BONK, PEPE and SHIB are a menace to crypto

In 2013, the launch of a dog-themed crypto token as a private joke between a couple of software developers was a harmless piece of fun. The fact that Dogecoin (DOGE) has since amassed a market capitalization greater than $13 billion (as of Dec. 13) is beyond the understanding of most investors, but it seems like it’s here to stay. The sector that DOGE has inspired, though, is becoming a menace to an industry that needs to evolve.

Memecoins are dangerous. They are dangerous because the large majority of those who put their money into them never see it again; they are dangerous in the way they damage the credibility of the entire cryptocurrency industry; they are dangerous in the way ownership is so highly concentrated, and they are dangerous because they are proliferating.

As of Dec. 13, there are around 1,300 memecoins in circulation with a collective market cap of about $22 billion, a sizable figure. However, take a close look at the CoinMarketCap memecoin sector, and you’ll notice that nine of those listing pages contain utterly worthless coins.

This is because most memecoins are unabashed scams. Typically created in the bedrooms of degens, these tokens are designed to capitalize on crypto’s affiliation with social media to rapidly steal people’s money. Whether it’s a Squid Games token — which saw $3.38 million swiped — or coins launched on the deaths of former Berkshire Hathaway Vice Chairman Charlie Munger and former Secretary of State Henry Kissinger, these coins now pump and dump in a weekend, taking millions of dollars with them.

Related: History tells us we’re in for a strong bull market with a hard landing

Projects such as Shiba Inu (SHIBA), Pepe (PEPE) and Bonk (BONK), for example, seem not to be blatant scams. BONK came at a time when the Solana (SOL) ecosystem was in desperate need of good cheer and appears to be enjoying quite the pump. However, investors in these coins have still lost money — PEPE, for one, shed an eye-watering 62% in one ugly week in May and has not recovered.

Then there was the spectacular rise and fall of Bald (BALD) in August: a meme coin built on Coinbase’s new layer-2 blockchain, Base. Launched on a Sunday morning, by BALD had achieved a market cap of $85 million by evening. By Monday the lead developer had pulled his liquidity, sending the token’s price plunging by around 90%.

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