One inevitability in the cryptocurrency space was the emergence of Dogecoin: the first memecoin – a digital token inspired by memes and internet culture. The internet received this new digital token exactly how its founders envisioned – as a cheap joke!
But every joke has a punchline, and in Dogecoin’s case, this punchline would be revealed over time as its popularity continued to grow rapidly until it began to be taken more seriously by investors and is today considered a legitimate asset class in the cryptocurrency market.
Taking Dogecoin as a case study, when it was first released in 2013, it traded for between $0 to $0.0004 USD per DOGE, and within the first few months after its release, it remained relatively stable until January of 2014, when it saw its first significant bull run from $0.00026 USD per DOGE to slightly over $0.002 USD per DOGE, which represented a 700% increase in value.
Five years after this initial jaw-dropping increase in price, Dogecoin hit its all-time high price at $0.682 USD per DOGE, which was a 262584.62% increase in its price from its inception, and that was enough to make unbelievers in the concept of memecoins change their minds completely about it.
This brings us to the question:
Do Memecoins have a future in the cryptocurrency space?
Generally, yes! The adoption, price hike, and overall stability of a memecoin, according to Tauhid Zauman, an associate professor at Yale School of Management, depends on how well their creators can create initial hype on a memecoin, maintain that hype, and build a strong community around their digital currency.
So this is basically a battle of popularity and creativity between thousands of memecoins and how they can outshine one another to stay relevant in the cryptocurrency space. While the concept of memecoins has a future and will never truly die, various memecoins that are created will definitely die off.
It should be noted that while memecoins are marketed as fun, there can be a very negative side to them.
Not only are their values incredibly unpredictable, with many memecoins plummeting 99% or even down to absolute zero in the current bear market, but there are also numerous allegations of foul play and malicious motives against creators, who are sometimes unknown.
Jonathan Zeppettini, international operations lead at Decred, cites a number of instances where founders create new memecoins, control 100% of the supply, or a large concentration of it right out of the gate, then make their primary objective building buzz so they can dump off their inventory afterward, and those who purchased such a memecoin end up losing all their money.
In conclusion, although some consider memecoins as a passing trend due to their lack of use cases and real-world applications, others see them as a possible hidden treasure. As with any new and emerging technology, the future of memecoins still remains uncertain, and traders and potential investors should approach them with caution and never forget to do their research before investing.