Remember Doge? The Shiba Inu pup that became a digital currency sensation in 2013? Back then, it was a playful jab at the seriousness of the crypto world. Fast forward a decade, and memecoins, those internet joke-inspired tokens, are a barking mad force in the crypto economy, amassing a market cap of nearly $60 billion, according to Galaxy Digital CEO Mike Novogratz.
The popularity of internet memes and their capacity to appeal to the humour and inventiveness of the online community help to explain this development. Especially in relation to the market caps of conventional cryptocurrencies like Bitcoin and Ethereum, the figure above is rather high. As Novogratz would argue, indeed, nemecoins are “one of the most powerful stories” available in the crypto industry.
From Funny To Fortune: Investing In The LOL Factor
“My son-in-law’s made a killing,” Novogratz recently said, highlighting the potential for big profits in these playful pups. But how does one value a digital currency based on a meme? Novogratz suggests it’s all about the “laugh factor.” He pointed to dogwifhat (WIF), a Solana-based meme coin inspired by a misspelling of “dog” that rocketed to a $3 billion market cap.
Memecoins – whether you’re a fan or not – have become a cornerstone of the crypto economy… In today’s market, they’re one of the most powerful narratives out there. At @galaxyhq we estimate that memecoins on permissionless blockchains have an aggregate market cap of more than… pic.twitter.com/wihxYIPwxi
— Mike Novogratz (@novogratz) June 12, 2024
Evolving Ecosystem: Memecoins Get Serious
Although this investment approach sounds like a wager at a casino, memecoins are developing outside of the LOLz in increasing trend. Use Shiba Inu (SHIB) for instance. Originally parodies of Dogecoin, SHIB has developed into a project with actual uses. It currently features a distributed name service (think crypto domain names!), a payment system, and even a layer-2 scaling mechanism called Shibarium.
DOGE market cap currently at $20.6 billion. Chart: TradingView.com
This shift towards utility isn’t unique to SHIB. Floki Inu (FLOKI) launched TokenFi last year, a platform aiming to grab a slice of the tokenization market (think representing real-world assets like property on the blockchain). This trend suggests meme coins might be here to stay, potentially becoming more than just a flash in the pan.
A Cautionary Tale
While Novogratz is bullish, others remain skeptical. Meme coins are notorious for wild price swings, making them a risky investment. Their long-term viability based solely on utility remains debatable. Some argue that meme coins are a distraction, diverting attention away from the true potential of crypto: fostering innovation and decentralization.
Featured image from Coins.ph, chart from TradingView
