Better Meme Coin: Dogecoin vs. Pepe

Cryptocurrency is a polarizing subject, even as it becomes more widely adopted. Meme coins, in particular, are a lightning rod for criticism because they're closer to digital lottery tickets than serious investments.

But people still buy them, because when meme coins catch on, they can explode in value. Two of the best examples are Dogecoin (CRYPTO: DOGE), the original meme coin, and Pepe (CRYPTO: PEPE), a newer token that launched in 2023. If you're considering speculating with some extra cash, here's how these two stack up.

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How Dogecoin and Pepe work

Dogecoin began as a parody of Bitcoin in 2013. Its technology is based on Litecoin, another early cryptocurrency that's more energy-efficient than Bitcoin. Like Bitcoin and Litecoin, Dogecoin uses a proof-of-work system to validate transactions. Unlike those two coins, Dogecoin doesn't have a maximum supply; 5 billion new DOGE are minted each year. The current supply is about 154 billion.

Pepe is an ERC-20 token launched on the Ethereum blockchain. It started with a supply limit of 420.7 trillion PEPE tokens -- with meme coins, even the number of tokens can be mined for humor. Pepe also features a built-in token-burning mechanism, which reduces the total supply over time. It's now less than 414 trillion.

The fact that Dogecoin's supply increases while Pepe's decreases gives the latter a slight advantage as a cryptocurrency investment. Everything else being equal, Dogecoin would gradually become less valuable, while Pepe would become more valuable. However, everything else isn't equal, as changes in demand influence each coin's price much more than small changes in their token supplies.

Recent developments

The biggest recent news for Dogecoin and Pepe has to do with cryptocurrency exchange-traded funds (ETFs). The Securities and Exchange Commission (SEC) has approved multiple spot Dogecoin ETFs (I never thought I'd be writing that), and investment manager Canary Capital has filed an application for a spot Pepe ETF.

Although Dogecoin won the race to ETF approval, there hasn't been much demand from institutional investors. Spot Dogecoin ETFs have less than $30 million in assets under management (AUM) at the time of this writing, not nearly enough to move the needle for a cryptocurrency with a market value of about $18 billion.

On a positive note, Dogecoin whale activity and holdings hit new highs in April. Whales refer to wallets with at least 100 million coins. These whale wallets collectively held 108.52 billion tokens, an all-time high. They also had 739 transfers worth at least $100,000 in a one-day span, a six-month high.

Pepe has also seen activity rise lately. From mid to late April, the number of Pepe holders increased by nearly 37,000 to about 551,500. The surge in holders was likely related to the news of Canary Capital's Pepe ETF application, which the asset manager filed with the SEC on April 8.

Is Dogecoin or Pepe the better buy?

As far as meme coins go, Dogecoin is still the king, and it's a better buy than Pepe. Name value is an important factor in this market, and Dogecoin is one of the most famous cryptocurrencies. It has also been around for more than a decade, demonstrating a staying power that most meme coins don't have.

Dogecoin's whale accumulation and the number of people who own it give it a more stable floor than Pepe. Although Pepe recently surged to more than 550,000 holders, Dogecoin has more than 8.1 million.

To be perfectly clear, this doesn't mean Dogecoin is a good cryptocurrency investment. I rank it ahead of Pepe, but when you're comparing meme coins, the bar is pretty low. There's no fundamental value or legitimate use case for either of these cryptocurrencies, so buying them is much closer to gambling than investing.

Lyle Daly has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.