Meme Coins: What They Are & How They Work

Meme coins have become super popular among those who give them value and have been on many people’s minds as to how they work, what exactly they are, and if there is any value in them.

Today we look at all of those questions and help you determine if this type of cryptocurrency investment is right for you.

So let’s dive in!

Looking to learn more about the basics of Crypto? Check out our Crypto terms every investor should know.

What Are Meme Coins?

what are meme coins and how do they work

Many people have heard about meme coins but aren’t sure what they are. Meme coins are a type of cryptocurrency that was first inspired by jokes and various memes across the internet. 

You shouldn’t take these meme coins too seriously, but at the same time, some people can cause these cryptocurrencies to take off when they buy into the meme coin to get in on the joke.

They call these cryptocurrencies meme coins because they are rooted in fun, engaging, and imaginative memes that come in the form of videos and images, for example. Some of the most popular meme coin examples are Shiba Inu and Dogecoin

Meme coins are supposed to be fun but with a little bit of investment savvy behind them. After all, they are the same as their bigger-known counterparts, Bitcoin and Ethereum. The only difference is that meme coins are ideas built on various forms of media that are designed to be shared and can go viral if super popular.

If we take Dogecoin as an example, which is one of the biggest meme coins around, it began as a joke to make fun of the big cryptocurrencies like Bitcoin. Originally it wasn’t intended to have any use out in the real world, but later as the joke caught on, people started making purchases with them inside a particular ecosystem.

How Volatile are Meme Coins and What Is Their Value?

Meme coins are highly volatile because they don’t have any real purpose except to be traded. The reason for their extreme volatility is that, unlike other cryptocurrencies and fiat currencies, there are no caps on how many can be in circulation and how many can exist in the marketplace. But just as fast as it skyrocketed, it fell even quicker.

Differences Between Meme Coins and Traditional Cryptocurrencies

what are meme coins

When doing your research on meme coins, you must understand the key differences between traditional cryptocurrencies and meme coins.  

Meme coins were never designed to be used in the real world. They were simply intended to be traded for fun. Other cryptocurrencies are designed as utility tokens and can be used in a particular ecosystem.

As mentioned above, meme coins suffer extreme ups and downs in the short term and aren’t considered a serious investment. This is primarily because they have uncapped supply in the marketplace, except for Shibu Inu.

Meme coins have virtually no value and are simply driven by their popularity and ability to go viral. Most of these meme coins are just for fun and traded among enthusiasts of the coin.

At the same time, these coins have low, if any, value. You don’t want to write them off completely when it comes to short-term investing because many people have made small fortunes trading these coins. 

It’s very rare to find something that offers quick short-term returns, so the possibility of adding meme coins as a small part of your portfolio might not be a crazy idea. 

Like many investments on the stock market, one of the tricks is to figure out when a meme coin will go viral before it happens. Obviously, this can be very difficult if you aren’t up to the latest and future trends.  

Although you may not decide to invest your hard-earned money in meme coins, it’s good to be aware of them as they are a significant part of the cryptocurrency culture.

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How Do Meme Coins Work?

Meme coins work very similarly to other cryptocurrencies. They utilize the blockchain technology that is available to them, and they use smart contracts similar to how Solana and Ethereum use contracts. 

It’s amazon how far meme coins creation has become. It used to be much more difficult because of the technological aspect of knowing how to create them. Today there are businesses that specialize in creating meme coins and can sites can do most of the work for you.  

This low barrier to entry when creating meme coins makes it super accessible for the average person but also makes it easier for scammers to take advantage of investors who aren’t as savvy as they should be.

Just like any other cryptocurrency, meme coins can be bought and sold on specific marketplaces like It is simple and easy to do and doesn’t take any money to start.

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Risk In Investing In Meme Coins

are meme coins risky

Like any other type of investment, there is risk involved. Since meme coins rely so much on popularity, the ability to go viral, social media, and other factors, it creates an environment of extreme risk and volatility.

Because meme coins are based on outside influences, it leaves them open to drastic upturns and downturns in value in as little as 24-48 hours.

You may have even heard about people getting scammed through investing in meme coins that they didn’t know were fake. The Squid Game scam was a popular scam, and many got conned into thinking they were real meme coins. The makers of that scam got off with a cool $3.8 million before it was shut down.

Related Links: How to Invest In Crypto (Without Buying Cryptocurrency)


Investing in any type of meme coins can be very risky. But at the same time, without risk, there is no reward, right? The best thing to do is learn as much as you can about meme coins before investing.  
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