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.
This growth is attributed to the increasing popularity of internet memes and their ability to tap into the humor and creativity of the online community. The figure above is a substantial amount, especially when compared to the market caps of traditional cryptocurrencies like Bitcoin and Ethereum. Indeed, nemecoins, as Novogratz would say, is ‘one of the most powerful narratives’ in the crypto market as we speak.
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
This investment strategy might sound like a gamble at a casino, but there’s a growing trend of memecoins evolving beyond the LOLz. Take Shiba Inu (SHIB) for example. Initially a parody of Dogecoin, SHIB has morphed into a project with real-world applications. It now boasts its own payment system, a decentralized name service (think crypto domain names!), and even a layer-2 scaling solution 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