What is a Memecoin? From Dogecoin to Dogwifhat

In the early days of cryptocurrency, the focus was mostly on serious problems. Bitcoin tried to create digital money that did not rely on banks. Ethereum aimed to power decentralised applications through smart contracts.

Then Dogecoin appeared in 2013. It was created as a joke that poked fun at the seriousness of the crypto industry, using the Shiba Inu dog from a popular meme as its mascot.

The joke did not fade away. Instead, Dogecoin attracted a community, media attention and eventually large amounts of trading activity. What started as satire became part of a multi‑billion pound speculative market segment characterised by extreme volatility and risk.

Today, memecoins are a visible part of the crypto market. They act more like social tokens than traditional investments, where price is often driven by humour, viral status, and online attention. This can create sharp price rises, but just as often leads to sudden and permanent crashes.

Defining a memecoin

A memecoin is a cryptocurrency whose main appeal comes from internet memes, viral trends or pop culture rather than clear, long term utility. Where some cryptoassets aim to be a payment system or a decentralised computing platform, many memecoins are created mainly for entertainment and speculation.

They usually sit on existing blockchains such as Ethereum or Solana. The technology behind them can be sophisticated, but for most holders the main purpose is participation in a community or trend.

Prices are heavily linked to social sentiment. If a token starts trending on social media and the community grows, the price can move extremely rapidly. If interest fades, the price can just as quickly fall towards zero. There is often little or no underlying use case to support the price once the hype slows down.

The psychology of unit bias

A common trait of memecoins is an enormous token supply, sometimes in the trillions or more. This can result in very low prices per token, for example £0.00001.

This feeds into a behavioural pattern sometimes called "unit bias". People may feel more satisfied holding 1,000,000 units of a very cheap token than 0.01 of a better known asset such as Bitcoin, even if the pound amount invested is identical.

This feeling can encourage speculation. New buyers may believe that a cheap token only needs to “go to £1” for them to become wealthy, without understanding how large the market value would need to be or how extremely unlikely that outcome is. This can lead to unrealistic expectations, disappointment and the high probability of total financial loss.

The major players

The memecoin market has expanded well beyond the original Shiba Inu joke. Below are some of the better known examples. Inclusion here is for information only and is not a recommendation to buy or sell any asset.

Dogecoin (DOGE)

Dogecoin is often described as the original memecoin. It runs on its own blockchain, based on a fork of Litecoin. It uses a proof‑of‑work system and has no fixed maximum supply, which means new DOGE continues to be created.

Dogecoin has had periods of intense media coverage, including public comments from high profile figures such as Elon Musk. At times it has been accepted by some merchants for small payments, helped by relatively low fees compared with some other networks.

However, Dogecoin’s price has also been extremely volatile. Periods of online enthusiasm have been followed by large price falls, and there is absolutely no guarantee that past peaks will be reached again.

Shiba Inu (SHIB)

Shiba Inu launched as the "Dogecoin Killer" on the Ethereum network. It began as a meme token that played on the same dog imagery, but later expanded into a broader set of projects.

Developers have created tools such as a decentralised exchange (ShibaSwap) and a layer 2 blockchain called Shibarium in an effort to add more utility around the core token. This may create more ways to use SHIB, but it also introduces extra complexity and smart contract risk.

Holders should remember that, despite this ecosystem, SHIB remains highly speculative. Its price has gone through extreme cycles of boom and bust, and future returns are uncertain.

Pepe (PEPE)

Launched in 2023, Pepe is based on the online "Pepe the Frog" character. It made no strong claims about utility and was marketed primarily as a "pure" memecoin.

The project saw rapid initial price increases as traders speculated on its meme potential. This kind of rise can attract copycat projects and intense short term speculation, which increases the risk of heavy losses for late entrants.

The value of PEPE, like many memecoins, is closely tied to ongoing internet attention. If that attention moves elsewhere, liquidity and price can decline sharply.

Bonk (BONK) and Dogwifhat (WIF)

BONK and dogwifhat sit on the Solana blockchain, which has become associated with fast and low cost transactions. This has made Solana popular for launching and trading new memecoins, but it also means very speculative assets can appear and disappear quickly.

BONK was launched in part through a large airdrop to Solana users, which helped restart interest in the ecosystem after a market downturn. The token’s early success was heavily driven by community activity and highly speculative trading with extreme volatility.

Dogwifhat (ticker: WIF) became known for its simple image of a dog in a pink beanie hat. Its popularity reflects the absurd humour that often underpins memecoin culture.

Both BONK and WIF have seen large price swings, up and down. Rapid gains in earlier periods do not mean similar performance will continue, and anyone buying at higher prices faces a serious risk of losing most or all of their investment.

