first meme coin created was Dogecoin. Launched in 2013 as a parody, DOGE was inspired by the popular Doge meme of a Japanese Shiba Inu dog. So what are the benefits of these coins? This blog will explore this in detail.
What Are Meme Coins?
Meme coins are meme-inspired cryptocurrencies. They tend to be highly volatile compared to major cryptocurrencies like Bitcoin (BTC) and Ether (ETH). This is likely because meme coins are heavily community-driven tokens.
Social media and online community sentiments usually influence their prices. This often brings a lot of hype but also FOMO and financial risk. While it’s true that some traders became rich with meme coins, many lost money due to market volatility.
What Makes Meme Coins Unique?
Meme coins are known for their extreme volatility. Their value can skyrocket overnight due to endorsements and fear of missing out (FOMO) within online communities. However, they can also experience sudden drops when attention shifts to the next meme coin.
Another characteristic of meme coins is their often massive or unlimited supply. For instance, Shiba Inu has a total supply of 1 quadrillion tokens, while DOGE has no maximum supply. Over 100 billion tokens are already in circulation. Since meme tokens usually lack mechanisms to reduce supply, their prices remain relatively low. Therefore, acquiring millions of meme tokens with just $1 was possible.
What Are Meme Coins Popular?
During the COVID-19 pandemic, the crypto market witnessed significant growth, possibly due to retail investors seeking protection against inflation. This surge also extended to meme coins, which experienced increased market capitalization and variety.
The origins of this trend can be traced back to the "meme stock" saga involving GameStop (GME) and AMC Entertainment (AMC) towards the end of 2020. Through online communities on Reddit, these stocks saw astronomical price increases, reaching up to 100 times their original value within a few months.
In January 2021, a Reddit group jokingly suggested replicating this phenomenon in the cryptocurrency realm by inflating the price of DOGE, aiming for a crypto equivalent of GME. This idea gained traction, bolstered by the influence of Tesla CEO Elon Musk's tweets, ultimately leading to a surge in DOGE's price. Within five days, Dogecoin skyrocketed to a new all-time high of $0.73, marking a remarkable 2,000% increase.
However, in May 2021, Elon Musk made a public remark about DOGE, which many believe triggered a subsequent price drop. Consequently, numerous traders shifted their attention to other meme coins available on the market, including SHIB, often referred to as the "Dogecoin killer." Simultaneously, retail investors were caught up in fear of missing out, eagerly jumping into meme coins with hopes of achieving overnight millionaire status, sparking another wave of meme coin rallies.
Another factor that attracts retail investors to meme coins is their low individual price, often just a few cents or even a fraction of a cent. While the actual value may not be significant due to their substantial supply, holding millions of meme coins feels different from owning a fraction of popular cryptocurrencies like ETH or BTC. With just a few dollars, traders can acquire thousands or even millions of DOGE, SHIB, or Akita Inu (AKITA) tokens.
What Are the Potential Risks of Investing in Meme Coins?
Simultaneously, retail investors were caught up in fear of missing out (FOMO), eagerly jumping into meme coins with hopes of achieving overnight millionaire status, sparking another wave of meme coin rallies.
Apart from the potential for profits, the frenzy surrounding meme coins is also fueled by community sentiment. As mentioned, meme coins draw inspiration from popular internet memes, fostering a sense of fun and often serving as "inside jokes" within specific communities.
By investing in meme coins, individuals show support for these communities. Inspired by the Reddit group SatoshiStreetBets and their endeavors with GME, meme coin traders engaged in a "David vs. Goliath" battle, challenging the mainstream cryptocurrencies. Consequently, the crypto market became flooded with community-driven meme coins.
What Are the Most Popular Meme Coins?
Two meme coins with the most significant market capitalizations are Dogecoin and Shiba Inu. As a result of DOGE and SHIB's success, many dog-themed meme coins have entered the market. Introduced in 2013 by software engineers Billy Markus and Jackson Palmer, Dogecoin (DOGE) emerged as a light-hearted cryptocurrency based on a Shiba Inu dog meme. Originally intended as a joke, DOGE gained popularity among mainstream audiences. As a fork of Litecoin (LTC), DOGE operates on a Proof of Work (POW) mechanism, similar to LTC, and has an unlimited supply.
Shiba Inu (SHIB) is DOGE's rival and has earned the moniker "Dogecoin killer." Created by an anonymous developer known as Ryoshi in August 2020, SHIB derives its name from a Japanese dog breed. Unlike DOGE, SHIB has a capped supply of 1 quadrillion tokens, with 50% of the tokens burned and donated to charity. In addition, SHIB boasts an ecosystem encompassing a decentralized exchange, an NFT art incubator, NFTs, and an NFT game.
Following closely behind the doggy duo, Dogelon Mars (ELON) captures significant attention. They are named in honor of Elon Musk, the CEO of Tesla, and his passion for SpaceX, ELON functions as a Dogecoin fork with a circulating supply of 557 trillion tokens. Since its launch in April 2021, ELON has witnessed a remarkable surge of over 3,780% by November 2021.
Among the other meme coins featuring Japanese dog breeds as mascots, Akita Inu (AKITA), Kishu Inu (KISHU), and Floki Inu (FLOKI) stand out.
AKITA, heavily influenced by DOGE, debuted on Uniswap as an ERC-20 token. The tokenomics of AKITA mirror SHIB, with 50% of the total supply locked on Uniswap and the remaining portion sent to Ethereum co-founder Vitalik Buterin. However, AKITA has a significantly smaller total supply of 100 trillion tokens, representing 1/10th of SHIB's supply. Gaining traction alongside its canine counterparts, AKITA has been deemed by some community members as another potential "Dogecoin killer."
Samoyedcoin (SAMO) is another meme coin project on the Solana blockchain. During its launch, 13% of the SAMO supply was airdropped to community members. The roadmap for SAMO includes burning events, airdrop tools, establishing a decentralized exchange (DEX), and creating NFTs. SAMO recently witnessed a surge in popularity, experiencing a growth of over 4,300% within a month after launch.
Kishu Inu, another meme coin embracing the canine theme, has experienced remarkable growth since its launch in April 2021. KISHU incorporates participation rewards for active users, non-fungible tokens (NFTs), and a decentralized exchange called Kishu Swap. Within a month of its introduction, KISHU amassed over 100,000 holders and reached a market capitalization of 2 billion dollars.
SafeMoon (SAFEMOON) emerged as a new contender by capitalizing on the meme coin rally. Launched as a BEP-20 token on the BNB Smart Chain (BSC) in March 2021, SAFEMOON incentivizes long-term holders by imposing a 10% exit fee on token sales. Half of the fees collected are distributed to existing SAFEMOON holders, while the other half is burned. SAFEMOON gained significant attention in April for its substantial price surge.
Conclusion
Given the influx of new meme coins flooding the market regularly, traders seeking to emulate the successes of DOGE and SHIB must exercise caution and conduct thorough research before engaging with any meme coins. In addition, remembering that meme coins exhibit heightened volatility compared to more established digital currencies is essential.
Engaging in cryptocurrency trading or investment carries significant risks. Meme coins rely heavily on community involvement and can experience abrupt crashes, underscoring the importance of investing only funds one can afford to lose.