After the popularity of Dogecoin (WIF), meme coins BOME and SLERF on Solana have taken the spotlight in the crypto community. However, there are mixed opinions regarding meme coins as a special type of cryptocurrency. This article, written by yuga.eth, is compiled, organized, and authored by Deep Tide TechFlow.
I believe that meme coins are beneficial to society. Even in the field of cryptocurrencies, this stance remains controversial. Many people believe that meme coins distract attention from the core technological innovation of cryptocurrencies and claim that they are inherently valueless.
Overall, I think meme coins are good because they reflect society’s commitment to maintaining digital property rights through a free and open market. Meme coins are one of the purest expressions of individual economic decision-making and serve as arbiters of preferences without the need to justify legal purchases and sales. They highlight the principles of individual autonomy and market freedom.
In contrast, in most markets (except perhaps those with overwhelming national interests), regulatory agencies or legislators do not need to decide what can or should be bought and sold. Restricting the meme coin market based on personal preferences is against the broader concept of a free market. Limiting the meme coin market based on personal preferences is against the broader concept of a free market.
Regardless of whether meme coins have intrinsic value, the above arguments hold true. However, the assumption that meme coins are fundamentally valueless is becoming increasingly untenable. A straightforward indicator is market price. For example, during the 22-year bear market, Dogecoin had a minimum market value of $7.7 billion.
This puts DOGE’s market value on par with News Corporation (the parent company of FOX News and a constituent of the S&P 500) at the time, which had a market value of $9.1 billion. Even during periods of cryptocurrency downturns and high interest rates, the market continues to reflect the significant value of DOGE.
There are many explanations for this, ranging from skepticism to ideology. Skeptics may argue that those holding large amounts of DOGE have an incentive to prevent the price from falling to a certain extent, thereby supporting the price through further purchases. Crypto-ideologists may consider all currencies, including the US dollar, as meme coins because their value comes from social conventions, which are a form of imitation or meme. (As economist Paul Krugman once said, fiat money is supported by “people with guns,” making meme coins appear more benign than their alternatives.)
I believe both of these explanations are correct to some extent, along with a third explanation: meme coins are primarily a cultural phenomenon rather than a financial one. They provide a channel for people to express collective humor, dissent, or friendship through new technologies. Through meme coins, communities are formed around shared jokes, cultural moments, or socio-political sentiments, allowing them to engage in a digital form of expression beyond traditional financial mechanisms. Meme coins become symbols of shared identity or ventures, and their value comes not only from market dynamics but also from the popularity of the values they reflect.
It is easy to perceive these activities as “financial nihilism”: extreme distrust of the existing system and a desire to undermine it by exposing its absurdity, as Joe Weisenthal writes in the tweet below:
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Indeed, some parts of meme coin activity are likely driven by financial nihilism. This sentiment reflects a broader trend of pessimism, including factors such as inflation, uncompetitive wages, unaffordable housing, unsustainable sovereign debt, and political polarization.
However, when people attempt to scrutinize or deny financial nihilism as a philosophical viewpoint, the situation becomes interesting. The so-called financial “laws” are neither inviolable nor inherently moral. In fact, they cannot even be consistently observed. It was not until the 1950s that investment banks began using discounted cash flow models as a method for valuing companies based on research by scholars such as Fisher, Modigliani, and Miller.
Similarly, the concept of “risk-free rate” is a product of the capital asset pricing model invented by Treynor and others in 1962, less than 70 years ago. These relatively new concepts cannot be referred to as moral guidelines; they are simply theories with varying predictive effectiveness. So why is questioning the current system often characterized as a moral failing rather than a critical exploration of its effectiveness?
One answer is that those with vested interests in the current system, especially those working in traditional finance and the regulatory institutions surrounding it, want to maintain it. To do so, they need to dismiss any challenges to the system, including cryptocurrencies and meme coins. A wholesale rejection of financial nihilism demonstrates a bias towards preserving the current financial order without considering the existence of any alternative solutions.
Another answer is that people believe meme coins are riddled with scams and fraud, which is somewhat true. Supporters of meme coins should demand honesty and transparency from their communities as rigorously as they demand price increases. I suspect many of the prominent voices opposing meme coins are those who have been somehow deceived and sympathize with them. Those who engage in fraudulent activities should be held accountable by the community or the state.
While some scams exist within meme coins, not all meme coins are scams. On this note, I will disclose the meme coins I hold. This is by no means financial advice, and any of these meme coins could go to zero. Instead, it is an expression of my personal cultural sentiments and a commitment to transparency:
MOCHI: The cutest on-chain cat. I believe cuteness is a universal value that can unite people, and I also love cats.
TOSHI: The highest-valued on-chain cat at the moment.
JENSEN: A community based on the prototype of NVIDIA’s CEO.
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I recently tweeted the following:
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This statement may be somewhat ironic, but there are unexpected similarities between the two:
Based on community value:
Meme coins and social security both rely on collective belief. The value of meme coins stems from community consensus, similar to the effectiveness of social security rooted in societal commitment.
Redistribution mechanism:
Meme coins and social security both involve wealth redistribution. Meme coins redistribute wealth among investors, while social security redistributes income from the current workforce to retirees.
Dependency on new participants:
The sustainability of meme coins depends on attracting new investors, similar to how social security needs to continuously attract contributions from the working population to pay for retirees’ benefits. The difference is that social security faces the risk of bankruptcy.
As a form of cultural expression, meme coins need time to gain people’s trust, especially in an industry that has held dogmatic beliefs about what constitutes value for decades. But even without that, meme coins have social value because they are an important litmus test for financial freedom. Fraudulent activities should be eradicated, and at the same time, people should have the right to transact using any medium, including meme coins.
Further reading:
Missed out on meme coins on Solana? Bankless: 5 tools to catch a thousand-fold explosion!
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