Meme coin: Internet humor meets cryptocurrencies

What really defines a meme-coin?

Meme coins are cryptocurrencies that are based on internet culture, memes, and humor rather than on concrete technological innovation. Unlike bitcoin (BTC) or ether (ETH), which solve specific technical problems, meme coins are often created to be fun, foster community, or follow trends.

The story began in 2013 when Dogecoin (DOGE) was launched as a joke inspired by the popular Doge meme. DOGE was far from intended to be anything serious – it was a parody. Yet, it became a phenomenon.

What particularly distinguishes meme coins is their often enormous or unlimited token supply. For example, Shiba Inu has (SHIB) 1 quadrillion tokens in total supply, while DOGE has no maximum limit. Without burning mechanisms, the low prices are explained by this inflation – but the low price also allows private investors to own millions of tokens, which psychologically feels different than buying fractions of more expensive currencies.

How did meme coins become so popular?

The breakthrough of the movement came during the covid-19 pandemic when private investors sought protection against inflation. At the same time, the “meme stock saga” surrounding GameStop and AMC created a new trend: the Reddit community managed to coordinate purchases and significantly raise the prices of these stocks.

Inspired by this, online communities began joking about doing the same thing with cryptocurrencies. Dogecoin (DOGE) became the target, and support from high-profile individuals – especially Tesla CEO Elon Musk – initiated a powerful rally. DOGE went from being a joke to becoming an actual phenomenon with billions of dollars in market value.

After DOGE came a flood of alternatives. Shiba Inu (SHIB) was marketed as the “Dogecoin killer,” and in later years followed Pepe (PEPE), Dogwifhat (WIF) and others. Private investors were attracted partly by the low prices, partly by the feeling of belonging to a community, and partly by the opportunity to make quick money.

The institutionalization accelerated the phenomenon. In 2024, VanEck launched an index that tracks the six largest meme coins (DOGE, SHIB, PEPE, WIF, FLOKI, and BONK), significantly increasing legitimacy and visibility. Media coverage on financial channels also spread interest to a wider audience.

Market Overview 2024

The total market capitalization for the meme coin reached approximately 63 billion dollars in June 2024. The top six are:

• Dogecoin (DOGE): Originating from 2013, based on the Litecoin code, no maximum supply
• Shiba Inu (SHIB): “The competitor” with 1 quadrillion tokens, of which 50% were burned, extensive ecosystem with DEX and NFT games.
• Pepe (PEPE): Launched in April 2023, inspired by the internet meme Pepe the Frog, with a supply of 420 trillion tokens.
• Dogwifhat (WIF): Rent mem-focused token from the end of 2023
• FLOKI: Inspired by Elon Musk's Shiba Inu, combines meme with tools like NFT marketplaces
• Bonk (BONK): Dog-focused token on the Solana blockchain, 50% of the supply distributed to the Solana community

Why are meme coins controversial?

The tokenomics is often problematic

Bitcoin is deflationary with a limited supply and a well-developed ecosystem. Meme coins are usually inflation-driven, often without a maximum number of tokens. Their ecosystem and use cases are often defined by the community rather than a clear vision. This poses a fundamental risk for long-term value preservation.

Extreme price fluctuations

Meme coins are strongly community-driven and thus much more volatile than larger cryptocurrencies. A single tweet from an influential person can trigger enormous price movements. Conversely, the price can crash when the community turns against the next meme coin.

The rug-pull risk is real.

Developers can abandon projects and disappear with investors' money. This type of fraud is unfortunately common:

• SQUID (2021): Inspired by the Netflix series, developers withdrew the project.
• BALD (July 2023): Developers have drained all liquidity pools on the Coinbase network Base
• MetaSwap (beginning 2024): Developers disappeared with the investors' assets
• URF ( March 2024): The team behind the project ( promoted by influencer Bryce Hall) disappeared 24 hours after launch after raising $450,000.

How do you protect yourself?

Basic precautions

1. Do your own research: Review the team, the whitepaper, the goals, and the community sentiment.
2. Understand the tokenomics: Analyze supply dynamics, burning mechanisms, and distribution strategy.
3. Diversify: Never put everything into a meme coin – balance with established currencies like BTC, ETH, SOL, or BNB.
4. Follow the news: Meme coins are heavily influenced by social media trends and news.
5. Use stop-loss orders: Automatically protect yourself from larger losses
6. Avoid impulse buying: Only invest what you can afford to lose, and don't let FOMO (fear of missing out) dictate your decisions.

Specific rug-pull warnings

1. Check liquidity: Verify that the liquidity is locked and cannot be easily withdrawn.
2. Review smart contracts: Look for red flags such as features that allow the creation of unlimited tokens or massive transfers.
3. Investigate the team: Anonymous teams can be suspicious. Look for verifiable credentials and transparency.
4. Assess the community: A strong, authentic community is positive; fake followers and excessive shilling are red flags.
5. Check the roadmap: Legitimate projects have detailed development goals and realistic timelines.
6. Warning for high pressure: Time-limited offers, guaranteed returns, and pure hype focus without technical substance are classic fraud checks.

Decentralization vs Centralization

Many meme coins, such as Dogecoin (DOGE), were launched with fair distribution – no pre-mining, no special allocation to founders. This resonates well with the cryptocurrency ideology of open access and community-driven growth.

Other projects, such as certain versions of Shiba Inu (SHIB), have used pre-mining or uneven distribution, raising concerns about transparency and market manipulation. The community generally values decentralized launches far more than centralized.

Concluding Thoughts

New meme coins are emerging daily, and traders hope to replicate the successes of DOGE and SHIB. It is absolutely essential to do your own research before investing.

Remember: meme coins are extremely volatile and community-driven. They can crash unexpectedly when interest shifts. Never invest more than you can afford to lose completely.

The world of meme coins is exciting and fun, but it is far from safe. With knowledge, caution, and a cool head, you can navigate it more safely – or simply choose to stick with the established options.