What are Memecoins? Coins made for fun and speculation, explained

If you’re looking for the current (2025) top 10 cryptocurrencies by their total global value (aka market cap), you’d see Bitcoin at the very top, followed by altcoins like Ethereum. As you scroll down the list, you’d notice Dogecoin, currently sitting at the 8th rank in 2025. 

Dogecoin. You look closely at the coin’s logo. It’s literally a Shiba Inu dog making a funny face. It looks familiar, too, as you may have come across that dog in a social media post. In fact, Dogecoin ($DOGE) is the world’s first and most popular memecoin. It’s a cryptocurrency built around the Doge meme. Much wow!

TL;DR – Memecoins used to be made for fun, but in recent years bad actors have picked up the trend and used it to trick people into giving free money via rug-pulls and pump-and-dump schemes. While some memecoins are legitimate, investors new to the memecoin space must remain cautious!

What is a memecoin?

Memecoins are cryptocurrencies inspired by internet memes, jokes, or popular cultural trends. Other examples of memecoins include Dog Wif Hat (WIF), Pepe (PEPE), Bonk (BONK) and Shiba Inu Coin (SHIB). You can find hundreds more examples at Coingecko.

Unlike traditional cryptocurrencies, memecoins often lack intrinsic value or real-world utility, deriving their worth primarily from community engagement and social media hype. In other words, if a memecoin is currently trending, traders buy them in droves, driving their price up. Other traders catch on, and they buy them in the hopes of selling them later for a profit. 

This is called ‘the greater fool theory’, that there will always be a fool in the market who will be willing to pay a higher price for a speculative asset. This trading strategy involves extremely high risk relying on sustained market momentum and interest in the meme.

The potential for profit for memecoins is no joke. In December 2020, with one NZ dollar you could buy 153 units of DOGE. That following month, the price increased twenty-one-fold, effectively turning a $1 investment into a $20 profit. 

How exactly are memecoins valued?

There are several factors why memecoins like DOGE could reach such high valuations. Most cryptocurrencies share the same underlying factor, that is the global macroeconomic condition, which determines how confident investors would be to buy riskier assets.

However, possibly unique to memecoins are the “unreasonable” emotional factors that can sharply drive their prices up or down. For example, Internet celebrity Elon Musk said that Dogecoin is his favourite coin after Bitcoin. For much of 2021, the price of DOGE experienced high volatility whenever Musk posted anything related to the memecoin on social media.

More recently, preceding Donald Trump’s inauguration as the 47th president of the United States, the memecoin $TRUMP was launched, followed by another memecoin $MELANIA. Clearly, these are very much politically charged memecoins with more than a million wallets holding at least one of these tokens. Trump also fully endorsed these coins, and given his high profile, the memecoin space was boosted to a higher level than ever. 

A common theme is at play here, and that is the strength and number of the communities that back up memecoin. A memecoin based on a meme alone may not be enough to gain full traction and trade at high prices. However, successful memecoins that you’re likely to hear on the news have been promoted by communities or influencers with high numbers of passionate followers.

While celebrity endorsements can increase the value of a memecoin, other factors intrinsic to the coin could come into play:

Total supply

The total supply of a memecoin directly affects its price and perceived scarcity. A limited total supply can create a sense of scarcity, potentially driving up demand and price. This perception is shared among many cryptocurrencies with a limited supply, including Bitcoin.

Also, memecoins with a smaller total supply often have higher individual prices, while those with larger supplies tend to have lower per unit values. There are trillions of units of Shiba Inu and Pepe; SHIB is valued at 100-thousandth of a dollar per unit, while PEPE is valued at 1-millionth of a dollar per unit.

Although the price per unit of coin has no bearing on its future valuation, many investors perceive such low prices as getting a huge discount. As the thinking goes, after all, Bitcoin started out quite worthless and now look at it!

Supply locking and burning

Some creators of recent memecoins adapt the concept of supply locking and burning from well-established and serious cryptocurrency projects. The reason for this is to give a signal to investors that these particular memecoin projects ensure long-term sustainability, and hopefully prevent the coin from losing all of its value due to short-term hype. 

