Influencers have always figured prominently in cryptocurrency culture, but even more so recently. When Elon Musk backed the original meme cryptocurrency, Dogecoin, it sparked a wave of copycats, promoted by influencers on social media platforms like TikTok.
Some call meme coin investment crazy, others think it's a cheap gamble with the potential for 1000% returns. Whatever the reason, interest in meme coins or tokens has skyrocketed in recent months. Here's the lowdown.
Generally, a meme coin has no inherent value, and often no utility. As the name suggests, these cryptocurrencies are usually, but not exclusively, Internet memes: jokes and images that are shared on social networks.
The original meme coin, Dogecoin (DOGE), is based on the Doge meme, which originated with the image of a Shibu Inu dog. It runs on its own blockchain, and as such is distinguished from meme tokens, which run on top of an existing blockchain.
Two of the most popular meme tokens are Shibu Inu (SHIB), an ERC-20 token built on Ethereum, and SafeMoon (SAFEMOON), which runs on Binance Smart Chain. But there are dozens more.
There are more than 80 meme coins and tokens listed on the price aggregator CoinMarketCap. Many are Dogecoin imitators, and many others reference Elon Musk, either positively or negatively.
Since the launch of Dogecoin in 2013, it is much easier to create a cryptocurrency, and meme tokens can be quickly launched in the wake of events, or become popular due to their associations with influencers.
For example, in May 2021, Facebook CEO Mark Zuckerberg posted a photo of his pet goats with the caption "My goats - Max and Bitcoin." Soon after, a meme token called Aqua Goat saw its value increase by around 300% within hours of the post on social media.
When Elon Musk tweeted that if there was ever a scandal about him, "Elongate" should be coined, an ELONGATE token was launched within an hour. Mercenary motives? Perhaps, but, to date, the developers claim to have donated $3 million of their profits from the token's rise to charity.
As the leading meme coin, Dogecoin is available on a wide variety of cryptocurrency platforms, including Coinbase, Binance and Kraken.
Meme tokens tend to be available on a more limited range of exchanges. Shiba Inu, for example, can be traded on Binance, Crypto.com and KuCoin, as well as on decentralized platforms (DEXs) such as Uniswap. Safemoon, being based on the Binance Smart Chain, can be traded on Binance and BSC-based DEXs such as PancakeSwap.
Often, when first launched, meme tokens are given away for free. Many small-cap meme tokens are only available on DEXs such as PancakeSwap, and can only be purchased with other cryptocurrencies.
All cryptocurrencies depend on a strong community and the support of influencers. But meme tokens have gained popularity because of their disproportionate association with influencers, especially Elon Musk. It's enough for the Tesla chief to tweet about a topic, such as Baby Shark, based on a popular children's song, for the price of related meme tokens to skyrocket.
Meanwhile, meme token developers use publicity stunts to drive up the price. The team behind the Shibu Inu coin decided to give half of all SHIB tokens to Ethereum co-founder Vitalik Buterin. But the latter foiled their plan when he divested himself of the tokens (donating the proceeds to charity), requesting that projects not give him coins without his consent and stating that "I don't want to be a locus of power."
Meme tokens accounted for about 2.8% of the cryptocurrency market capitalization as of mid-June 2021, and the sector is valued at more than $38 billion, according to one aggregator. But price swings are not unusual.
Typically, meme cryptocurrencies have a huge supply in circulation-often in the quadrillions.
Not everyone sees the funny side of Dogecoin and its ilk. The Thai regulator ordered platforms to delist meme tokens in June 2021, along with NFTs and fan tokens.
There is also the ever-present danger of "carpet-pulling"-when developers have a bunch of coins, get people to buy them, and then dump them. This sends the market plummeting, while they make off with their loot. Even experienced investors, Mark Cuban, have fallen victim.
One way to mitigate the risk of ear pulls is to only buy coins and tokens that have been vetted, audited, or have some form of reliable third-party oversight.
Relying on cryptocurrency influencers to promote the next coin seems like a fickle enterprise. But the ultimate success of individual coins and tokens depends on the strength of their communities, and influencer culture is not going away.
Inevitably, barring regulatory action (such as Thailand's), the harvest of memes seems destined to expand, as the tools to create them become increasingly accessible. Meme.com, for example, is a new marketplace where users can compare meme cryptocurrencies and mint their own "meme tokens," the value of which will be based on the perceived value of the trends or memes they represent.
Backed by nothing, an asset of over $24 billion has been created.
