Meme coins, often created as a joke or mock other coins or memes, derive their value from novelty rather than technological or practical use. Unlike utility tokens, which have specific functions like staking or making purchases, meme coins are mainly traded on exchanges and are highly volatile compared to major cryptocurrencies like bitcoin and ether.
The value of meme coins is heavily influenced by social media and online communities, resulting in hype, fear of missing out, and financial risk. While some traders have profited from meme coins, others have lost money due to market fluctuations.
Meme coins are traded similarly to other cryptocurrencies and are popular among retail investors due to their humorous nature, low per-unit value, and large or unlimited supply. For example, Shiba Inu has 1 quadrillion tokens, and Dogecoin has over 100 billion tokens in circulation without a maximum supply. The lack of a coin-burning mechanism and the vast supply contribute to their low prices.
Some businesses, like Tesla, Nordstrom, and GameStop, have started accepting meme coins as payment. Dogecoin, the first meme coin, was created in 2013 by Billy Markus to develop a more accessible and fun alternative to Bitcoin. The coin gained popularity and value after the “meme stock” saga involving GameStop and AMC Entertainment in late 2020 and early 2021. Elon Musk’s tweets also contributed to Dogecoin’s price surge.
As the meme coin market expands, be cautious of potential scams, like the Squid Game token, which experienced an 86,000% increase before a sudden price collapse left holders unable to sell. Always do your own research before investing in meme coins.