Over the past year, cryptocurrency has surged in popularity, aided by the march towards acceptance, legitimacy and integration into the traditional financial landscape.
The peak achievement in this regard has been the success of Bitcoin, the oldest cryptocurrency token on the market, which reached six-figure dollar values in December 2024 and has since largely maintained prices in the high $90,000 or low $100,000 range.
In the spirit of a rising tide raising all ships, this has caused other people to invest in other bitcoins as well, using dedicated, easy-to-use crypto conversion tools found at credible exchanges.
Whilst there are various classes of crypto tokens, from widely accepted mediums of exchange such as Bitcoin and Ether, to utility-filled governance tokens, one particularly unusual but highly popular class of tokens is so-called meme coins.
Unlike their analogue in the stock market, meme stocks, meme coins have a very long history in the crypto space, and even their subject matter aside, have been a point of contention within the world of decentralised finance.
Whilst they can look tantalising to a new investor, is there anything to the “too-good-to-be-true” promises or should you avoid adding them to your wallet at all costs?
What Are Meme Coins?
Meme coins or meme cryptocurrency is a type of token that takes advantage of the fact that almost anyone can create their own token on the blockchain should they want to.
The term refers to a cryptocurrency token that had its source from a joke, internet meme or other lighthearted characteristic, but can also refer to tokens which have no utility, authenticity or basis of value. Many meme coins are both.
The first and most famous of these is Dogecoin, and it serves as a good illustration of the concept and how people can make money from it, even if that was not the intention of its creators.
Dogecoin was created by Markus and Jackson Palmer in 2013 as a parody of Bitcoin during one of its early peaks, named for and with a design based on Kabosu, a shiba inu dog that was the face of the popular and rather infamous doge meme.
It had a relatively stable valuation based on nothing but speculation and the residual value of the doge meme, but it unexpectedly surged in 2021 in the wake of a similar stock surge for video game retailer GameStop that rose for similar reasons.
There are literally thousands upon thousands of meme coins out there, most of which have valuations that are as close to zero as makes no difference and with just as little liquidity, but at the same time, that is not to say that people have not made money with meme coins. It typically just is not buyers.
Whilst Dogecoin did become successful, it must be emphasised that it was the exception rather than the rule, and much like how people can theoretically make money with penny stocks by taking advantage of spikes in volatility, betting everything on the roulette wheel is likely to be a better financial strategy.
The same is true of many meme coins, although some are far worse and far more brazen in this regard than others.
Possibly the worst example was Squid, a token inspired by the dystopian South Korean television series Squid Game, but not only had almost no value once the liquidity pool had been siphoned by the creators, but because it required a token that did not exist to sell, the token was literally valueless.
The only value of the coin came from the rather infamous reaction of a livestreamer who witnessed the value of the token crater in real-time, with the particular clip often being shared when similar pump-and-dump meme coins reach the inevitable latter stage.
This is the main concern to be mindful of when investing in meme coins; even more than other tokens, a lot of due diligence has to be paid towards the stated aims, projects and basis for their valuations, otherwise it is all too easy for them to become valueless, abandoned token projects.
Possibly the most recent example, and one that is currently the subject of a lawsuit is Hawk, a Solana-based meme coin released by Hailey Welch, an influencer best known as “Hawk Tuah Girl”, although it must be noted that Ms Welch herself was not named in the lawsuit.
The value of Hawk was based entirely on the association with the “hawk tuah” meme, the context for which will not be repeated here, and its virality led to Ms Welch becoming a minor internet celebrity overnight.
Ultimately, as in all matters cryptocurrency, caveat emptor is the most important rule; people investing significant money they cannot afford to lose into the Hawk Tuah Girl’s cryptocurrency are almost destined to lose money.
If people want to put money they can afford into a highly volatile speculative meme coin, then they can, but they should have no expectation that they will ever see that money again.