What Are Meme Coins? Are They Worth Investing In?

If you look up the word “meme” in the dictionary, it’s a humorous image, video, or piece of text that is copied, usually with slight variations and spread rapidly by internet users.

Meme coins aren’t too different from this dictionary definition of a meme—they’re nothing more than cryptocurrencies that memes and internet jokes have inspired.

Should you invest in meme coins? While some are ranked among the top cryptos by market cap, potential buyers should understand that most meme coins offer little value, and a few are outright scams.

What Are Meme Coins?

Meme coins are cryptocurrencies that have been produced as a lighthearted joke. Nevertheless, some meme coins have ballooned in value, gained multibillion-dollar market caps and garnered celebrity endorsements.

While these characteristics suggest that meme coins offer some underlying utility or value, the truth is that nearly all of them lack anything like fundamental value or unique use cases.

Instead, crypto investors often buy meme coins to be part of a community or for entertainment value. The sole use case for most meme coins is pure speculation.

“Meme coins are designed like any other cryptocurrency, like Bitcoin or Ethereum,” says Brain Hernandez, co-founder of trading and investment platform Structure. “The difference is their existence tends to be centered around a viral moment or funny idea, and their value depends largely on how much momentum that concept can generate.”

The Original Meme Coin: Dogecoin

The original and most prominent meme coin is Dogecoin (DOGE). Created in 2013 by software engineers Billy Markus and Jackson Palmer, DOGE was branded around a popular meme: the “doge” Shiba Inu dog.

The founders say they created Dogecoin to poke fun at Bitcoin (BTC). The name “doge” is a deliberate misspelling of “dog,” and the founders admit they chose this name to ensure the crypto was “as ridiculous as possible.”

But in what would become a hallmark of other meme coins to follow, Dogecoin began to make a name for itself thanks to a fervent community of users, amassing somewhat of a cult status.

For example, when the Jamaican bobsleigh team qualified for the 2014 Winter Olympics in Sochi, Russia, but could not fund the trip, the Dogecoin community came together to raise around $30,000 for the cause.

The story was picked up by mainstream media outlets, helping to gain further investors and influence.

But it wasn’t until celebrities began endorsing Dogecoin that the price rocketed. The coin’s most high-profile booster is Tesla CEO Elon Musk.

The enigmatic billionaire has continuously promoted Dogecoin. Musk even appeared on a “Saturday Night Live” skit where he referred to himself as the “Dogefather.”

At its peak, Musk’s endorsement propelled Dogecoin to a market cap of $88 billion in May 2021 and became a pop culture phenomenon.

When a celebrity endorsement disappears, these cryptos can come crashing down. Today, Dogecoin’s market cap is only worth a tenth of its all-time high from more than a year ago.

Other Popular Meme Coins

Dogecoin still serves as an inspiration for meme coins. More than 200 such coins have been created since the launch of the original meme coin.

Shiba Inu (SHIB) launched two years ago as the “Dogecoin killer.” The crypto even imitates the Dogecoin branding in so far as using the same Shiba dog. SHIB also saw meteoric growth, rising to a market cap of $41 billion in October 2021.

Numerous other meme coins were created in the hope of creating their own communities and sky-high valuations, but this year has seen prices across the market return to earth, with meme coins among the hardest hit.

Dogecoin is down 60% in 2022, Shiba Inu has fallen 64%, while many of the smaller meme coins have gone to zero and are being abandoned.

How Do Meme Coins Work?

Barriers to entry are exceedingly low for meme coins.

The open-source nature of the blockchain technology underlying these cryptocurrencies means that creators can simply “fork” existing…