As the crypto industry continues to evolve, there has been a growing interest in “memecoins” — digital assets that often have little to no underlying value, but instead rely on internet culture and social media hype to gain popularity. From the meteoric rise of Dogecoin (DOGE) to the recent launch of the Pepe memecoin (PEPE), these coins have captured the attention of the masses and have even seen some success in the market. However, as the market matures, the pressure is on for crypto projects to offer more than just a catchy name or meme-worthy mascot.
From the beginning
Memecoins can be traced back about a decade to the success of Dogecoin. Created as a joke by two software engineers in 2013, Dogecoin gained a significant following among meme-loving traders, and its mascot, Shiba Inu, became an overnight internet sensation.
Despite its lack of real utility or purpose, Dogecoin soared, briefly surpassing Bitcoin (BTC) in 2014 and even reaching its highest market capitalization of $88.8 billion in May 2021 at a price of $0.6818 per DOGE. Its success and endorsement by prominent figures such as Elon Musk have paved the way for other coins such as Shiba Inu (SHIB), Baby Doge and most recently, Pepe Coin. In April 2023, Musk even briefly replaced Twitter’s iconic bluebird logo with Dogecoin’s official mascot from the Shiba Inu meme. Around this time, DOGE rallied as much as 40% on the news.
— Elon Musk (@elonmusk) April 3, 2023
Launched in early 2023, PEPE quickly captured the attention of the internet community and has since reached a market capitalization of over $1 billion, with recent listings on platforms such as Binance, Huobi, Bitget, Gate.io, XGo and OKX, to name a few.
Although it has been a runaway success since its launch, the anonymous development team behind the token has been transparent about its intentions, making it clear that it is “completely useless” and even stating so on its disclaimer page:
“PEPE is a memecoin with no intrinsic value or expectation of financial return. There is no formal team or roadmap. The coin is completely useless and for entertainment purposes only.”
Thus, as the space emerges from the current crypto winter and continues to grow and expand, it is crucial to consider the long-term sustainability of memecoins. In essence, the crypto industry should look to prioritize substance and utility instead of simply focusing on short-term gains.
More importantly, the question that should be asked is not, “Are people questioning the long-term sustainability of memecoins?” but rather, “What steps can be taken to ensure the long-term viability and usefulness of cryptocurrencies as a whole?”
Moving beyond the memescape
Indeed, as the crypto industry continues to evolve, there is a growing understanding that cryptocurrencies need to have real-world applications and solve real-world problems to gain wider adoption and long-term viability. While memecoins may bring attention and excitement to the industry, they ultimately do little to advance the technology or promote its adoption.
In fact, some argue that memecoins may even be harmful to the industry’s reputation. To quote Lim Yu Qian from CoinGecko: “Memecoins are a very risky type of crypto because they are based on internet cultural references with price movement depending on whether the memecoins can stay relevant by driving hype.”
According to CoinGecko Research, an investor would have needed to invest $66,298.25 on average to become a memecoin millionaire, based on the analysis of 10 memecoin price returns. To reach $1 million in memecoin holdings, the minimum initial investment required ranges from $11.87 for Shiba Inu in 2020 to $190,585.57 for ArbDoge AI (AIDOGE) in 2023.
Source: CoinGecko
While these numbers may seem tempting to some, it’s important to consider the significant risks and volatility associated with memecoins and the potential harm they could cause to the reputation of the broader crypto industry.
Ultimately, the success and long-term viability of memecoins are still uncertain. While they have captured the attention of a new and growing audience, they may not provide the necessary substance and utility to drive the long-term adoption of cryptocurrencies. However, it is worth noting that the crypto industry is still in its infancy and, therefore, constantly evolving.
From speculation to tangible benefits
Hence, while memecoins may not be the solution to long-term adoption, they have served to bring attention and excitement to the industry. To truly drive adoption and bring substance to the space, the industry needs to shift its focus away from just trading and speculation, and instead develop practical applications that solve real-world problems and provide tangible benefits to users. This could include applications in areas such as remittances, online payments, and wealth management.
As the cryptocurrency industry continues to mature and grow, the possibility of an application or platform that allows memecoins to be used for real-world transactions is not farfetched. Such an innovation would not only bring more substance to the crypto industry but also give memecoins and other cryptocurrencies a real-world utility beyond their current speculative nature.
The crypto industry has the potential to bring significant positive change to the world of finance and beyond. By working to build a more stable and trustworthy ecosystem alongside projects like Arbitrum, Optimism and XGo, the industry can pave the way for a new era of crypto utility that will benefit individuals and society as a whole.
Kirthana Devaser is an economist turned financial writer and speaker in the Web3 space. She’s a firm believer in using technology for good and believes that Web3 will drive meaningful change and build a better tomorrow for all. Currently, Kirthana serves as the content and copy manager at XGo, where she oversees and champions all things content and brand identity across the company.
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