The Ideology of Memecoins

Economics of belief, tokenisation of faith and financial Neo-religions

In every crypto cycle, there are many narratives and a breakout product. If you find the right narrative and invest in the breakout product early, you can usually end up making a lot of money.

The first cycle, it was all about Bitcoin: Digital Gold, store of value, would replace the dollar, and it was a narrative that continues to thrive and make a lot of people rich. Then there was Ethereum and everyone who understood that blockchains don't just have to be a ledger, and can instead be a globally decentralized computer, invested and got wealthy.

The next cycle had NFTs as the breakout product - and even though the markets haven't been favourable to NFTs in recent years, at its prime, NFTs not only managed to get crypto popular among celebrities, it perfectly served as a proxy of status and wealth, which very few things in crypto has been able to do since.

Then there was the DeFi-cycle, where a lot of DeFi protocols took off and if you bought Uniswap or a similar token then, or even if you just participated in the protocols, just waiting for eventual airdrops was enough to make you significant amounts of money.

You don't have to take my word for any of the above statements. The greatest thing about crypto is that you can go look at everything on-chain, and something as simple as just viewing the price charts for different blockchains will show you what the prevailing narrative was each year, what narratives survived and what failed.

If you're paying attention to this cycle, one of the dominant narratives for this cycle is investing in memecoins. But I’d argue the most important fact about memecoins is that for the first time, in a long, it has come packaged with an ideology.

This is important because ideologies are what makes or breaks movements. Great ideas are truly scarce, so when one takes off - like how Bitcoin did in several ways with educating everyone about the drawbacks of fiat, how every fiat currency eventually collapses, how those who control currency don’t have your best interests in mind, how inflation is inevitable and slow killer of your wealth, how digital gold is supposed to be superior, what a real “Store of Value” is, etc, all these things have helped put Bitcoin on the map as a trillion dollar asset class - which can still 100x from here and be the dominant world currency some day.

This fact is important because memecoins, if they come with an ideology that’s equally or even close to the “lore” of Bitcoin, they can become worth trillions of dollars either individually, or combined. That is what the “memecoin supercycle” proponents claim will happen this cycle.

But if the ideology is riddled with lies & poor thinking, they’ll fail. The asset class may still reach a trillion dollars as a whole, but it may largely be driven by capital getting rotated into alts during peak bull market alt seasons, a dogecoin rally, or something similar, at which you’re safer off anyway investing in alts which are more stable. If the ideology doesn’t hold up, there won’t be a second memecoin rally and comeback, and the space as a whole will recede back to the “trenches” where few insiders win and unsophisticated retail ends up losing their capital.

Now, if some of the words in the above paragraphs didn’t make sense to you, that’s all right because it is YOU who should definitely read the rest of the essay. We’ll start from the basics and dive deeper so that you can make up your mind before investing your life’s savings into $BUTT.

None of this is financial advice, so do your own research.

So, what is a memecoin?

II.

A meme coin is a token created on a blockchain.

Launching one does not require any technical expertise, and you can launch one the old fashioned way, after watching one 5 minute tutorial, or by using any existing service for free.

There’s a saying among the Bitcoin maximalists that there are two kinds of crypto - There’s Bitcoin and there’s everything that is not Bitcoin known as AltCoins.

Altcoins are usually launched by teams building a product - where the token usually has some utility. Ethereum, Solana, Polkadot, Near, etc, are all considered altcoins, even though they’re all well established blockchains today.

You can create tokens on these blockchains yourself, and many teams usually launch a token to support their product such Pyth Network - who have their token $PYTH on Solana, Chainlink, who have their token $LINK on Ethereum - and both these companies don’t have their own blockchains even though they provide valuable oracle services for which their token is used.

Meme coins are simply a token created on a blockchain with an interesting ticker (like $PopCat, $WIF, $Bonk) with an image. Dogecoin was the first memecoin, but according to the memecoin ideology, memcoins are a post-dogecoin phenomenon, so even though the largest memecoin right now is worth over 20B dollars, we can safely ignore dogecoin from this discussion both because the ideology asks us to consider memecoins as a post-dogecoin phenomenon, and because Dogecoin can be argued to have some utility - being a cheaper, faster Bitcoin alternative.

As of today, forty thousand memecoins are getting launched daily. Yes, that’s forty thousand new tokens every day.

Services have popped up that let you launch your own meme coin in seconds and for free. Platforms exclusively meant to trade memecoins are popping up and right now, the total market cap is around 60 billion dollars, with Dogecoin & Shiba Inu itself making up 50% of the memecoin market.

The audience of memecoins does not care about Dogecoin or Shiba Inu, precisely because their time horizon and price targets don’t align with assets which are already worth billions of dollars. They want to make money fast, and Dogecoin, even if it 10x’s from here and becomes worth $200B, it doesn’t matter - because a memecoin worth $1k today can 10,000x tomorrow, still be worth only $10M and be considered cheap - as it can still do a 100x from there and be worth $1B.

If that doesn’t sound exciting to you, think about those numbers again. You’ll begin to understand this basic, yet unspoken fact about the crypto industry:

The fundamental motivation for retail in crypto is to make money.

That is a cold hard truth about this space that many either realise too late, or realize but don’t speak of it. Retail does not care about the fancy technology, no matter how revolutionary it is. It's all about money. Making a lot of money. Fast.

In the past, I'd like to believe that perhaps retail was more sophisticated. Maybe money wasn't the only motivation, not that there's anything wrong with that, but perhaps, when Satoshi was discussing design implications of Bitcoin in the BitcoinTalk forums, everyone there who coordinated with him and contributed code and their time, weren't solely interested in just making money. Perhaps everyone among the cypherpunks trying to create digital cash in the 90s were not just doing it because they'd be wealthy, but because they really felt the need to build something that saves humanity from the corruption of fiat money.