When a memecoin has part of its supply locked by the creators, it means that they are not available for sale in the foreseeable future. This gives investors the perception that the creators have skin in the game, who could lose potential gains if they were not serious. If the creators were able to sell all their stake of their memecoin project, what does that say about their long-term commitment to the project?

“Burning” refers to a programme that systematically and permanently removes part of the supply from circulation. In theory, should the demand for the memecoin remain the same, while the supply decreases, burning would increase the value of the memecoin. 

The important part — the risks

Let’s now talk about the risks associated with memecoins. It used to be that a new memecoin was released every month, but now with platforms like pump.fun, literally anyone can create a memecoin. Hundreds of memecoins have been created daily through pump.fun. 

With such ease to issue digital assets as well as promoting them, you couldn’t fail to notice how this is all quite similar to the NFT mania that was all the rage back in 2022. Most of the new memecoins issued these days, bluntly speaking, will turn out to be worthless or downright scam. 

Here are some examples of scams that were successfully pulled off by memecoin creators:

SQUID

In late 2021, a memecoin named SQUID was released. Based on the popular Netflix series Squid Game, the memecoin was marketed as a “play-to-earn” coin, promising investors that they could earn SQUID by participating in an online game based on the series. 

However, investors soon realised they could not sell their SQUID coins, while the original creators, who were in no way affiliated with Netflix or the series, left the investors in radio silence.

WIZ

A now common occurrence is sophisticated scams involving a celebrity’s hacked social media account. In November 2024, rapper Wiz Khalifa’s X account was hacked and scammers promoted the WIZ memecoin through his account, accumulating over $3.4 million in sale. 

Within an hour, the scammers sold all of their WIZ holdings, and the price plummeted to worthlessness. This is known as a pump-and-dump scheme, however the extent of this crime is a lot worse as it involved a person who was never involved.

LIBRA

One of the most scandalous crypto scams to date was none other than the LIBRA coin scam early this year (2025). Although it is not strictly defined as a memecoin, how it was promoted looked similar to any memecoin. 

LIBRA was marketed as a serious project, but upon closer inspection, there were red flags that a keen crypto sleuth would probably pick up. It gave out no details beyond the basics like what it claimed it would do, how much the coin is being sold, and for how much. Even the way the coin was made appeared shady; the creators were anonymous.

However, that didn’t stop Argentina’s president Javier Milei from promoting it as something which could stimulate economic growth by supporting small businesses through decentralised finance — something that sounds like marketing material on LIBRA’s website.

Within an hour, the first buyers of this coin (identified to belong to one of the creators of LIBRA) started to sell, initiating a 70% price collapse. At the time of writing, President Milei was charged with fraud and called for impeachment. Following the scandal, Argentina’s sovereign bonds fell 2%, which is a signal for investors losing trust towards the government’s credibility.

The LIBRA scandal appears to be the first time that a memecoin scam has posed a publicity crisis to a government, in addition to personal financial losses from those who bought the memecoin in good faith.

The lessons we can take away

From the way memecoins are generally marketed and perceived, it appears that memecoins are made mostly for fun but they have evolved into the most speculative, ‘wild west’ end of the crypto market swamped by rug pulls and ultimately being a gamble.

Whilst memecoins are like a digital collectible that signals belonging to a certain community or Internet subculture, digital collectibles are generally not viewed as investment instruments. 

Memecoins can cause harm, as we’ve seen from scam cases in recent years, with LIBRA as a notable example. Investing into cryptocurrencies whose value increased due to celebrity endorsements appears to be very risky indeed. 

First of all, celebrities are not financial advisors, and even if they were to recommend buying an asset in the most general sense and in good faith, could they be really trusted? A lot of time and effort must be spent on checking whether the celebrity’s statement is legitimate (e.g. their account had not been hacked), and if so, we’d still need to know if the project has long-term financial value.

At this point in the article it almost goes without saying, if you’re going to speculate on memecoins then be prepared to lose everything that you invest.

Just remember — when buying a memecoin, be sure to avoid becoming a meme yourself!