Meme Coins: The Risky New Craze Inspired by Internet Memes

Meme coins are a type of cryptocurrency inspired by internet memes or other trends, with an estimated 40,000 to 50,000 created daily.

Trump Meme Coins: A Lighthearted (Yet Risky) Addition to the Crypto World

Readers may be aware that Trump, the 47th president of the United States, is a champion of cryptocurrency. Among other things, Trump made headlines in January with the launch of two meme coins, $TRUMP and $MELANIA, three days before his inauguration. Many would argue that his action wasn’t in the spirit of meme coin trading, took the fun out of meme trading, and highlighted potential risks.

Meme coins are a type of cryptocurrency inspired by internet memes or other trends, with an estimated 40,000 to 50,000 created daily. Anyone with a small amount of technical knowledge can create and launch a meme coin. Meme coins are literally made out of thin air.

Meme coins can normally be purchased on crypto-currency exchanges and sometimes directly from the meme coin creator. The website for Trump meme coins directs purchasers to the Moonshot app available on the App Store and Google Play.

Unlike other cryptocurrencies, such as Bitcoin and Ethereum, which are designed to be used for payments, utility and other uses, meme coins are more for entertainment purposes. Meme coins are meant to be light-hearted, fun and not taken seriously. Popular meme coins include DOGECOIN, SHIBU INU and PEPE. PEPE was created as a tribute to Pepe the Frog, a humanoid frog cartoon character who became a popular internet meme in the early 2000s.

While images are often associated with meme coins, for example, DOGECOIN and SHIBU INU both use images of a dog and PEPE uses a cartoon frog, meme coins are not NFTs (non-fungible tokens). One $TRUMP is the same as all the other $TRUMPs.

The playful nature of meme coins is reflected in the price of PEPE. Trading at just $0.000015, one US dollar buys 62,344 PEPE. Low-value coins like PEPE are often seen as harmless fun in the crypto world.

Not too many months ago, the thought of holding meme coins as a long-term investment would have been dismissed as fanciful.

But that changed with the release of $TRUMP and $MELANIA, which were initially sold at $6.50 and nearly $7 respectively. Notably, $TRUMP’s price surged to $73 per token, and at one stage more than $24 billion worth of $TRUMP was traded in 24 hours.

$TRUMP and $MELANIA, as with other meme coins, are volatile. At the time of writing, $TRUMP trades around $27, a fall of over 60 percent from its $73 high, but still well above its initial sale price. $MELANIA has fared less well and is trading at $2.30, less than one third of its initial sale price.

The value of a meme coin is market driven. The high trading value of $TRUMP is hardly surprising given Trump’s immense name recognition and support in certain quarters, combined with $TRUMP’s strategic release just before his inauguration. The ability of people to purchase $TRUMP easily through an app on their phone no doubt fuelled the purchase of $TRUMP.

Of course, Trump is not the first to drive the value of meme coins through celebrity endorsement. Elon Musk’s comment in Mach 2024 that DOGE should be accepted as a payment method for Telsa vehicles saw the DOGECOIN price increase by 15 percent. Similarly, Musk’s change of Twitter’s blue bird logo to a Shiba Inu dog, often used with the DOGECOIN coin, saw a 30 percent spike in the DOGECOIN price.

But meme coins aren’t all fun and games. They risk legal scrutiny as they can blur the line with unregistered securities. If a meme coin is classed as a security (in New Zealand a ‘financial product’) stringent requirements must be met. On the official Trump Meme website the creators of $TRUMP are trying to position $TRUMP and $MELANIA as not being securities: “Trump Memes are intended to function as an expression of support for, and engagement with, the ideals and beliefs embodied by the symbol ‘$TRUMP’ and the associated artwork, and are not intended to be, or to be the subject of, an investment opportunity, investment contract, or security of any type.”

Musk faced a $258 billion-dollar lawsuit over his public support of DOGECOIN, amid a claim that his comments made DOGECOIN increase by 36,000 percent over two years before letting it crash. However, even at DOGECOIN’s height, its value was well under $1.

Buyers beware. Extreme caution is required around meme coins. A sad but all too common feature of meme coins and cryptocurrency generally is