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Abstract

In 2021, the memecoin market will develop rapidly, with dogs as the leading Themed meme coins are even more popular. As of November 2021, the most popular “varieties” are Dogecoin (DOGE) and its competitor Shiba Inucoin (SHIB).

Memecoin is a cryptocurrency inspired by memes. Compared with mainstream cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH), the price of meme coins has been volatile. The reason may be that it relies heavily on community promotion, and the price is often affected by the sentiment of social media and online communities. This often leads to hype, coupled with the negative emotions of fear of missing out (FOMO) and financial risks. While there are a few traders who have made huge amounts of money using memecoins, it is common for them to lose all their money due to market fluctuations.

Introduction

Some people say that 2021 is the "dog" year of cryptocurrency. The twin stars of dog coins-Dogecoin (DOGE) and Shiba Inu coin (SHIB) lead the meme coins, and their prices and market values have soared. As of November 2021, Dogecoin has surged more than 8,000% since the beginning of the year. CoinMarketCap data shows that Dogecoin’s market capitalization has jumped to ninth place. The price of rival Shiba Inu Coin has also surged by more than 60,000,000% since January.

What is a memecoin?

Memecoins are cryptocurrencies inspired by Internet and social media memes or jokes. Dogecoin (DOGE) is the first meme coin in history. Dogecoin was launched in 2013 as a parody, inspired by the popular Japanese Shiba Inu meme.

Memecoin prices tend to fluctuate. Community-led meme coins can become famous overnight, driven by online community publicity and fear of missing out (FOMO). However, when traders switch to the new memecoin, its price can take an unexpected plunge.

Another common feature of meme coins is that the supply is huge and there is no upper limit. For example, the total supply of Shiba Inu Coin (SHIB) is 1,000 trillion coins, and Dogecoin has no supply limit, and the circulation currently exceeds 100 billion coins. Generally speaking, meme tokens do not have a burning mechanism. Due to the huge supply, the price is naturally relatively low. Buy millions of meme tokens for just $1.

Why are meme coins so popular?

Although it is difficult to find the exact reason, some analysts believe that during the COVID-19 epidemic, retail investors wanted to hedge the risk of inflation, which promoted the rapid growth of the cryptocurrency market. Meme coins have also taken advantage of the momentum of hype to rise rapidly, with their market value soaring and new products emerging one after another.

This all stems from the "meme stock" events of GameStop (GME) and AMC Entertainment (AMC) in late 2020. At that time, the Reddit community raised the stock price 100 times in just a few months. In January 2021, a Reddit group joked that it would raise the price of Dogecoin and make it a cryptocurrency comparable to GME. This development attracted public attention, and Tesla CEO Elon Musk’s tweets added fuel to the fire, causing Dogecoin to surge instantly. The price hit an all-time high of $0.73, rising more than 2,000% in just five days.

However, in May 2021, Elon Musk publicly ridiculed Dogecoin on TV. Many people regarded these remarks as the trigger for the subsequent price decline. Subsequently, some traders switched to other meme coins in the market, such as the "Dogecoin Killer" Shiba Inu Coin. At the same time, retail investors are afraid of missing out on the opportunity to invest in meme coins and fantasize about getting rich overnight, which ultimately leads to an increase in the price of meme coins.

Another reason why retail investors admire meme coins is that their investment costs are usually only a few cents, or even less than one cent. Strictly speaking, low prices don't mean much because the supply of these tokens is huge. However, holding millions of memecoins feels very different than holding a fraction of Ethereum or Bitcoin. Traders can acquire thousands or even millions of Dogecoins, Shiba Inu coins or Akita Inu coins (AKITA) for just a few dollars.

In addition to potential revenue, the memecoin craze is also driven by the sentiment of their respective communities. As mentioned before, meme coins are inspired by popular memes on the Internet and are meant to be funny, sometimes just as an "inside joke" in the community. Purchasing meme coins is a way of expressing your support for the community. After the stock market saga of GME, memecoin traders, inspired by the Reddit group SatoshiStreetBets, launched a "David vs. Goliath" battle against mainstream cryptocurrencies. As a result, the cryptocurrency market in 2021 is flooded with community-driven meme coins.

Potential risks of investing in meme coins

Meme coins will indeed grow rapidly in 2021, but with all Like cryptocurrencies, trading and investing in memecoins carries financial risks that cannot be ignored.

First, the token economics of memecoins are worrisome. Take Bitcoin as an example here. Bitcoin has its own blockchain, detailed white paper, mature ecosystem and deflation mechanism. In recent years, more and more institutions have also begun to use Bitcoin. In contrast to Bitcoin, most memecoins have no supply cap and therefore have inflationary properties. Memecoin ecosystems, use cases, and fundamentals often rely solely on the collective banter of the community, with only a handful of memecoins being based on the technology of mainstream cryptocurrencies. For example, Dogecoin’s technology is derived from Litecoin (LTC), and Shiba Inucoin was created on the Ethereum blockchain.

Another potential risk is that memecoins rely heavily on community support and are more speculative than high-capitalization cryptocurrencies. Its volatility is unpredictable and can trigger unexpected surges or crashes. Meme coins generally have a short life cycle. Prices can surge thousands of times due to celebrity hype or fear of missing out (FOMO), or they can crash unexpectedly when the community decides to pursue a new memecoin.

As the memecoin market continues to grow, one should be wary of various projects that use hype to defraud traders. For example, when the Netflix drama "Squidward" hit the airwaves, the price of the Squidward meme coin of the same name soared by more than 86,000% in a week. However, the development team was caught off guard and ran away, causing the price to plummet by 99%. To make matters worse, holders are not allowed to sell their SQUID tokens. Therefore, you need to exercise extreme caution and do your own research before trading or investing in memecoins.

