The rise of memecoins has surprised many people in the cryptocurrency world. These digital coins aim to capture key ideas like fairness, transparency, and decentralization. But they also focus on quick profits, sometimes more than on new technology.
Since 2022, memecoins have grown a lot. They now make up about 11% of all cryptocurrencies, not counting big ones like Bitcoin and Ethereum. This is almost three times what it was before. In 2021, coins like Dogecoin and Shiba Inu reached huge values, with Dogecoin hitting over $80 billion and Shiba Inu over $39 billion.
As memecoins become more popular, we should remember they exist because of technology built by the crypto industry. Memecoins run on blockchains, which use cryptography, networks of computers, and digital wallets. Without progress made in the last ten years, these coins wouldn’t exist.
Some people feel doubtful or upset about memecoins becoming popular. They might think memecoins distract from important technological advancements. But there are reasons why people like them. Memecoins often start in a fair way, are easy for anyone to get, and are transparent. They offer equal chances to investors all over the world because they use open, global markets.
Traders should stay positive about the crypto industry, even if it’s still growing. Speculation has its place, but there’s more work to do and more technology to build. The goal is to have a truly global and fair internet.
So, why have memecoins become popular? One reason is the larger economic situation. During the COVID-19 crisis in 2020, central banks around the world printed more money than ever before. The global money supply increased by over 25% from 2020 to 2022, growing from about $81 trillion to $102 trillion.
When more money is in the system, prices of goods and services go up because more money chases the same amount of goods. This is called inflation. In the U.S., inflation reached up to 7% in 2021 and 6.5% in 2022. People started worrying about the rising cost of living.
Because money was losing value, people looked for assets that would hold their value over time. Many turned to real estate, but housing prices have been going up faster than wages. In 1963, it took about 4.4 years of an average salary to buy a house. By 2021, it took about 8.1 years.
This makes owning a home harder for many, especially younger people. With high inflation and the dream of owning a home slipping away, some people might feel hopeless about traditional finance. They might think, “If I can’t get rich slowly, maybe I can get rich quickly.”
This feeling might be stronger among younger generations. In crypto markets, Millennials and Gen Z make up 94% of buyers. They are looking for new ways to build wealth outside of traditional systems.
In 2021, the GameStop stock saga showed how young investors were challenging traditional finance. A group of retail investors on platforms like Reddit banded together to push up the price of GameStop stock, going against big hedge funds betting against it. This event showed that people could use the market to express their views against the traditional financial system.
Memecoins might be similar. They are digital assets that represent internet culture and are not tied to traditional finance. They allow people to “vote with their money” against old systems. Buying a memecoin can be a way to join a community and support an idea or movement.
Memecoins offer something different from other tokens. They are easy to understand and accessible to everyone. They often start with a fair launch, where anyone can buy in at the same time. There are no special deals for big investors or venture capitalists.
In the past, new crypto projects raised money through public sales called ICOs (Initial Coin Offerings). Anyone could invest at the beginning. But now, many projects raise money from private investors before the public can buy in. This means regular investors might end up buying tokens at higher prices later, while early investors can sell for a profit.
Memecoins try to avoid this by being open and fair from the start. They appeal to people who want a level playing field. They also have simple and catchy themes that are easy to understand. This makes them popular among everyday investors.
Because memecoins are simple and based on popular internet memes, they can spread quickly. People can easily grasp the idea of a coin based on a funny dog or a catchy phrase. This makes it faster for memecoins to gain popularity and for communities to form around them.
However, there are risks with memecoins. Most of them don’t last long. About 97% of memecoins have already become worthless, meaning they have almost no trading volume. While some like Dogecoin and Shiba Inu have lasted, many others disappear quickly. Investing in memecoins can lead to big gains, but also big losses.
Another risk is that some groups might manipulate memecoin markets. Certain groups, sometimes called “cabals,” might create hype around a coin to pump up its price, then sell their holdings, leaving others with losses. They might use social media and pay influencers to promote the coin. Even though blockchain is transparent, it’s hard to know who owns which wallets. People need to be careful and do their own research.
Memecoins also don’t focus on advancing technology. If too much attention and money go into memecoins, it might take away from developing new and useful crypto technologies. The industry needs innovation to grow and provide real value.
It’s important for people in the crypto industry to think about how they spend their time and money. Overcommitting to tokens that don’t bring new technology or ideas can lead to wasted resources. The industry should balance the excitement around memecoins with the need to build new products and services.
Looking ahead, both technology-driven tokens and memecoins have their place. Technology tokens aim to build new software and services on the blockchain. They might offer new ways to handle transactions, store data, or run applications. Memecoins represent ideas and narratives that people can rally around. They might not offer new technology, but they bring people together.
For projects building new technology, they shouldn’t be discouraged by the memecoin craze. They can learn from memecoins about building communities and launching tokens fairly. Fairness, transparency, and decentralization are important principles in the crypto world.
Memecoins show that blockchain can bring people together around shared ideas. They demonstrate the power of open, global markets. While speculation is part of the market, there’s still a need for real technological progress.
In summary, the rise of memecoins reflects a mix of economic factors, changes in investor attitudes, and the unique features of blockchain technology. They offer a new type of asset that is accessible and aligned with internet culture. But they also come with risks and challenges.
Investors should be aware of these risks and make informed decisions. The crypto industry should balance the excitement around memecoins with the need to continue building innovative technologies. By doing so, it can create a more inclusive and advanced financial system for everyone.
