Meme Coins vs Altcoins
What is a Meme coin and how do they differ from other Altcoins
Last updated
What is a Meme coin and how do they differ from other Altcoins
Last updated
Alternative coins (Altcoins) are essentially any cryptocurrencies that is not Bitcoin; however some believe that Ethereum is not an Altcoin because it is too competitive with Bitcoin. There are currently thousands of Altcoins, as of 2022 there are approximately 10,000 of cryptocurrencies which all are consider Altcoins, some of the famous ones include: BNB, Cardano, Tether, Dogecoin and Shiba Inu. These coins fall into into the many categories of Altcoins which are Payment Tokens, Stablecoins, Security Tokens, Utility Tokens, Governance Tokens and finally Meme Coins.
It is important to understand and distinguish that not all Altcoins are Meme coins but all Meme coins are Altcoins.
Meme coins are cryptocurrencies that has no inherit value and often does not have any utility. How Meme coins differ from crypto giants like Bitcoin; is that Bitcoin's value is directly connected to the fundamentals such as scarcity and total potential market cap. Whereas Meme coins often hit the crypto ecosystem with astronomically high circulating supply ranging from 1 quadrillion (1,000,000,000,000,000) to 100 quadrillion (100,000,000,000,000,000) coins. Also Meme coins are typically, but not always, themed around a meme on the internet; which often incentivise eager-trend followers and influencers to buy these coins, so that they are a part of the trend. In turn this allows non crypto users to see meme coins as their favourite influencers are sharing the memes and promoting the coin encouraging them to get into crypto or just reposting the meme. All this mean there is more initial and commercial awareness to meme coins compared to other types of Altcoins.
To mint a new Altcoin used to be difficult and required a niche set of skills whereas now to mint a new Altcoin all the is require is to sign up, pay the fees and provide the liquidity. This means that Meme coins can be minted everyday. As previously specified Meme coins have no inherit value so liquidity pools are need to create a mechanism to give Meme coins value. This mechanism works when users buys meme coins, the supply decreases and the meme coins has to equal the liquidity pool. The only way that can happen is by increasing the price of the meme coins. resulting the increase in value (as price and value are the same thing). The benefit of this mechanism it with a very low market cap and low volume it makes its very easy to make trades; however it almost gives full freedom for users to dump all their coins resulting in the value to plummet.
Some of the most famous Meme coins include: Shiba Inu, Dogelon mars, baby doge and the original meme coin: Doge coin
Probably the most famous Meme coin, Doge coin has its origins in a tweet by Jackson Palmer ( a worker for Adobe) in 2013 stating that there is so many Altcoins in the crypto ecosystem; what if there was on based on the Shiba Inu meme (which was referred to as doge hence the name Doge coin). This tweet, that was a making a "joke" of the wild speculations in cryptocurrencies at the time, gained a lot of social media attention which was noticed by an IBM engineer Billy Markus. Markus approached Palmer: they built, registered it and gave it a logo creating Dogecoin in December 2013.
When Doge coin was released it gained colossal success in the first 72 hours dogecoins value rose by 300%. This is due to the mass social media hype which promotes the coin and effectively acts as Dogecoins marketing. This social media traction started with the Shiba Inu meme, then leading to celebrities like Elon Musk retweeting and posting about Dogecoin. This made new memes about it creating the cyclical system in social media leading to meme like "to the moon" memes. Doge's creators know that doge is a "joke" but there is no arguing that it has grown out of the joke and has grown far beyond their dreams. At release 1 Dogecoin= $0.0013 and grew to a value of $0.04 in 2021. Dogecoin has used this to donate $1 million dollars to multiple charities.
Due to the success of Dogecoin, many people are trying to create their own meme coins either from the same Doge meme or a different meme. Some other coins that use the Doge Meme is Shiba Inu coin, Dogelon Mars and Baby Doge just to name a few; whilst some that are based from different memes include: Monacoin and Banano.
To see how Dogecoin is behaving on the market check out the Scallop exchange
It would be extremely naive to think that one crypto user cannot have an impact on crypto, In the crypto ecosystem there is term "Whale". A "whale" is a wallet address ( a commercial or individual web 3 wallet) that hold significant amount of a specific cryptocurrency usually 10% or more is could a significant effect on its value; Elon Musk is the prime example of a whale. Elon Musk has so much influence that the term the Musk effect was created. Some of his most famous impacts was when he announced that Tesla bought $1.5 billion worth of Bitcoins in February 2021, Bitcoin rose by 20% that day. When Musk said Tesla are no longer expecting Bitcoin as a form of payment, because of environmental damage POW mining does, the value dropped by 50%; it is speculated that he did this to buy up more bitcoin when everybody was selling ( because of FOMO) which means he controls even more of the market after this.
However Musk is even more influential when it comes to meme coins especially Dogecoin. He famously tweeted about it stir interest in it, by doing this the value would keep increasing. Some of his most famous tweets incentives people to buy like the "people crypto" tweet and some of the tweets inspire new meme to be created, which means even more people are seeing it.
Though there is a lot popularity with Meme coin, there are more risk factors to Meme coins compared to other Altcoins. Some of the risks include: There can be a lot dangers with investing into Meme coins:
Overall Meme coins are nothing more than what they say they are a meme, a "joke". Which for this new era of banking can be extremely dangerous, they can be viewed more as a gamble rather an investment. This approach to meme coins means that you only put as much into them that you can afford to lose, but this does not stop scammers. However it minimise the users lose. The only one benefit to meme coins is that they are one of the best ways to introduce new people into crypto; which benefits the crypto ecosystem astronomically.
