The world of cryptocurrencies is tremendously broad. There are more than 10,000 digital currencies, all types of cryptocurrencies, and more are constantly being created.
With this volume, it is impossible for all of them to be serious projects. In fact, a non-negligible number of cryptocurrencies are precisely the opposite and are an extension of the best memes that dominate social networks, with the small nuance that they move significant amounts of money; They are memecoins.
What are memecoins
Memecoins are currencies inspired by memes, jokes and viral phenomena. While more traditional cryptocurrencies such as Bitcoin or Ethereum seek to offer useful technology and are the result of considerable technical effort, memecoins are born for entertainment… and speculation.
Therefore, The value of memecoins does not depend on their usefulness concrete or its use, but rather the hype they generate, the popularity they obtain and the involvement of their community. Memecoins can be created by anyone and do not need to provide technological innovation or solve a specific problem within the blockchain ecosystem. In many cases they just need a catchy name and to be released at the right time to attract the attention of the masses.
This dependence on public attention, generally coupled with the enormous supply of this type of currency and little liquidity, makes its price highly volatile, oscillating violently and causing wild speculation around some of them.
Despite being “joke” cryptocurrencies, memecoins have been involved in some of the largest movements of money in the crypto sector. There are thousands of memecoins, but some have gained enormous notoriety, either for being a bestseller or for having been an exemplary case of speculation. These are some of the most famous:
Dogecoin
DOGE could be considered the mother of memecoins. It was born in 2013 inspired by the Doge meme, a friendly Shiba Inu dog. Despite its birth as a parody, it has become an absolutely gigantic financial asset with a maximum market capitalization (market cap, calculated by the price of each coin multiplied by the total number of coins) of $88 billion.
Shiba Inu
SHIB, curiously also inspired by the DOGE puppy, and created to be the competition for Dogecoin. It was one of the greatest exponents of memecoin speculation in 2021, when it reached a market cap of 43 billion.
Pepe
This currency, born from the Pepe the Frog meme, is one of the clearest examples of the influence of memes in the world of cryptocurrencies. It far exceeded $8 billion in market capitalization, which demonstrates the strength of memes in the crypto world.
Dogwifhat (WIF)
The name WIF literally means dog with a hat. It is a very clear example of the absurdity of memecoins, where anything can be converted into an asset with a market capitalization greater than the education budget of many countries. In the case of WIF, close to $5 billion.
Fartcoin
Literally, fart currency. Another sign that the absurd and meaningless are precisely what is attractive about memecoins. This curious currency with a total absence of any technological pretensions and focused on humor reached a market cap of more than 1 billion dollars.
Peanut the squirrel (PNUT)
Coin born as a result of the viral phenomenon of Peanut, a squirrel that was sacrificed in New York. In less than two weeks, PNUT reached a market cap of $2 billion, making it clear that memecoins born from popular or viral events are capable of creating million-dollar valuations that generally benefit the first to arrive.
Risks of memecoins
The list of memecoins is long. In many cases, they have reached a peak of popularity characterized by a very high market cap followed by a collapse in price that has evaporated billions and billions.
Speculation around memecoins is one of the most exaggerated in the crypto world, so it is advisable to be careful when investing money in this type of asset.
Volatility is not the only danger of memecoins. These types of currencies can depend widely on influencers, social networks and viral phenomena, such as the case of DOGE, whose price was greatly inflated on several occasions in reaction to Elon Musk's comments about the currency.
This can lead to cases of market manipulation or the concentration of large amounts of a memecoin in a few wallets. This accumulation in few hands can be a problem since if one of these large companies decides to sell, it can flood the market, plummet the price and negatively affect small investors.
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