2021 has been humorously dubbed the "Year of the Dog" in the cryptocurrency world, with Dogecoin and Shiba Inu representing meme coins and achieving astonishing leaps in market value and price. Dogecoin's annual growth exceeded 8,000%, while Shiba Inu's growth reached an incredible 60,000,000%.
The concept of meme coins originates from internet memes or jokes. In 2013, Dogecoin emerged as the first meme coin, created as a parody of the Shiba Inu meme, essentially a product of community and internet culture.
Meme coins exhibit extreme price volatility, influenced by online community hype and the "fear of missing out" (FOMO). These community-driven currencies can gain fame rapidly, but as the market focus shifts to new meme coins, the prices of older ones may plummet.
Unlike traditional cryptocurrencies, meme coins often have a vast supply, sometimes with no cap. For instance, Shiba Inu's total supply reaches a staggering 1 quadrillion tokens, and Dogecoin's circulation has surpassed 100 billion. This characteristic leads to relatively low prices for meme coins, allowing investors to purchase a large number of tokens at minimal cost.
Traditional cryptocurrencies like Bitcoin and Ethereum are based on blockchain technology, aiming to provide decentralized financial solutions. Bitcoin was created as a decentralized payment system, while Ethereum expanded blockchain applications through smart contracts. In contrast, meme coins often stem from internet culture, like Dogecoin from the popular Shiba Inu meme, focusing more on community culture and internet humor, with less emphasis on technical depth and innovation.
Traditional cryptocurrencies aim to solve specific financial issues, such as payments, asset storage, and smart contracts, with clear use cases and target markets. Meme coins, however, are primarily about community and cultural expression, relying more on social media and online community outreach, often lacking in clear application scenarios or financial functions.
Bitcoin is viewed as digital gold, a tool for long-term value storage. Ethereum, with its smart contract capabilities, serves as the foundation for decentralized application (DApps) development. Conversely, the value perception and usage scenarios for meme coins are more based on community support and internet humor, lacking traditional financial attributes or practical applications. Investments and transactions in meme coins are often speculative, based on community consensus rather than substantive economic activity or value creation.
Many traditional cryptocurrencies, like Bitcoin, have a clear supply cap, which helps maintain value stability. On the other hand, some meme coins, like Dogecoin, have no supply limit, potentially affecting their long-term value stability. The economic models and monetary policies of meme coins are generally simpler and less thought-out than those of traditional cryptocurrencies, reflecting in their price volatility.
During the COVID-19 pandemic, many retail investors turned to the cryptocurrency market to hedge against inflation risks, with meme coins rising rapidly. The variety and swift market value growth of meme coins can be partly attributed to the 2020 meme stock events with GameStop and AMC, demonstrating how community power can influence the market.
In early 2021, a jest on Reddit to pump Dogecoin's price quickly garnered public attention. Celebrities like Elon Musk further fueled this, causing Dogecoin's price to surge in a short time. This phenomenon highlights the significant impact of community and online influence on meme coin prices.
Retail investors' interest in meme coins partly stems from their low investment threshold. Compared to traditional cryptocurrencies, meme coins are usually priced lower with a vast supply, allowing investors to own a large number of tokens at a minimal cost. This low-cost investment appeal attracts many investors seeking quick profits.
Another characteristic of meme coins is their deep roots in internet culture and community sentiment. Many meme coins originate from online jokes or cultural phenomena, making purchasing meme coins a form of support and identification with specific community cultures. After the GME event, many meme coin traders were inspired by Reddit's SatoshiStreetBets group, hoping to challenge mainstream cryptocurrencies by supporting meme coins, creating a "David vs. Goliath" sentiment.
Public support and jesting by celebrities like Elon Musk have promoted the popularity of meme coins, also leading to significant market volatility. Their statements and actions often act as catalysts for meme coin price fluctuations, demonstrating the real impact of celebrity influence in the cryptocurrency domain.
Despite shining brightly in 2021, meme coins lack the blockchain technology foundation and mature ecosystem that Bitcoin has. Traditional cryptocurrencies like Bitcoin have deflationary characteristics and practical use cases, while most meme coins, with no supply cap, carry potential inflation risks, relying almost solely on internet culture and community enthusiasm.
The market value of meme coins is greatly dependent on community and social media momentum, making them highly speculative. This reliance leads to extreme price volatility, with sudden surges or drops in value. Meme coins often have a short lifespan, with price movements heavily influenced by community sentiment and celebrity comments.
With the popularity of meme coins, there have been numerous instances of fraud in the market. For example, the Squid Game meme coin incident, based on the popular TV series, saw its price skyrocket before the developers vanished, causing the price to plummet and investors to suffer heavy losses. These incidents remind investors to conduct thorough market research and risk assessment before investing in meme coins.
Dogecoin, the progenitor of meme coins, was created by two software engineers in 2013 as a joke within the cryptocurrency community. Over time, it has become a standout among meme coins due to its unique cultural charm and community support. Dogecoin uses a proof-of-work (PoW) mechanism, is a fork of Litecoin, and has an unlimited supply, becoming an undeniable force in the cryptocurrency market.
Shiba Inu, dubbed the "Dogecoin killer," is one of the most famous meme coins in recent years. Created by an anonymous developer in 2020, Shiba Inu is not just a simple meme currency; it has built its decentralized ecosystem, including a trading platform and an NFT art incubator. With a total supply of an astonishing 1 quadrillion tokens, more than half of which were destroyed, it showcases its unique approach to market marketing and community building.
Representing decentralized finance (DeFi), SafeMoon utilizes an automatic liquidity pool to address price volatility and liquidity issues in other cryptocurrency transactions. It charges a fee on each transaction, redistributing a portion to existing holders and adding another portion to the liquidity pool, encouraging long-term holding and reducing volatility.
Inspired by the Akita dog breed, Akita Inu is another meme coin that has garnered attention from the community and investors. It's also created on the Ethereum blockchain, reflecting the diversity and innovation within the meme coin domain.
First, log into your LBank account. If you don't have one, you'll need to register. After logging in, click on "Exchange" at the top navigation bar and choose either the "Classic" or "Advanced" trading page to enter.
In the search bar on the exchange page, enter the abbreviation of the meme coin you want to buy, such as "DOGE" for Dogecoin. Select a trading pair, like "DOGE/USDT," and click it to open the corresponding trading page.
In the "Spot" trading area, enter the amount of the meme coin you wish to buy. You can choose from different order types; here, we'll use a "market order" as an example. Click "Buy DOGE," confirm your order, and complete the purchase process.
After completing these steps, you'll see the newly purchased Dogecoin in your LBank account's spot wallet. Through this process, you can not only buy popular meme coins like Dogecoin and Shiba Inu but also explore more emerging meme coins traded on decentralized exchanges.
Meme coins, as a unique form of cryptocurrency, have carved out a niche in the cryptocurrency market with their distinctive internet culture background and community-driven momentum. While they offer new investment opportunities, they also come with undeniable risks. Investors need to carefully consider the volatility, economic foundations, and potential market manipulation risks of meme coins. As the cryptocurrency market continues to mature and the regulatory environment improves, whether meme coins can adapt to new market conditions, maintain their cultural charm, and continue to offer value to investors remains an observation-worthy question. In this context, rational analysis and prudent investment become especially important.
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