What Are Meme Coins?
Curious to learn more about meme coins?
What Are Meme Coins?
Meme coins are joke-inspired tokens with no inherent utility. They thrive on hype, community, and virality, not blockchain innovation.
A meme coin is a cryptocurrency connected to an internet meme or trend, or which offers a humoristic element.
Meme coins now play an important role in internet culture, allowing people who follow these trends to capitalize on their volatile nature and pursue high returns.
Unlike most cryptocurrencies, meme coins do not aim to innovate blockchain technology, offer a decentralized finance tool or service, or provide a long-term incentive to hold the coin.
Rather, they’re designed to launch an idea as a coin, to engage and unite a community, and inspire some market activity.
A few meme coin projects, such as Dogecoin, have enjoyed so much success and income that they’ve turned into something innovative thanks to the investment. These are the exception, not the rule.
What Are Solana Meme Coins?
Solana is the meme coin launchpad of choice. You see, meme coins need a home blockchain.
While BNB Chain was once the go-to, Solana is now the top choice due to its low fees and fast speeds. BONK and dogwifhat ($WIF) are Solana’s biggest meme coin success stories.
Arguably, the most famous Solana meme coin is Bonk ($BONK), which has inspired countless copycat projects.
To aid in the sale of their Web3 "Saga" Smartphones, a significant amount of $BONK was sent to the handsets. Suddenly, they increased in value and rapidly sold out.
The inspired blockchain community witnessed just how quickly people will take action to claim generous airdrops, which led to the creation of many similar meme coin projects.
Another Solana meme coin with an interesting background and which inspired countless copycat projects is dogwifhat ($WIF). This project now has a market cap of several billion dollars and is the most valuable Solana Meme Coin ever.
Characteristics of Meme Coins
Meme coins are fun, chaotic, and wildly unpredictable with some defining characteristics.
Extremely volatile
Driven by online communities
Meme-heavy, humor-based, low/no utility
Easy to create, trade, and hype
Often short-lived
Influenced heavily by social media trends
What’s The Difference Between Meme Coins & Cryptocurrencies
Traditional cryptocurrencies like BTC or ETH derive value from utility and innovation while meme coins gain value from virality. Most meme coins are technically tokens (not coins), created on existing networks.
The value of meme coins derives almost entirely from their virality, community-driven hype, and social media influence, while the value of cryptocurrencies (like BTC, ETH, and SOL) is connected to the strength of their blockchain network, the technical innovations they’ve introduced, and the developments they are working on.
For more information on meme coins vs cryptocurrencies, we've written an article explaining here.
“Altcoins”, another blockchain terminology, refers to any coin that is not Bitcoin, however, altcoins should not be used synonymously with meme coins - they are very different.
You may also have heard "tokens" and "coins" used interchangeably, but this is incorrect. A coin is used as a form of money and is native to its L1, while tokens are created on top of existing chains and are used for purposes other than money.
Confusingly, that makes USD Coin (USDC) and Tether (USDT) tokens, rather than coins. Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) are all coins, as they are the native token of their L1 blockchain.
Meme coins, therefore, are actually tokens, but “meme coin” has stuck, while the more accurate “Meme Token” rarely gets used by the community.
Go figure!
Meme Coins Vs NFTs
Meme coins represent units of tradeable value. NFTs represent ownership of unique assets. One’s like money, the other’s like a digital collectible.
Meme coins are tokens launched to signify a unit of value (e.g. 100 $DOGE), whereas NFTs are tokens built on blockchains to signify ownership of a unique digital asset (e.g. a piece of digital art).
Meme coin projects may launch an NFT collection and NFT collections may release meme coins, but they are different concepts and technologies.
Popular Meme Coins
Dogecoin ($DOGE)
Shiba Inu ($SHIB)
Pepe ($PEPE)
dogwifhat ($WIF)
Bonk ($BONK)
FLOKI, POPCAT, BRETT
How Do People Make Money From Meme Coins
Buy low, sell high: While this is the obvious advice, the trick is to time your purchases well. Get in early, don’t get too greedy, and sell your initial stake when you’re up so that you can ride on pure profit!
Follow market dynamics: Meme coin trading can be unusual and seemingly random at times, but it still follows market rules. You need to see what the big players (whales) are doing, track the influencer movements, and be ready to act fast when you spot an opportunity.
Investor sentiment: Trading when the market is collectively heading upwards can be a great way to improve your odds, conversely, trying to fill your bag while the market is crashing might not be so smart.
Where there’s smoke, there’s fire: If there’s enough hype around a coin and it’s getting serious coverage, it might be a good time to get in, but you still need to look at the charts and do your technical analysis (TA). Be careful not to act rashly, as the red candlesticks could come at any moment!
Get close to the source: Download Telegram and Discord and embed yourself in the meme coin community to get close to the action, see or receive information first, and build an impressive depth to your knowledge of the market. After a while, you won’t be guessing, you’ll be making informed decisions.
If you're keen to learn more about trading meme coins for profit, check out our beginner's guide on how to trade meme coins on Solana.
Risks Of Meme Coins
The fast and furious nature of meme coin investment can be anxious and emotional for some people who are not accustomed to dealing with such levels of risk.
To compound that, you have to be aware of a tiny minority of bad guys who try to hack projects and participants. There are also some folk who intentionally create meme coins with the sole purpose of ripping people off.
Sometimes the best education is acquired by making mistakes, but in this space, errors can prove very costly.
Lastly, never give up your private keys, AND if you do not self-custody your crypto (i.e. keep it safely in your own wallet), you are liable to lose it.
Remember, where there’s money to be made, there’s money to be lost.
The golden rule of meme coins is this:
Don’t invest more than you can afford to lose. Ever.
Final Words
Let’s hand over to Naval Ravikant, Former CEO of AngelList, for some famous words to conclude this guide.
“Crypto is the greatest videogame ever created. Play 24/7 with everyone in the world, directly from your phone. New challengers, meme wars, and MONEY. Every new player has to pay off all of the existing ones.“
P.S. Check out the BONKbot Tutorial Guide if you’re aching to get started on BonkBOT.