Every day 40,000 to 50,000 new crypto tokens are created and this can reach 100,000, according to DEX aggregator data.
Meme coins are intrinsically linked to social media. Meme culture, as we know it today, was created on social media platforms. On everything from Facebook to Reddit, memes (humorous images, videos, gifs, etc. that are shared prolifically across the internet) have become a defining aspect of online culture, conversation, advertisement, and so on.
Meme coins are tokenized versions of different internet memes. However, some meme coins are created only for amusement and satire and are not directly inspired by any meme in particular. The first meme coin, Dogecoin (DOGE), perfectly embodies the essence of meme coins. Stylistically, it was inspired by the Doge meme. Its intention, however, was to satirize other cryptocurrencies.
What is a Meme Coin?
The main difference between the likes of Bitcoin and Dogecoin is that the former was created with the intent of creating a legitimate digital currency, while the latter was created as a joke. Incidentally, the likes of Dogecoin quickly went viral and became just as legitimate as Bitcoin. Today, it stands as one of the most popular cryptocurrencies; it’s seen as a serious investment option and is used widely to pay for goods and services.
Dogecoin isn’t a lone example. Over the last decade, there have been lots of meme coins that have made investors a lot of money. For example, one anonymous investor of the PEPE meme coin made $46 million from the coin.
The speculative nature of meme coins attracts investors who are looking for short-term gains. To identify a potentially lucrative meme coin, investors must assess several factors. According to meme coin analyst Alan Draper, two key characteristics to look for in upcoming meme coins are viral potential and community strength. By judging coins based on these factors, lucrative investment opportunities can be found.
The best way to examine these aspects is to assess online communities found on social media. The profitability of a meme coin directly correlates with how widely it is being talked about and shared on Facebook, X, Reddit, and other social media platforms.
How Social Media Impacts the Success of a Meme Coin
Meme coins such as Dogecoin and Pepe would not exist without social media and the meme culture it supports. Just as memes are widely shared due to their humorous value, meme coins are also initially invested in due to their amusing nature.
Popular meme coins became prominent due to the thriving groups, threads, and communities dedicated to them. For example, Shiba Inu (SHIB), which was launched in 2020, achieved its all-time peak in October 2021 thanks to groups like the r/SHIBArmy on Reddit, which today boasts 518k members.
Within these community groups, members discuss the coin widely, organize events, and make memes. These groups are made to create a buzz around a newly minted coin. Once these groups reach a certain volume of participants, they start going viral. For example, a meme created in the group will be reshared widely on X or Instagram, creating a wider reach and inspiring more participation in the group, ultimately leading to further investment in the coin.
Many people are exposed to meme coin-related content daily on their social media. A recent study by the Financial Conduct Authority found that 44% of 18-to 24-year-olds heard about crypto for the first time through social media, which conveys how big a talking point crypto is online.
As a meme coin increases in prominence, it is picked up and talked about by crypto news sites, which spreads its renown further. Overall, the prevalence of a meme coin is solely determined by its presence on social media.
The Role of Influencers
Another key component to a meme coin’s success is influencer endorsement. Throughout crypto history, celebrities and socialites have created price fluctuations by publicly endorsing a specific cryptocurrency on their social media accounts.
As soon as a social media influencer shares that they support or have invested in set crypto, all of their followers become inclined to do the same. This can result in a massive price increase for a coin that may not have reached the same level of value otherwise.
The coins that celebrities endorse are oftentimes meme coins. They pick these coins due to their ridiculousness; they also like to test how much their influence can impact the crypto market.
One of the most significant examples of this was when Elon Musk published a series of tweets endorsing Dogecoin in 2019. This created widespread interest in the meme coin and resulted in it shooting up in price. Since Musk’s initial endorsement, the coin has increased in value by 3,233%, reflecting the massive impact that his words have had.
A study published by Science Direct found that all 47 coins that Musk has posted about have experienced a price increase as a result.
Final Thoughts
Meme coins must gain traction on social media platforms in order to become valuable. Without thriving on subreddits and being the subjects of viral posts, they can’t gain the attention of investors and achieve widespread notoriety. On top of this, a social media endorsement from a celebrity can catapult the coin to unimaginable heights. So, it’s impossible to deny that social media shapes meme coin crazes.
