What are meme coins?

Dogecoin was technically the first meme coin that was released in 2013 to poke fun at the volatile nature of Bitcoin and other popular cryptocurrencies. Dogecoin was named after a meme that became very popular in 2013 called ‘Doge’. The meme represented a picture of a Japanese breed of dog called Shiba Inu. It went viral after gaining widespread popularity within just a few weeks after its release on social platforms, like Reddit. 

Soon, Dogecoin became a mainstream cryptocurrency and is ranked the tenth most popular cryptocurrency based on market cap as of June 2022. Its popularity fueled the creation of meme-based cryptocurrencies, and there have been hundreds of meme coins since then.

A  cryptocurrency called Shiba Inu, named after the same dog breed as in the Doge meme, was released in 2020 as a competitor to Dogecoin, and is also a meme coin. Dogecoin and Shiba Inu are two of the most popular meme coins in circulation today. Dogelon Mars is another meme coin that is quite popular and is named after Elon Musk and the Doge meme. 

Although not named after a meme, the first version of the crypto token SafeMoon was considered a meme coin. The reason was its sudden rise in value after celebrity endorsements and social media hype, and the equally sudden drop in value once the hype had died down. This erratic spike in value because of market hype was considered humorous within the crypto community and was likened to the viral nature of memes, which is why SafeMoon V1 was called a meme coin.

Overall, the term ‘meme coin’ is just an umbrella term for a group of cryptocurrencies that have a connection with internet memes. When it comes to real-world use, meme coins are just like any other cryptocurrency. They operate over the blockchain and can be traded (bought, sold and swapped) or used to purchase products and services (if they are accepted as a payment). 

You can purchase meme coins through any cryptocurrency exchange that lists them. While selecting a crypto exchange platform, make sure to compare crypto exchanges to analyse their fees, features and benefits to pick one that suits your investment style. Consider checking if an exchange is registered with AUSTRAC to ensure it complies with local laws and regulations.

Investing in meme coins is probably just as safe or risky as investing in other cryptocurrencies. The risk of price fluctuations or volatility always remains. In fact, meme coins tend to show more volatility in prices than other popular cryptocurrencies, as they are closely linked to internet memes and trends. 

Take the example of Dogecoin. The value of Dogecoin cryptocurrency increased over 10X between April 2021 and May 2021, hitting an all-time high of 67 cents (USD) after Elon Musk promoted it on Twitter. As of June 2022, the price of Dogecoin is back down to what it was before the hype, which is a tenth of its all-time high price. This is a perfect example of how the value of meme coins can be swayed.

If you wish to buy meme coins, it may be better to restrict yourself to popular meme coins because those that do not gain traction tend to go obsolete. Keep an eye on trending memes and conversations related to meme coins on social media, because they will give you a clue as to which meme coins could potentially increase in value. You should also try to limit your investment to an amount of money you can afford to lose, considering the volatile nature of these cryptocurrencies.