Memecoins
Why Memecoins, while not serious in nature, seriously illustrate Web3’s core value proposition
Memecoins are a great example of how any collective group of individuals can create the economic infrastructure necessary to facilitate commerce and collaboration without the need for an intermediary.
If you’ve been following the world of digital assets and Web3 even marginally, you’ve probably come across a high-profile rags-to-riches story.
They take more or less the same format: an individual wins a life-changing sum of money by investing in a token built around a viral internet cartoon sensation or more eloquently named, meme. If you haven’t yet discovered one of these stories, rest assured that you have read the previous sentence correctly. There are many stories of people buying these assets, often called “memecoins,” and getting 2x, 5x, or even 50-100x returns within a few days.
The most famous is Elon Musk’s favorite cryptocurrency, Dogecoin, a former memecoin by crypto standards, rose from the ashes and rose to prominence in late 2021. This happened when Musk, who was the richest person in the world at the time, publicly endorsed the asset in a series of tweets. Lo and behold, Dogecoin and its associated meme broke the internet.
Even though the vast majority of people who fall into this type of wealth do so unintentionally or through prudent investments, there is something to be said for the power of the individual and the communities to which they belong. This is something that has been demonstrated time and time again to the highest degree in this industry.
Sophisticated financial “experts” and “gurus” are rightly quick to question the underlying intrinsic value of these tokens. Typically, this skepticism questions their value from a technological perspective, which is normally a good place to start. Low barriers to entry, undefined regulatory frameworks, and easy-to-use infrastructure make creating one of these tokens quite easy. Investors have been burned in the past, so they are wary of scams and sweepstakes. However, to the contrary, I argue that to fully understand the value proposition of the memecoin asset class, one must truly understand the principles of money and how society assigns value to anything.
“But they’re just cartoons!” They have no value and are of no use. »
Before we go any further, it is important for me to reiterate that anyone considering investing in digital assets should only do so after completing a sufficient amount of due diligence and research. Most people think it begins and ends with the actual investment in question, but I would go so far as to say that in today’s times it is imperative that all investors have a sufficient understanding of money and the system modern financial.
I say this for two main reasons. First, to fully understand Bitcoin (or any crypto value proposition), an individual must understand the key benefits of decentralization. To do this, we must understand the pitfalls of our current monetary system. In the United States, we face hyperinflation and a currency that is continually printed in irrelevant ways to fulfill America’s great promises. Ultimately, this makes the dollar worthless, which is a major problem since it is widely used as a store of value.
The second reason people need to understand the current system is that much of the criticism that memecoins and cryptocurrencies face also applies to many fiat monetary systems that exist today. Since the lowering of the gold standard in 1971, the U.S. dollar has been supported solely by the republic’s confidence in the government that the dollar is worth what it says it is. Sure, the United States has the most powerful armed forces in the world and American pride has helped the country become the global superpower it is today, but hyperinflation and growing political tensions have begun to take a toll. on the long-term sustainability of American growth.
All it takes is a few more cracks in America’s seemingly impenetrable armor before we, as citizens, begin to ask ourselves the same question: what really gives the dollar its value. On the contrary, one could argue that the US dollar is the world’s largest memecoin, built on the imagery of the nation’s founding fathers and their founding principles.
Power to the people!
Following the SEC’s approval of the highly anticipated Bitcoin Spot ETF, we have seen unprecedented inflows into digital assets. Demand continued to exceed the natural supply of the network. Thanks to higher valuations, we have seen various ecosystems benefit, with investors shifting their profits to thriving utility-led ecosystems and ultimately to memecoin projects.
Most notably, we have seen a proliferation of memecoins in the Ethereum and Solana ecosystems. Shiba Inu and Pepe are mature and well-respected memecoins in the more proven Ethereum ecosystem, while many Solana memecoins have risen to prominence in recent weeks.
Two reasons for this are Solana’s vibrant retail community and the network’s low transaction costs. Bonk started the party but we saw many others like Dogwifhat, Myro and many more. The Dogwifhat community amazingly came together and raised over $600,000 for advertising space on the Las Vegas Sphere – proof that what might have started as an inside joke will now go commercial in 2024!
Why Memecoins are an integral part of Web3 adoption
Memecoins, at the very least, are easy to understand for crypto newbies. This is potentially the most important aspect of them. The narrative behind several memecoin projects lies in the power of the community behind said meme.
Memecoins are a great example of how any collective group of individuals can create the economic infrastructure necessary to facilitate commerce and collaboration without the need for an intermediary. Before blockchain, this was virtually impossible.
To create the world we live in today, it was necessary for nation states to establish a formal government whose sole purpose was to maintain the integrity of such a polity. As we have seen over time, this system requires unfailing trust, given that the financial livelihood of citizens is at the mercy of the said government.
Additionally, with many governments around the world operating with limited transparency, growing tensions across the globe have begun to affect citizen confidence, which undoubtedly puts a strain on any financial regime.
Memecoins are completely at odds with this outdated configuration. Rather, memecoins and Web3 technologies in general allow users to interact with both people and money without having to trust any person or entity.
To fail to understand the value of this is to fail to fully understand cryptography and decentralization.