Crypto 101: What Are Memecoins, And Why Are They Important?
Memes are a critical part of internet culture, and memecoins leverage this to build value. In fact, Bitcoin itself is arguably the ultimate memecoin.
Memecoins are a popular form of crypto token, which leverage the power of particular cultural ideas and the communities that build up around them. Although their value is disputed, there's a case for saying that Bitcoin itself is a meme and a memecoin, since the whole crypto industry/community is built on a set of collective presuppositions and ideas about the existing financial system, and how to create a better one.
A memecoin is a type of cryptocurrency that derives its popularity, and therefore any value attached to it, primarily from an internet meme and the online community that has built up around it.
Memecoins often have humorous or satirical themes and are created as a form of online entertainment rather than as serious financial assets. Despite that, some memecoins—including Dogecoin, Shiba Inu, Pepecoin and others—have been extremely successful.
What Are Memes?
The idea of a "meme" was first introduced by British evolutionary biologist Richard Dawkins the 1976 book The Selfish Gene. The word derives from the Greek mimema, meaning "that which is imitated". A meme is an idea, belief, or cultural concept that is transmitted by imitation and copying, rather than by genetic means: Memes are self-replicating ideas.
While the concept of a meme can be applied to many social and cultural phenomena, the term is most commonly used today of internet memes: Ideas, typically expressed as static or animated images, often with a humorous or satirical message, which spread virally by social media and other platforms. Memes are an important part of internet culture.
Memecoins are cryptocurrencies based around a popular internet meme. The first memecoin was Dogecoin, which references the Shiba Inu meme, and which was started as a joke (poking fun at crypto speculation) in 2013.
Unlike traditional cryptocurrencies like Bitcoin or Ethereum, memecoins may not have a clear purpose beyond simply serving as a meme or a joke. They typically lack innovation, a serious roadmap, or a solid underlying premise. Memecoins frequently gain attention and value through social media trends, celebrity endorsements, or coordinated efforts by online communities to pump their prices.
While many memecoins rise and fall in a matter of days, some attract large, loyal, and active communities, and maintain market caps of hundreds of millions or even billions of dollars over a period of years. Dogecoin (DOGE), the original memecoin, has survived for over 10 years and has a market cap of around $10 billion.
Why Are Memecoins Important?
Memecoins can be highly volatile and speculative investments. Due to their reliance on social media hype and trends, their values can fluctuate dramatically and unpredictably (even more so than other cryptos). Some traders see memecoins as a way to make quick profits, while others may view them as a form of entertainment or a way to engage with online communities.
Regardless of the reasons people hold them, memecoins are an important part of the crypto space.
Memes are a critical element of internet culture. As well as communicating a point (often humorous), they are used as social signifiers that help establish identity and community membership, hinting at association or agreement with collective values or beliefs and denoting membership of an "in" group. In the crypto world, which almost by definition sets itself apart from the TradFi system, this is particularly important.
Bitcoin: The Ultimate Memecoin?
In fact, there's a case for saying that many financial assets are memes, with AMC and other meme stocks being an obvious example. And what, really, is gold, if not a meme commodity? Its value on the market far outstrips its industrial utility. It's shiny but useless in terms of generating revenue. It has value simply because a lot of people want to own it, and have done for a long time. In other words, it's popular because it's popular.
Bitcoin can be seen in the same way. It's a cultural and financial meme that is loaded with many different meanings and significance for different groups: Skepticism at the integrity of the legacy financial system and the competence of governments and central banks to manage the money supply and economy; rebellion against Boomer stocks and values; embracing freedom, technology and the future; preference for openness, transparency, and decentralization over closed, opaque, and centralized systems, to name a few. (Some of the earliest Bitcoiners were gold bugs, and became interested in bitcoin as a form of sound money.)
Being a "Bitcoiner" holds connotations that go far beyond simply owning a digital asset.
Crypto is tribal by nature; memecoins develop and leverage this principle by providing a more granular means of expressing identity and difference. The most successful memecoins are the ones that are maximally inclusive (hence the profusion of dog-based memes), appealing to a large number of people within the crypto space.
In the online world, community is fluid, and allegiance to a meme—an idea that can be packed with social, political, economic, and humorous meaning—can be far more important than conventional allegiances based on (for example) national borders, and it can have a far larger potential audience than any single country.
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