TL;DR
- Meme coins look and function just like other cryptocurrencies like Bitcoin or Ethereum, but they are usually based on a single viral moment or funny idea.
- Dogecoin (DOGE) is the first and most widely used meme cryptocurrency. Shiba Inu Coin (SHIB) was dubbed as the "Dogecoin killer,” aiming to match the achievements of its predecessor.
- DOGE and SHIB are now being used as payment for online stores, entertainment platforms, movie theaters, mobile applications, and websites.
- The biggest risk in trading meme coins is that the prevailing hype can quickly die down and the coin will inevitably suffer from a devastating drop.
What are meme coins?
Meme tokens are a category of cryptocurrencies created for humorous purposes but some of these meme coins have served an actual purpose and gained a huge following, which has brought the value of some meme coins through the roof, giving them a market capitalization in the tens of billions of dollars and earning them support from famous people.
Though high token prices and market capitalization can give the illusion that meme coins have a lot of value or function. The majority of these meme tokens are purchased by people who want to join a community, purchasing it for fun and mainly speculating on its prices to make a profit.
Technology-wise, meme tokens function just like other cryptocurrencies like Bitcoin or Ethereum. The biggest difference is that their existence is usually based on a single viral moment or funny idea, and most of their value comes from how well that idea gets propagated.
The Original Meme Token
Dogecoin (DOGE) is the first and most widely used meme cryptocurrency. DOGE was developed in 2013 by software programmers Billy Markus and Jackson Palmer, and it was named after the "doge" Shiba Inu dog meme.
DOGE’s creators claim they invented the currency as a joke about Bitcoin (BTC). They also confess that it was intentionally misspelled the word "dog" on purpose in order to make it seem "as silly as possible."
Silly as it seems, DOGEcoin, gained popularity quickly because of its dedicated community, and it gained a cult following that became the hallmark of meme currencies that came after it.
One of the most historic events the community did was donating almost $30,000 to the Jamaican bobsled team so they could go to the 2014 Winter Olympics in Sochi, Russia. The mainstream media picked up the story, which ultimately led to more funding and clout.
“Endorsement” from notable figures
As the Dogecoins community created a utility for the meme token, it attracted notable figures like Elon Musk, who became the token’s biggest supporter. Musk has been supporting Dogecoin for a long time, especially through his funny tweets. Musk has even joked about being the "Dogefather" during a spoof on Saturday Night Live. Musk's support helped drive Dogecoin to a peak market worth of $88 billion in May 2021 and made it a social phenomenon.
The Dogefather
— Elon Musk (@elonmusk) April 28, 2021
SNL May 8
The success of Dogecoin paved the way for other meme tokens to be created and right now there are more than 200 meme coins trying to copy the success that dogecoin has.
In August 2020, SHIB was released. Dubbed the "Dogecoin killer", SHIB adopts the same Shiba Inu dog from Dogecoin as its logo. SHIB's valuation skyrocketed from $1 billion in October 2020 to $41 billion in October 2021.
Who accepts Crypto as payment?
Despite being a meme coin, businesses and some well-known brands have begun accepting $DOGE and $SHIB as a form of payment:
Movie Theaters
AMC Entertainment was the first major movie theater chain to accept $DOGE and $SHIB for ticket and F&B purchases in AMC Theatres.
Online Stores
Thousands of online stores, shipping companies, and logistics companies, like Nordstrom, GameStop, Walmart, Newegg, and Whole Foods, accept DOGE and $SHIB as payment.
Entertainment
If you frequent Reddit or Twitch for entertainment like articles or live-streaming, these are just two of the many entertainment sites that take DOGE and SHIB as payment. In addition to paying for subscriptions, DOGE and SHIB can be used to tip creators!
Applications
Software companies, mobile apps, and websites are also accepting meme coins as a form of payment, these include ExpressVPN, NameCheap, and CryptostormVPN.
Transportation
The “Dogefather”, Elon Musk who owns Tesla now accepts certain Tesla products to be paid for in Dogecoin which creates a who shift in the retail space where companies can accept cryptocurrencies as a form of payment.
Risks of Investing in Meme Coins
When investing in meme coins, traders should take extra precautions as with many meme coins, they pump in prices from hype, and for many, the hype might not hold which leads to the token dumping and going to zero.
During crypto winters or bear markets, like the latest one in 2021, many meme coins suffer in price action like Dogecoin going down 60%, Shiba Inu down 64%, and many more have dropped to zero and are being abandoned entirely.
Though Shiba Inu and Dogecoin stand out as examples of successful projects, the reality is that most meme coins will eventually fade away because of the lack of real-world utility.
Should You Invest in Meme Coins?
From a fundamental perspective, there are currently no developments in the underlying technologies behind DOGE and SHIB, therefore, the fundamentals of the project still require a lot of work to attract serious investors.
However, if you’re a technical trader, you may find a ton of trading opportunities in DOGE and SHIB. While these cryptocurrencies don't hold as much value as compared to their blue chip counterparts, you can still take advantage of the meme coin phenomenon —if you know what you’re doing.
At the end of the day, it’s still best to do your own research and exercise due diligence.
Disclaimer: The information and publications in this article are not intended to be and do not constitute financial advice, investment advice, trading advice, or any other advice or recommendation offered or endorsed by Coins.
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