MEMECoin is the top 1 in the hottest track in 2024. This cryptocurrency has quickly become the darling of the market with its unique network culture background and fan-like community support. According to Biteye's research, in the first half of 2024, MEMECoin ranked first in the return rate of the cryptocurrency track with an astonishing data of 1834.22%, far ahead of the second place (nearly 8 times higher).
In another KuCoin report, researchers also stated that in May 2024, the encryption market grew significantly, especially MEMECoin, which was related to celebrities and hot topics, attracting a lot of attention and investment. When it comes to this, we have to talk about celebrity effect. You may have heard of Tesla CEO Elon Musk. His tweets have repeatedly caused violent fluctuations in the price of Dogecoin. But who would have thought that initially this was just an encryption joke.
The origin of MEMECoin
Turning back time, let us go back to 2013, when Dogecoin was born dramatically. At that time, its founders Jackson Palmer and Billy Markus just wanted to poke fun at the growing cryptocurrency craze at the time, so they minted the MEME Shiba Inu that became popular all over the Internet. Token and named Dogecoin. Unexpectedly, this joke became bigger and bigger, and the currency that was originally a joke gradually evolved into a community cultural phenomenon with significant influence.
Another typical MEMECoin is Shiba Inu. Launched in 2020, Shiba Inu calls itself "Dogecoin Killer". Through extensive social media and community activities, it quickly accumulated a large number of followers and once ranked among the top 20 cryptocurrencies by market value. In 2023, with the launch of Arbitrum, more MEMECoin projects emerged in its ecosystem, and led to the old MEMECoin, including PEPE, FLOKI, BONK and other projects became the darlings of the currency circle, which not only made users crazy, but also attracted more Web3 practitioners to step into this track.
*Image source: Coinmarketcap
However, for some people who have just participated in Web3, it is a bit hard to tell MEMECoin and NFT apart. Why? Because they are too similar! The representative images are PFP (Profile Picture), and they rely on the culture of the crypto community to go viral, and the prices are mostly based on FOMO. A typical example is BOME (Book of MEME), which stores cultural images of MEMECoin in IPFS and encapsulates this data into each BOME Token. This design makes BOME both like PFP and Token, with both the collection value of NFT and the practicality of Token. Another example is inscriptions. Each inscription has its specific storage location and content on the blockchain, including text, pictures or other forms of information.
*Image source: BOME official website
So, whether you are an investor or a developer, how should you differentiate between MEMECoin and NFT?
Differences between MEMECoin and NFT
Indeed, whether it is MEMECoin or NFT, they all have something in common in terms of technology, community attributes and symbolism. However, there are significant differences in their essence and underlying logic, including technical standards, properties, purchasing motivations and issuance mechanisms.
technical standard
MEMECoin: The most common MEMECoin, the underlying layer generally uses the ERC-20 standard, which is the most common token issuance standard on Ethereum.
NFT: The most basic standard for NFT is ERC-721, which ensures that each NFT is an independent individual; but later, in order to meet higher flexibility, many NFTs will use ERC-1155, allowing developers to mint both NFTs and homogeneous tokens, which is convenient for the use of things such as blockchain game props.
Nature
MEMECoin: is a digital currency based on blockchain technology, mainly used for trading and investment, and its price changes depend more on speculation and market FOMO.
NFT: represents a unique digital asset, usually used for digital artwork, music, in-game items, etc. Its value is often linked to its scarcity and artistic quality.
Purchase motivation
MEMECoin: Mainly used as a speculative tool, participants hope to profit from price fluctuations. Such tokens often rely on social media and celebrity effects to drive their value, just like the popularity of Dogecoin and Shiba Inucoin.
NFT: Mainly used as proof of digital assets for collection, display and trading. NFT is more like a collectible in the digital age, attracting the attention of a large number of artists and collectors due to its brand value, scarcity and uniqueness.
Issuance Mechanism
MEMECoin: Usually issued through ICO (initial token offering), IDO (initial DEX offering), etc. The issuance process is usually simple, but due to the lack of supervision, it is prone to various problems, such as fraud and market manipulation.
NFT: Usually minted directly by artists or creators and sold on specific platforms. The issuance of NFT relies more on the reputation of the creator and the uniqueness of the work, so it is relatively more standardized and transparent.
In comparison, although MEMECoin also behaves like PFP, its difference from NFT is very obvious, especially its nature as a token, and the volatility of price and user participation motivation often easily lead to user disputes and compliance issues. Therefore, as a Web3 developer, it is necessary to consider the prospects of the MEMECoin project from a legal perspective, rather than blindly chasing market popularity.
MEMECoin’s Compliance Issues
MEMECoin's low threshold, high risk, high return and strong community driving force are the fundamental reasons for its popularity, but at the same time, the regulatory issues it faces must be taken seriously.
The Chinese government prohibits digital currency transactions and ICOs (initial coin offerings), which means that due to China's strict regulation of cryptocurrencies, direct issuance of MEMECoins in China is not allowed, but it is more open to blockchain technology and NFTs. In this case, the innovative way of combining MEMECoin with NFTs may provide developers with another possibility, such as the inscription model. However, in the process of issuance, more attention should be paid to laws and regulations, such as the requirements for the issuance of NFTs in my country's current laws and regulatory policies, including intellectual property issues, full information disclosure, a sound consumer protection mechanism, and tax obligations, etc.
However, some developers may think that as long as they do not issue MEMECoin in China, there will be no problem. This is not the case.
Let's talk about the United States first. Many MEMECoins may be considered securities and need to comply with the regulatory requirements of the U.S. Securities and Exchange Commission (SEC), including registration, disclosure, etc. At the same time, the issuer must comply with the regulations of the Financial Crimes Enforcement Network (FinCEN), implement AML and KYC procedures, and prevent money laundering and terrorist financing. In terms of taxation, tax declarations and payments must be made in accordance with the regulations of the U.S. Internal Revenue Service (IRS), including transaction income tax and capital gains tax.
Let's take a look at Japan. All cryptocurrency exchanges must be registered with the Financial Services Agency (FSA) and subject to supervision. Similarly, issuers must comply with Japan's AML and KYC regulations to ensure compliance with customer identity verification and transaction monitoring. In terms of taxation, tax declarations and payments must be made in accordance with the regulations of the National Tax Agency of Japan, including transaction income tax and capital gains tax.
Similarly, the EU is gradually establishing a unified regulatory framework for cryptocurrencies, including the Markets in Crypto Assets Regulation (MiCA), which has already begun to be implemented in stages. Issuers must comply with the EU's Anti-Money Laundering Directive (AMLD) and implement strict KYC and AML procedures. They must declare and pay taxes in accordance with the tax regulations of each member state to ensure compliance with tax treatment.
In addition, whether it is MEMECoin or other Web3 projects, whenever it comes to issuing coins, they will face the problem of market manipulation and fraud. The issuer needs to establish internal control and risk management mechanisms to monitor and prevent market manipulation and fraud.
Conclusion
Obviously, as the hottest track, MEMECoin’s wealth effect will inevitably attract a large number of users to participate, and naturally more projects will be born. However, legal compliance issues have always been hanging in the air as the "Sword of Damocles". Issuers need to fully understand and comply with relevant laws and regulations in order to protect themselves while gaining more wealth.
In short, as the MEMECoin market continues to develop, the regulatory environment will continue to change. Only on the basis of legality and compliance can MEMECoin achieve sustainable development and bring more value and opportunities to investors and society. If you encounter any legal problems during the issuance or investment of MEMECoin, please feel free to consult our professional team of lawyers. We will provide you with the best legal services and support.
