With NFT sales volume steadily declining since January 2023, memecoins — such as $PEPE, $DOGE, and $TURBO — have emerged as the center of attention in the crypto space. Unlike conventional cryptocurrencies such as Bitcoin and Ethereum, memecoins are primarily used as trading instruments and lack any specific utility tied to particular blockchain features, such as Ethereum’s use of Dapps and DAOs.
While memecoins give traders an opportunity to make large amounts of money in short periods of time, they are also very volatile and unstable. As such, they should be approached with caution.
Here’s what to know about memecoins, how they became popular, the risks, and how to buy them yourself.
What is a memecoin?
So, what exactly is a memecoin? Memecoins — AKA “shitcoins” — are a cryptocurrency created and promoted around a popular internet meme or cultural trend. The appeal of memecoins lies in their fun and lighthearted nature, as well as their potential for significant profits.
Memecoins are often created as a joke or a way to mock the serious nature of traditional cryptocurrencies, but they can still hold significant value if they gain a following. This has led to a large increase in memecoin trading and investment, with some investors seeing major returns.
What are some examples of memecoins?
Two of the most popular memecoins are Dogecoin and Pepe Coin. Dogecoin was started as a joke in 2013 by Billy Markus and Jackson Palmer, but it has since grown into a significant player in the cryptocurrency space. In May 2021, it surged to an all-time high of around $0.74, boasting a market cap of over $80 billion at its peak.
Inspired by the popular internet character Pepe the Frog, Pepe Coin recently made headlines when it reached a $1 billion market cap and entered the market’s top 100 cryptocurrencies — all just three weeks after launch. The contract for the token was deployed by an anonymous user and originally gained popularity through posts on its official Twitter.
Other notable memecoins include Shiba Inu (SHIB) and Akita Inu (AKITA).
Why are memecoins so popular?
One reason for the recent popularity of memecoins is the rise of social media and internet culture. Memes have become a significant part of online communities, and memecoins are a natural extension of this trend. The rise of Reddit communities, Discord channels, and other online forums has made it easier than ever for memecoins to gain traction and attract investors.
Another reason for the popularity of memecoins is the desire for quick profits. While other coins like Ethereum and USDC can take time to appreciate in value, memecoins can see significant gains in a short amount of time. According to Watcher Guru, if someone invested $1,000 in $PEPE on April 17, 2023, their tokens would be valued at $36,541 by May 3.
How to buy memecoins
Certain memecoins aren’t listed on exchanges. As a result, buying them can be tricky for those new to the space. Fortunately, the process of buying them is mostly the same from coin to coin. To illustrate, we’ll use $PEPE as an example.
First, make sure you have a wallet such as Metamask or Coinbase Wallet. Then, if you don’t already have some, buy Ethereum or transfer it through another exchange to your wallet. After you have the amount you want to swap in ETH, open Uniswap.com and connect your wallet.
Copy and paste $PEPE’s token address 0x6982508145454Ce325dDbE47a25d4ec3d2311933 and select Pepe Coin. Double-check to ensure you have the right coin and sign the transaction. Then, enter the amount of ETH you want to swap, and the amount of $PEPE will appear. Click “Swap” and sign the transaction.
Then, after a few moments, your Pepe Coin should be in your wallet.
The same process applies to different memecoins; all you have to do is swap out the token’s contract address. For example, if you were to buy $TURBO, you can access the contract on etherscan.
Risks and concerns
Ready to buy? Before you do, it’s important to remember that while memecoins can lead to quick profits, they are also subject to sudden price fluctuations. This can make them risky investments and may not be suitable for everyone, particularly those who are risk-averse.
With every story you hear about someone who has made hundreds of thousands off a memecoin, there are also more people who have lost large amounts but just don’t advertise it on social media. In a thread by NFT_Doctor33, dozens of traders chimed in with their losses to demonstrate that the crypto space isn’t solely about constant gains and victories but also setbacks.
As these memecoins continue to evolve, it will be interesting to observe their impact on the broader cryptocurrency market. Whether coins like PEPE maintain long-term success or eventually give way to another trend, they have already secured a place in NFT history as a significant contributor to the crypto ecosystem.