Overview of popular meme coins

Dogecoin (DOGE) and Shiba Inu Coin (SHIB) with the highest market value ) leads the meme coin market. After the success of the two, a large number of canine-themed meme coins flooded into the market and gained widespread attention in the second half of 2021.

Dogecoin (DOGE)

Dogecoin (DOGE) was developed by software engineers Billy Markus and Jackson Created in 2013, Palmer was inspired by the Shiba Inu meme and started out as a spoof of cryptocurrencies to attract public attention. As a fork of Litecoin (LTC), Dogecoin uses the same proof-of-work (PoW) mechanism and has no supply cap. To learn more about Dogecoin, please readWhat is Dogecoin? 》.

Shiba Inu Coin (SHIB)

Shiba Inu Coin (SHIB) is the counterpart of Dogecoin Competitor, known as the "Dogecoin Killer". Shiba Inu Coin is also named after the Japanese Shiba Inu and was created by an anonymous developer in August 2020. Compared to Dogecoin, Shiba Inucoin’s token supply is capped at 1,000 trillion coins, 50% of which are burned or donated to charity. The Shiba Inu Coin ecosystem consists of a decentralized trading platform, NFT art incubator, NFT and NFT games.

To learn more about Shiba Inu Coin and its ecosystem, please read "What is Shiba Inu Coin (SHIB)?" 》.

Dog Elon Mars Coin (ELON)

Dog Elon Mars Coin (ELON) follows the canine coin Gemini in popularity. As the name suggests, "Dog Elon Mars Coin" is named after Tesla CEO Elon Musk, expressing his love for his company SpaceX. Doge Elon Mars Coin is a fork of Dogecoin, with a circulating supply of 557 trillion coins. As of November 2021, Doge Elon Mars Coin has soared more than 3,780% since its launch in April 2021.

AKITA Inu Coin (AKITA)

There are other products with Japanese dogs as mascots in the market Meme coins such as Akita Inu Coin (AKITA), Kishu Inu Coin (KISHU) and Floki Inu Coin (FLOKI). Akita Inucoin is deeply inspired by Dogecoin and was launched on Uniswap in the form of ERC-20 tokens in February 2021. The token economics are similar to Shiba Inucoin. Like Shiba Inucoin developer Ryoshi, the Akita Inucoin team also locks 50% of the total supply in Uniswap, with the remaining 50% sent to Ethereum co-founder Vitalik Buterin. The total token supply of Akita Inu Coin is 100 trillion, which is only one-tenth of Shiba Inu Coin. In May 2021, Akita Inucoin received public attention along with a number of other canine tokens, and some community members called it another "Dogecoin killer."

Samoyed Coin (SAMO)

Samoyed Coin (SAMO) is in the Solana blockchain Canine meme coins created. After Samoyed Coin was launched, 13% of its supply was airdropped to community members. According to the official website, the roadmap for Samoyed Coin includes destruction activities, airdrop tools, decentralized exchanges (DEX) and NFT creation. The Samoyed coin has suddenly risen recently and has accumulated a lot of popularity, rising by more than 4,300% in one month. In October 2021, its price rose from $0.005 to over $0.22 in approximately 30 days.

Kishu Dog Coin (KISHU)

Kishu Dog Coin (KISHU) is another type of Canine-themed meme coins have grown exponentially since their launch in April 2021. Kishu Inucoin provides participation rewards to active customers, and its products also include non-fungible tokens (NFT) and a decentralized trading platform called "Kishu Swap". The popularity of Kishu Dog Coin continues to grow. According to statistics, one month after its launch, the number of currency holders exceeded 100,000, and the market value exceeded US$2 billion.

SAFEMOON

Another rising star of the meme currency is SAFEMOON ). It is a BEP-20 token launched by Binance Smart Chain (BSC) in March 2021. Safe Monthly Coin rewards long-term holders by charging a 10% redemption fee to users who sell the token. 50% of this fee will be distributed to existing currency holders, and the other half will be destroyed. The safe monthly coin attracted the attention of retail investors after prices soared in April. CoinMarketCap data shows that as of November 2021, the return on investment (ROI) of Security Month is as high as 9418.54%.

How to buy meme coins on Binance?

Popular meme coins such as Dogecoin and Shiba Inucoin can be purchased through cryptocurrency exchanges such as Binance. Other lesser-known memecoins can be purchased on decentralized exchanges.

Let’s take Dogecoin as an example.

1. Log in to your personal Binance account. Then, go to [Trading] on the top bar and select the classic or advanced trading page.

2. Enter "DOGE" in the search bar on the right side of the screen to view available trading pairs. Here we take DOGE/BUSD as an example. Click "DOGE/BUSD" to open the transaction page.

3. Scroll down to the [Spot] area and enter the amount of Dogecoin you wish to buy. Choose from different order types to buy Dogecoin. Here we take market order as an example. Click [Buy DOGE] to confirm the order. You will see the purchased Dogecoin in your spot wallet.

Summary

New meme coins are launched every day, and traders are looking forward to replicating the success of Dogecoin and Shiba Inu Coin and earning high profits. Before investing in meme coins, you should do your own research (DYOR). Please note that memecoins are very fickle compared to other digital currencies. The high risks associated with trading or investing in cryptocurrencies cannot be ignored. Meme coins are primarily community-driven and may suffer unexpected crashes. Please be sure to act within your means and never invest more money than you can afford.