Memecoins: What Are They?

Is investing in Memecoins a wise decision?

Memecoins is a general name for some crypto tokens similar to other coins like Ethereum and Bitcoin.

Memecoins are designed as homages to a meme, a funny idea, or an exciting scene.

Memecoins are replicated in a token and expected to go viral and share across various crypto platforms.

Memecoins are mainly used on smart contract-enabled blockchain Apps like Solana and Ethereum.

Memecoins are extremely volatile; their values depend on the market buzz and publicity.

Memecoins are solely produced for trading.

Dogecoin (DOGE), Floki Inu (FLOKI), and Safemoon (SAFEMOON) are some of the prominent meme coins in the cryptocurrency ecosystem.

Meme Coins had a good and profitable run in 2021, but the situation was bleak in the first quarter of 2022.

The cryptocurrency ecosystem is wide enough to contain several tokens and coins. Whatever idea the developers come up with, there are investors and cryptocurrency enthusiasts who are ready to invest.

We have seen several types of crypto tokens thriving in the crypto market; likewise, we have seen those that perform below expectations. It all depends on several market forces and, most importantly, the use case and versatility of such tokens.

In this article, we shall identify the essential details of memecoins, how they leverage blockchain technology and the prominent types of memecoins.

Let's dig in!


What Are Memecoins?

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Memecoins are not different from all other cryptocurrencies; they are like Bitcoin and Ethereum. Albeit, some meme coins are originally designed as an homage or replica of a meme, a funny idea or an interesting scene.

These meme coins are captured in images, videos, or other media forms. They are then replicated in a token and are expected to go viral and be shared across various crypto platforms.

Memecoins leverage blockchain technology and have popped up (mostly) on blockchain Apps that use smart contracts like Solana and Ethereum.

Most meme coins have an unlimited supply. The popularity of meme coins largely depends on and is driven by pop culture.

The first meme coin was introduced to the cryptocurrency ecosystem nine years ago. Meme coin has since then become one of the fast-growing cryptocurrencies leveraging blockchain technology.

Let's consider the general features of Memecoins.


General Features of Memecoins

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Although memecoins are the same as other types of tokens deployed on the blockchain network, some features make the memecoins stand out.

These features include;

Volatility
Memecoins are generally volatile, and they are designed for no specific purpose other than trading; this makes them incredibly volatile.

It is general knowledge that all types of digital tokens are volatile. However, meme coins are more susceptible to volatility, and they suffer from more drastic swings in value than other crypto tokens.

Another reason meme coins are volatile is that they have an uncapped supply, and they are designed to keep supplying their native token without limit.

Value
The value of the memecoin is the worth compared with other tokens on the crypto market or chart. This value is largely determined by how viral the coin has gone and the amount of buzz it is generating.

If a meme coin is promoted by a big brand or influential individual, the value increases, and if the hype dies down, the coin falls in value.

For instance, when the CEO of Tesla and the wealthiest man in the world promoted Dogecoin, the value skyrocketed. When the hype withered, the price value dropped.

Trading
One general feature of memecoins is that they are built for trading, and they are solely meant to be traded on the crypto market.

Other cryptocurrencies are designed as utility tokens and can be traded and exchanged. So if you are an investor, you can only buy the meme coin, HODL the token, and sell them in exchange for fiat later.

Now let's consider the popular Memecoins.


The Popular Memecoins

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There are several meme coins on the cryptocurrency market; however, a few are popular and doing well in the virtual market. They include;

Dogecoin (DOGE)
The pioneer memecoin to be launched on the blockchain network is Dogecoin, and it is an open-source and peer-to-peer digital currency.

Doge has unique and active community members who engage in trading using the Dogecoin native token and deploy it for social media content.

In 2021, Elon Musk, called “Dogefather,” endorsed and promoted the token. The endorsement skyrocketed the value of Doge, catapulting it into the top 20 cryptocurrencies by market capitalization.

Floki Inu (FLOKI)
Floki Inu (FLOKI) is a meme coin that aims to combine the theatrics of memes with utility. It is designed to seize power and opportunity from venture capitalists, get hold of funds and share it with the people.

Floki Inu has Valhalla, a metaverse gaming feature. It is a play-to-earn (P2E) Non Fungible Token metaverse game that incorporates A-level game mechanics on the blockchain network.

FLOKI is the native token of Floki Inu, and it powers the Valhalla game. Players of the game will be rewarded in FLOKI, and it will serve as a means of income for its users.

Safemoon (SAFEMOON)
The safe moon is a Decentralized Finance (DeFi) protocol and serves as a meme coin. It combines RFI tokenomics and an auto-liquidity generating protocol.

Based on the information available on Safemoon’s website, it has three functions that occur during trading. They include; Reflection, LP Accusation, and Burn.


Conclusion

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Memecoins enjoyed the market buzz and global attention in 2021. The prominent meme coins received attention from mainstream businesses, and their values increased drastically.

There are missed feelings about Memecoin. While they are very volatile and are not the most stable asset to invest in, they have the potential of going viral with little market force, and you will make massive gains overnight.

Big brands and corporate organizations such as Tesla, Gamestop, Newegg, and Nordstrom accept meme coins, including Dogecoin and Shiba Inu. Should other brands embrace the meme coins, they will continue to fare well in the crypto market.






Author: Valentine. A, Gate.io Researcher

This article represents only the researcher's views and does not constitute any investment suggestions.

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