For The Lulz: What is a Memecoin?

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Last updated Apr 09, 2024 | 09:45 AM UTC

The advent of cryptocurrencies and blockchain technology meant that anyone with a little know-how could create their own decentralized digital assets. 

Upon discovering how, individuals and online communities flocked to create seemingly pointless crypto tokens that are inspired by internet memes (usually).

These coins perfectly capture the best and worst side of crypto in many ways.

What does 'memecoin' mean?

As the name suggests, they are tokens based on popular memes such as Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE).

Memecoins typically lack the usual roadmaps, whitepapers, and ecosystem developments. As such, they populate a Wild West corner in the crypto market with highly speculative and risky assets. Traders that find themselves drawn to memecoins humorously label themselves as 'Degens', AKA degenerates.

The term also refers to other coins that have funny or obscure names like the appropriately named Memecoin (MEME) and HarryPotterObamaSonic10Inu (BITCOIN), that appear to exist simply to highlight the brilliance and absurdity of decentralization. 

This is not to say that memecoins are completely useless or fraudulent. In the spirit of decentralization and community-driven decision-making, they have achieved some impressive feats of innovation, philanthropy, and other initiatives.

What is memeseason?

'Memeseason' refers to a period in the crypto market when memecoins are surging in price and popularity. 

Since a vast majority of memecoins have no real future plans, price increases are rarely attributed to a major update or product release. Instead, they are usually the result of social media buzz. This can be the result of a celebrity tweet such as Elon Musk’s famous endorsement of Dogecoin in 2021, or something as insignificant as the Weed Smoker’s holiday date of 4/20. 

Either way, suddenly highly speculative cryptocurrencies are the focus of mainstream attention, and this draws in a lot of money very quickly. But beware, these moments are often just that, and memecoin season has no predefined or predictable duration.

Key memecoin moments:

  • 2013: Created as a parody of Bitcoin (BTC), Dogecoin went live on 6 December 2013, and became one of the first to reach mainstream success and solidify memecoins in internet culture. The symbol and branding of the token features the beloved Shiba Inu dog meme. Despite starting as a joke, DOGE has accumulated a market cap of over $11billion as of January 2024.
  • 2014: Altcoin and memecoin experimentation reached new heights. Hundreds of strange coins landed on the marketplace. Notably, this was Dogecoin’s best-performing year and Bitcoin’s worst. The Dogecoin community would sponsor a Jamaican bobsled team to send them to the Winter Olympics as well as purchase a car for a Nascar driver to race at the Talladega Superspeedway. The Dogecoin Foundation is established to formalize the community’s charity initiatives.
  • 2017: Initial Coin Offering (ICO) mania reaches its peak, flooding the markets with hundreds of new cryptocurrencies, many of which were memecoins. Following this unprecedented bull run, Dogecoin’s market cap surpassed $1bn at the start of December.
  • 2018: The 'Crypto Winter' begins and the markets begin to sharply decline. By May, DOGE had lost around 50% of its $1bn market cap. This number halved again when, on 31 December 2018, DOGE held a market cap of $274m.
  • 2020: Shiba Inu was launched in August 2020. With the vision of being a truly decentralized and community-driven token, ultimately birthing the Shib Army. Later in December, Elon Musk tweeted “One word: Doge”, skyrocketing the price of DOGE. By 28 December, DOGE reached an all-time high market cap of $1.2bn.
  • 2021: Momentum carried over from Dogecoin’s rise in December 2020. The infamous memecoin season of 2021 witnessed the birth of many new tokens including Dogelon Mars (ELON) and the controversial SafeMoon (SAFEMOON) added absurd gains to the overall memecoin market. Notably, Dogecoin’s market cap was launched to over $10bn on 1 February and over $60bn later that year.
  • 2023: Internet classics such as Wojak (WOJAK) and Pepe (PEPE) become the newest major memecoins to launch and gain major success. Keeping the spirit of crypto alive, the PEPE website states: PEPE is a “meme coin with no intrinsic value or expectation of financial return”.

Are memecoins a scam?

Not entirely, but with memecoins you do need to take extra care when deciding where to place your money. Memecoins occupy a special place in the crypto market, as they exist almost entirely without purpose, and therefore could be abandoned as quickly as they were created.

No matter how well-presented or celebrity-endorsed a crypto project appears to be, there is always a risk of it being a scam. Mainstream projects that were backed by major investors, bankers, business tycoons, and celebrities such as Bitconnect, FTX, and TITAN are reminders that scams can catch the most educated traders.

As noted in this article, there are plenty of fully decentralized memecoin projects that (for now) appear to be free from malicious manipulation.

What is the future of memecoins?

From humble beginnings as parodies, memecoins have become a beloved part of the cryptocurrency markets. Despite the scams, some memecoins aim to set better standards. In time, tokens such as DOGE could be considered legitimate assets and be listed on major traditional stock exchanges just as Bitcoin and Ethereum are. 

Most of all, the best memecoins are shining examples of Web3 in action. Where decentralization meets community, and occasionally way too much money.

Written by

Eddie is a seasoned crypto writer and Bitcoin maximalist.