What is a memecoin? Hype, risks and well-known examples

They pop up everywhere, sometimes go up thousands of percent and just as hard back down: memecoins. For some they are a gamble to get rich quick, for others proof that crypto is one big casino. What exactly are memecoins, and why are they so risky?

What is a memecoin?

A memecoin is a cryptocurrency that arose around a joke, an internet meme or a hype, rather than around a technical application. The best-known examples started as light-hearted projects, but grew through viral attention — often fueled by social media and famous names — into coins worth millions.

Why are they so popular?

• Low entry price: many memecoins cost a fraction of a cent, so you can buy ‘a lot’ of them — psychologically appealing.
• Community and humor: a strong, enthusiastic community makes taking part fun.
• Dream of quick profit: stories about people who got rich on a small stake attract new buyers.

The risks — be warned

Here comes the downside, and it is big:

• Extreme volatility: memecoins can rise or plummet tens of percent in hours.
• Little to no underlying value: the price runs mainly on hype, not on utility or revenue.
• Pump-and-dumps and scams: memecoins are a favorite target for scammers. Insiders buy early, drive up the price and sell at the top — after which the price collapses.
• FOMO: many people buy at the peak out of fear of missing out, and lose money.

Dealing sensibly with memecoins

Do you still see something in a memecoin? Treat it as what it is: a gamble, not an investment. Never put in more than you can fully afford to lose, do your own research and distrust promises of guaranteed profit. The vast majority of memecoins eventually disappear again.

Prefer to start with crypto in a sensible way? Read our beginner's guide and check out reliable platforms.

This article is not investment advice; always do your own research. Be extra vigilant about scams around memecoins.