How to create your own "memecoin"

"It is not difficult to create your own digital currency. But there are legal pitfalls that you can easily fall into.

 

The digital currency Bitcoin was created more than 15 years ago. Hardly anyone can count how many cryptocurrencies there are. Crypto.com puts the number at more than 25,000. Many more or less famous people are now creating their own digital currencies: influencers, athletes and even the American President Donald Trump.

 

These currencies are often created for fun and are referred to as "memecoins" in the crypto community: The term "meme" itself comes from the Internet and has now become a pop culture phenomenon: memes are basically images with text that usually comment on a situation in a humorous or satirical way. In contrast to established digital currencies, which have a deep technical background or useful functions, memecoins are mostly useless. Their value is based on a kind of community spirit, hype and a lot of speculation. This is also why many "memecoins" are also called "shitcoins".

 

If you still want to take part and create a memecoin yourself - whether for fun or because you're hoping to make a lot of money yourself - a little basic technical understanding is not a disadvantage.

 

There are currently two major blockchains on which third digital currencies run: Ethereum and Solana.

 

The differences can ultimately be simplified into two points: Ethereum offers more complex conditions for a digital currency, but the transaction costs are higher.

 

Solana, on the other hand, is inexpensive, lightning fast, the fees are lower and the scalability is higher.

 

There are other blockchains, such as the Binance Smart Chain or Polygon, but these currently have fewer users.

 

Nowadays you no longer have to be able to program to create your own coin, even if the program code is no longer very complex. Basic functions can be created with just five lines of programming code. The free Wizard program from Open Zeppelin writes this code automatically as soon as you have thought of a few things: for example, a name like "Peter's birthday coin", an abbreviation like "PGM" and how many coins there should be in the end.

 

But there are also many more possibilities: for example, how many decimal places the cryptocurrency should have (this determines how detailed it should be), who should have control over it, how transparent the transactions are or whether users should be able to destroy their digital coins themselves - also something that can influence the value.

 

You can also think about how the coins should be distributed to the public. The possibilities are varied and invite you to play around. After setting up these details, the token must then be created and uploaded to your own wallet. Open Zeppelin also helps with this. Here you have to select a network and provide your own digital currency. You then receive an address from the network - but before others trust Peter's birthday coin, the token should be verified on a platform like Etherscan, which checks the code.

 

Then comes the difficult part: creating liquidity. Because in order for others to trade with the token, there must be some kind of value. For this, a liquidity pool is created for your own coin. This basically consists of two stacks: Stack 1 contains a well-known cryptocurrency, such as Solana or Ethereum, and Stack 2 contains the new memecoin. The size of Stack 1 determines the value of Stack 2. This means that in order for "Peter's birthday coin" to actually be traded, you have to put a large amount of established digital currency into Stack 1. One unit of Ethereum currently costs $3,310, so if you want to deposit the coin with 100 Ether, this will cost more than $300,000 - illusory for anyone who hasn't been trading in digital currencies for a long time.

 

Regardless of this, there are legal pitfalls. As soon as the token can be seen as a transferable security, "a securities prospectus would have to be drawn up for a public offering and examined by Bafin," the German Federal Office of Financial Services said in response to a request from the FAZ. "With regard to memecoins, it remains to be examined whether they meet the definition of crypto value according to the MiCA directive," a spokesperson also said. This also concerns the rights of the owners of the memecoin. It may take some time to get out of a legal gray area here.

 

Therefore, for most people, at least at the moment, memecoins are a technical gimmick for those who can deal with digital currencies. Where this gimmick can lead if you don't understand what you are doing, is just one example of influencer Haliey Welch. She launched her memecoin "Hawk" at the beginning of December. After the market capitalization reached 490 million dollars, it fell to 40 million dollars on the same day. Investors accused Welch of fraud, and a lawsuit was filed against Welch's team. The influencer herself stated: "I take this situation very seriously." She emphasized that she was working with the lawyers of the victims to bring the truth to light and denied knowing anything about any alleged fraud. Since then, however, Welch has disappeared from her social media channels. This shows that it is not that easy to make a big profit with your own memecoin." [1]

  
 1. So erstellt man sich selbst einen "Memecoin". Frankfurter Allgemeine Zeitung; Frankfurt. 24 Jan 2025: 29.   Von Franz Nestler, Frankfurt