What is Memecoin? History of formation, development and classification of Memecoin

Background of Memecoin Origin

Memecoin originated from the Shiba Inu dog image posted by a Japanese teacher in 2000. This humorous image quickly became a social media phenomenon. In 2013, a 4chan user posted this meme on Reddit, and by the end of that year, Dogecoin – the first cryptocurrency featuring a dog meme – was born. The real explosion of meme coins occurred in 2021, when billionaire Elon Musk continuously shared dog meme images, pushing Dogecoin's value to an astonishing level. Since then, the term memecoin began to become popular and many new coins emerged.

Development History of Memecoin

Initial Period (2013-2014): The Emergence of Dogecoin

2013: Dogecoin (DOGE) was launched in December 2013 by Billy Markus and Jackson Palmer. Inspired by the famous "Doge" meme with a Shiba Inu dog image and humorous text.

Dogecoin was initially created as a joke but quickly attracted a community due to its friendly and humorous nature.

Highlight: Dogecoin was used for "tipping" or donating in charitable activities, such as sponsoring a NASCAR team and providing clean water to people in Kenya.

Rise of Other Memecoins (2017-2019)

When the crypto market boomed in 2017, many small memecoin projects began to appear but did not truly stand out.

Notable mark: Some memecoins like Pepe (based on the "Pepe the Frog" meme) emerged, focusing on internet culture and humor (However, PepeCoin with ticker $PEPE had not yet appeared at this time)

However, memecoins during this period were often short-lived and did not last long.

Revival through Dogecoin and Elon Musk (2020-2021)

2020-2021: Elon Musk, CEO of Tesla, SpaceX, and X, continuously posted tweets supporting Dogecoin, increasing the value and popularity of $DOGE. Dogecoin transformed from a joke to a global phenomenon. DOGE's price soared to its peak in May 2021, reaching a market capitalization of over $80 billion.

Emergence of other memecoins:

• Shiba Inu (SHIB): Dubbed the "Dogecoin killer," launched in August 2020 and quickly attracted a community
• Floki Inu (FLOKI): Inspired by Elon Musk's dog, FLOKI quickly became a popular memecoin.

Memecoin Diversification (2022-2023)

New memecoins emerged with diverse themes such as:

• Political Meme: MAGA (TRUMP)
• Cultural Meme: PepeCoin
• Innovation Meme: Some memecoins began integrating more practical functions, such as DeFi, staking, or even participating in Metaverse, like FLOKI with Valhalla

Prominent in this period was $PEPE – the new green frog symbol, which quickly rose to the third market capitalization position in the Memecoin market (only after the two predecessors $DOGE and $SHIB). $PEPE is a memecoin inspired by Pepe the Frog, a famous internet meme with a large fan base. Launched in 2023, $PEPE quickly became a phenomenon, attracting the attention of investors and the community due to its entertainment factor, high virality, and strong connection to meme culture.

Memecoin Classification

Memecoins can be classified into the following main groups:

1. Pure Memecoin
   • Characteristics: A pure meme coin that reflects a popular idea or personality. These coins typically have no specific purpose other than attracting attention and creating community effects.
   • Example: Pepe
2. Community Memecoin
   • Characteristics: Memecoin aimed at implementing community culture, sharing beliefs and values of a group. These coins often have a strong community and are used as a tool to promote shared community values.
   • Example: SHIB, DOGE
3. Event-Based Memecoin
   • Characteristics: Memecoin based on specific events, prediction, and speculation. These coins often emerge during major events and attract community attention in a short time.
   • Example: Trump, PEOPLE for election events
4. Celebrity Memecoin
   • Characteristics: Memecoin inspired not only by animals but also by famous personalities. During the US presidential election, two meme coins MAGA and BODEN grew strongly, representing Donald Trump and Joe Biden.
   • Example: JENNER token of Caitlyn Jenner grew 50,000% in less than 1 hour after launch. RICH token of rapper Rich the Kid reached a market capitalization of 1 million USD after 2 hours. However, celebrity memecoins often rise quickly during an event and then drop deeply, struggling to return to previous heights.
5. Cultural Memecoin
   • Characteristics: Memecoin sometimes represents a community's cultural aspect. When the community is active, the value of memecoin increases sustainably. These memecoins are often developed to attract capital flow and users. For example, DEGEN on the Farcaster protocol attracted many users when it gained attention.
   • Example: Degen, Bome

Why Are Memecoins Attractive and Highly Profitable?

1. Viral Effect
   • Memecoin easily spreads on social media through humorous images and stories. Popular memes can quickly attract the attention of a large number of users and create an investment frenzy.
   • Support from celebrities like Elon Musk has created a strong price appreciation effect, causing meme coin values to potentially skyrocket in a short time.
2. Small Market Cap – Large Profits
   • Meme coins often have a very small initial market capitalization, allowing rapid value growth from nearly zero. This makes meme coin values potentially increase thousands of times in a short period.
   • Extremely low display prices, usually under 1 USD, easily attract investors with small capital.
3. Exchange Listing Effect
   • Listing on major exchanges creates a FOMO (Fear of Missing Out) effect, attracting capital flow and generating significant attention. This effect quickly increases meme coin value and attracts many new investors. For example: BOME was listed on all major exchanges just 3 days after creation

Summary

Memecoin has become an indispensable part of the crypto market, bringing excitement and interest to investors. However, due to high risk, investors need to carefully consider before participating in this market and always maintain a safe exit strategy. Meme coin can bring large profits but also involves many risks, requiring investors to have deep understanding and appropriate investment strategies. A successful crypto ecosystem often cannot lack the presence of meme coins, creating richness and diversity in the market.