How it works in practice

To understand memecoins, it is often more helpful to think of them as online communities or social networks, rather than traditional technology companies.

The launch and viral spread

On many blockchains, especially Solana, it is now technically simple and fast to launch a new token. A developer can create a token contract, add some initial liquidity to a decentralised exchange and start trading within minutes.

In some cases, these tokens are linked to a current event, a celebrity, a joke, or a trending video. Promotion usually takes place on platforms such as X (formerly Twitter), Telegram or Discord.

Although the technical side can be straightforward, the risks for buyers are extremely high. New tokens often have very little transparency, no formal business plan and no proven track record. There is a real chance that a token will never gain traction or will vanish shortly after launch.

Community takeover

If a memecoin gathers attention, a community may form around it. Supporters create memes, share screenshots of price movements and encourage others to participate. This unpaid promotion is sometimes called "shilling". This social pressure should not be mistaken for investment merit, and such memecoin continues to carry extreme risk of total loss.

When prices start to move up, a feedback loop can develop. Rising prices bring more attention. That attention brings more buyers, often motivated by fear of missing out (FOMO), which can push prices still higher.

This cycle can reverse quickly and sharply. If sentiment turns, or early holders decide to sell, prices can drop far faster than many investors expect. Those who bought late in the cycle are often left with large unrealised losses that may never recover.

The "supercycle" shift

In 2024 and 2025, many market observers talked about a "memecoin supercycle". During this period, some memecoins produced higher short term returns than more established projects with clear technical goals.

We also saw the rise of new themes such as PolitiFi, where tokens referenced political figures or issues, and AI‑themed memecoins that claimed to use artificial intelligence or even used bots to promote themselves online.

These trends attracted traders looking for fast gains, but they also increased the risk level and a lot of them faced significant or total losses. Tokens built around political satire or AI marketing are especially vulnerable to sudden changes in sentiment, regulation, or platform rules. As with other memecoins, many of them are likely to fade away entirely.

Risks and red flags

Memecoins are widely considered one of the riskiest segments of the crypto market. The possibility of short term gains comes with a very real chance of losing your entire investment.

For every token that briefly surges, there are many that never recover once interest moves on.

• Extreme volatility
  Large and sudden price swings are normal in memecoin markets. Price moves of minus 50% in a few hours, or plus 100% in a single day, are not unusual.

  This volatility cuts both ways. While some traders may benefit from sharp upward moves, many retail investors end up buying near the top of a hype cycle. When the price falls, they can face steep losses, and there is often no clear path back to previous levels.

• Rug pulls and scams
  It is technically easy and relatively cheap to create a new token. Unfortunately, this is attractive to scammers.

  A common scheme is the "rug pull". A team launches a new token, encourages people to buy, and then drains the liquidity pool or sells a large hidden allocation, leaving other holders with tokens that can hardly be sold. In many cases, these losses are permanent and there may be no realistic way to recover funds.

  Warning signs can include anonymous teams, unclear token ownership, complicated or opaque smart contracts, and aggressive marketing that focuses only on quick profits.

• Concentration risk and whales
  In many projects, a small number of wallets hold a large share of the token supply. These large holders are often called "whales".

  If one or more whales decide to sell, they can trigger a sharp price crash. Smaller investors usually cannot exit quickly enough, especially if liquidity is thin. Before investing, it is important to understand how concentrated the token supply is, though this information is not always easy to verify.

• Short lifespans and fading memes
  Most internet memes are temporary. What is funny or popular today may be forgotten within weeks.

  Because many memecoins rely mainly on meme power, they often follow the same pattern. Once the joke is no longer fresh or a new trend appears, trading activity can dry up. Prices may never recover, even if they once reached very high levels during a hype phase.

• Regulatory and operational risk
  Rules for cryptoassets are still developing in many countries, including the UK. Future regulation could affect how certain tokens are traded or marketed, or whether some platforms can continue to support them.

  There are also operational risks. Smart contract bugs, blockchain outages, exchange failures or hacks can all affect your ability to buy, sell or transfer memecoins, and this can lead to losses that are not recovered.

Why memecoins matter

Despite their risks, memecoins have become a lasting part of the crypto conversation. They reflect how online culture, humour and speculation can combine in financial markets.

For some people, memecoins are a first step into using crypto wallets and decentralised exchanges. These tools can be more complex than traditional finance apps, so this type of onboarding is not risk free. New users may focus on potential profits and overlook the dangers.

Memecoins also highlight the power, and the danger, of crowd behaviour. Prices can move more on attention and narratives than on fundamentals. This can create opportunities for sophisticated traders, but it can be very harmful for inexperienced investors.

Anyone considering memecoins should treat them as highly speculative. They are not suitable for most investors, and you should be prepared for the possibility of losing 100% of the amount you put in.