Ah memecoins, the cultural phenomenon that refuses to die. Now, roughly 97% of these cryptocurrencies fail. And frankly, most don’t have any utility beyond their own intrinsic value — which is propped up by a black-box combination of hype, community, and cultural relevance. But despite this, memecoins seem to be here to stay and are only increasing in popularity.
The first memecoin was Dogecoin, based on the famous internet meme celebrity dog Kabosu (affectionately known as the Mona Lisa of the internet). To say it was a success is like saying Carolina Reapers are a tad spicy. Memecoins boast a mind-boggling ATH of $88 Billion. To put that in context, buying $100 of Dogecoin shortly after launch in 2013 would have netted almost $800,000 at its peak in mid-2021. But then, holding that long would require danglies of steel…or more likely, lost private keys.
The Rise of Memecoins
Dogecoin might have sniffed out the trail as pack leader, yes. But many other memecoins followed in its wake. Showing the industry’s universal love for man’s best friend, these were often dog tokens, such as Shiba Inu and Babydoge. Even this past year in 2024, there have been a staggering number of high-value memecoins launched. This trend is largely backed by the Solana chain’s breakout success and reinforced by pump.fun, which allows anyone to launch their own token – although the latter has recently found itself in hot water.
Notable tokens like Moondeng, Chill Guy, Pengu, and Fart Coin (yes, fart coin) have seen huge success. These holdings have led to massive gains for early investors. Of course, that’s just a handful of the ones that exist. Often, these memecoin phenomenons are based around popular cultural icons. And often, they slot perfectly into a larger anti-establishment zeitgeist of the time (such as Pepe). In that sense, their contemporary popularity, translated into financial value, is somewhat understandable.
However, for every meme token that hits 9 figures, nearly all others fade into quick obscurity. Many simply vanish into the ether, typically along with unsuspecting investors’ funds. Some $679 million has been lost to crypto scams in the first half of 2024 alone, with memecoins often to blame.
These coins have tremendous volatility as well as upside potential, and it’s often tied to significant cultural and macroeconomic moments. The $Trump coin listed in the days around the inauguration, for example, hit an earth-shattering $10 billion MC in just 4 hours. But, like baseball cards and other collectibles, their value is driven by trading volume and interest – not inherent utility.
The question has to be asked…why do we still love them so much?
The Gambling Mindset
One of the reasons for the persistent popularity of memecoins could be the gambling mindset. After all, memecoin trading is often called ‘educated gambling.’ In the Guardian, UK memecoin trader Sam Baker describes memecoins as “a pure form of gambling…like buying a lottery ticket. But some of them are going to rise by 10,000% or 20,000%.”
There is certainly an allure to seeing an investment climb to monumental percentages, especially since the average return of the S&P 500 is a paltry 10%. It could even be argued that the cost of living crisis in many countries is driving this interaction through a form of desperation. What other avenue provides a way for someone to pay off all of their debt and provide for their family? Taking high risks for potential high rewards? It’s a tale as old as time.
This ‘get rich quick’ mentality is also perpetuated in media. Almost every social platform around is filled to bursting with people who claim to be in the crypto-know. These so-called experts — typically sporting an annoying haircut and a tendency to use the word ‘bro’ — are quick to promote their lifestyle and peddle their wealth shortcuts. But these get-rich-quick plans often involve crypto ‘predictions.’ And unfortunately, the majority of this wealth and expertise is completely fake.
The Resistance Mindset
Some see crypto as a way to challenge established financial systems, which many view as accepted scams by elite institutions. For them, memecoins are the fastest way to create alternative wealth. But there is an emergent attitude within the industry itself that is very much against the scammer mentality pervading the space. For example, QUANT — which went on to have huge financial success — was bolstered by an enraged crypto community. What sparked this movement? A 13-year-old developer launched — and then rug-pulled — $30,000 from investors live onstream. But, the community’s response transformed the token into a symbol of resistance against deceit. (The argument could be made, however, that anyone investing in a 13-year-old who probably still has Minecraft sheets is kind of asking for trouble).
The Fun Mindset
However, for many out there, it’s not about being drawn to the allure of quick riches. People who invest in memecoins aren’t necessarily gambling addicts. Their motivation may have nothing to do with a cultural movement that speaks to a larger ‘fight the man’ ethos. It’s about having a bit of fun with a token they like and playing the game well by understanding how cultural groupthink works. After all, if you could see emerging metas (trends) as they were forming, and almost guarantee a successful return every time, wouldn’t you love memecoins, too?
Regardless of whether you love them or hate them, memecoins are here to stay — so you better get used to them. And if it’s something you have considered investing in, always remember the famous crypto words: “Enjoy memes, but never go full degen.”
3 Comments
Comments are closed.