It’s memecoin mania lately. Need some background? We’re here to help.
The Ordinals protocol launched for the Bitcoin network near the beginning of 2023, allowing people to inscribe data onto bitcoin transactions. In the past, someone might only want to send bitcoin to another person, like a contractor who helped them build a garden shed just in time for Mother’s Day (aww, sweet!).
However, Ordinals essentially allows bitcoin enthusiasts to create non-fungible tokens (NFTs) that can tag along with smaller bitcoin transactions, right down to satoshis (the smallest units of a bitcoin). This immediately sparked debate within the bitcoin community. Cryptocurrency purists were none too thrilled about the world’s OG cryptocurrency being modified for this new class of digital assets.
Call them old-fashioned, but some of bitcoin’s true believers feel it should be used as a means of peer-to-peer payment, and that’s it.
Learn more: Nifty stuff about NFTs
Regardless of any controversy surrounding Ordinals and the new class of BRC-20 tokens living on the bitcoin blockchain, the demand seems to be there. Transactions of inscribed satoshis and new BRC-20 tokens drove up transaction wait times and fees on the network over the previous week. The resulting effect on bitcoin’s price? Not so great.
Bitcoin prices dipped below $27,000 last week as the rally that’s been happening since January shows its first sign of faltering.
Related: More bitcoin tidbits
What is a memecoin? These hastily minted digital assets are typically inspired by popular online memes. Given the Ethereum network’s ability to swiftly set up new ERC-20 tokens that execute based on smart contracts, some online community members have been testing out their own abilities to rapidly mint new coins. Videos are being shared on Twitter of users creating memecoins in less than 30 seconds. Whew! But the rapid onslaught of newly minted memecoins has also sped up the pace of speculation.
What’s more valuable, having a quick laugh from looking at a funny meme or making gains by betting on memecoins? Gamifying the speedy creation of these memecoins drives the fear of missing out (FOMO) among crypto investors. But beware, because the coin that quickly rises to record highs based on FOMO may just as easily fall back down with a thud.
Pepecoin, the green frog-inspired memecoin, shot up in value at a rapid pace and then promptly fell by more than half over the course of last week.
More reading: How Ethereum works
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