But then again, it's hard to speculate on the true motivation of those in the past, when the simplest answer is so obvious.

Everyone in crypto is there to make money. Everyone in every industry is there to make money, but in crypto, it’s about making a lot of money fast. Rags to riches stories are as common as stories that go the other way around, but here, every story, every win, every profit and every loss is transparently visible on-chain.

Every industry has ways of hiding or obscuring their involvement with money - from companies not revealing salary ranges publicly and some not revealing how much a company raised in their "strategic" round, to even influencers not disclosing how much they got paid for shilling "totally healthy products they themselves use" like athletic greens.

In crypto, you can't do that effectively, at least right now when privacy chains are still not popular.

Influencers are often doxxed and their holdings are made public, showing they conveniently seem to sell tokens they mention people to buy. Layer 2's reveal how much tokens were allocated to early VCs and how much they're generous enough to reserve for "the community", and we'll come back to this point again, but it's wholly clear that the transparency of crypto makes it an environment where it's relatively easier to verify and make your statements verifiable.

Such transparency is what I think has eventually led us retail to glorify memecoins and come up with an ideology that fits perfectly with the narrative.

III.

Lies are easy to see on the blockchain, and consistently lying is harder to ignore.

For the last couple of years, every altcoin - whether that’s a Layer 2 blockchain on Ethereum, an infrastructure token like oracles, even DeFi protocols and NFT marketplaces, every such product with an altcoin has raised multiple VC rounds before launching their token. Such tokens are already allocated for VCs in private rounds who sell them when the token launches for retail, and even when the token crashes 90% in value, the VCs still make 10-100x.

Because retail can't participate in the private markets where such tokens are initially up for sale, retail ends up being the exit liquidity. Years of VCs gaining while retail waiting to get dumped on has its consequences, and one of the beautiful things that people have realized is that - Wait a minute, we can just launch our own tokens and speculate on them? Right? How is our memecoin any different from the altcoin that listed yesterday?

And it is these questions that are being answered with billions of dollars right now. People are launching tokens, some related to memes, some trying to start a movement, some just about animals they find cute, and everyone's investing based on vibes on what would increase in price.

It's like pumping the price of GameStop, but it's more fragmented, and unlike GameStop where there's still a functioning business that can survive even if the stock price is zero and there’s upside in squeezing the hedge funds which are shorting Gamestop, here it's one or a few guys, no business, and if the price goes to zero as it often does, you're just supposed to move on and find the next memecoin. The ideological middle finger is pointed at VCs, and perhaps even altcoins with a product, but they’re just not getting directly hurt as each memecoin rises in price.

Here we see the first signs of holes in the memecoin ideology. VCs are scapegoated falsely, and the blame shouldn’t fall upon them. Companies launching altcoins with poor tokenomics shouldn’t get the blame either, because I’d like to believe none of them deviously planned to make VCs rich and endure the wrath of commoners along with a failing company.

The first ideological mistake is choosing the wrong enemy. Who they should blame, and it’s not too late to start doing this, is the regulatory regime that cripples companies from fairly sharing the profits through their tokens.

IV.

If you buy a stock, you're buying a share of a regulated business and you can even earn dividends as the price of the stock goes up.

Any successful Web3 business like OpenSea, Phantom, Ledger, etc. can do this, but they won't be able to, because of regulations that have remained archaic and confusing, despite crypto as an industry existing for nearly 20 years at this point.

So, if these altcoin companies can't reward their holders with tokens, and it's not like it's an official share of a company so you probably don't have ownership over the company's decisions - what exactly are you holding when you buy an alt coin?

That’s a question that the memecoin ideology forces you to ask yourself.

Sure, you can convince yourself that you’re investing in a stellar team, innovative technology and a good product, but at the end of the day, if the team decides to wrap it all up - you and the other top 50 holders making up 70% of the token holdings can’t do anything to stop them or save the company.

Altcoins are thus, just memecoins with extra steps.

The memecoin ideology asks us to even conclude that alt coins are worse, because they have to worry about keeping an actual company running, struggle to find PMF if they don't already have it, sell tokens like every memecoin insider to keep their operations running or give token allocations early to VCs who invested in them.

All this paints a bleak picture where one must ask the question - Why would you want to launch a token at all - if you can't at least guarantee that the price will go up over time?

V.

The best crypto products don't need tokens. The best crypto tokens don't need products.

The above line is the slogan of this memecoin ideology, made popular by Murad, arguably the face of the current memecoin super cycle, but again, this part of the ideology is plain wrong. I've not seen anyone point out why this is wrong, which makes me feel like either everyone decides to shut off their brain before they log into twitter (in which case, same!), or it's a statement that makes sense only if you say it repeatedly, give some examples and brush past all the other examples that prove you wrong.

The best crypto products don’t need tokens, but products that rely on tokens surely do. Every blockchain needs a token to at least secure the network and/or reward miners/validators.

The best crypto tokens do need products. If you look at the top 10 coins on the chart at any time, they're not memecoins. Even those that are(Dogecoin, Shiba), they either have a product (like a blockchain, a dex, a protocol, etc) or they don't last long at the top, quickly dipping when the euphoria wears off.

There are other things that Murad says that are plain false, but I do think his heart is in the right place when he’s making these statements. His presentation at Token49, now being considered as the entry-point to memecoins for normies, makes the case for memecoins very eloquently, but then again, it’s mostly filled with lies.

Here's a list of all the "utility" that a memecoin supposedly provides -

Almost none of them are true. Let’s go through them one by one -

1. Having Fun - Gambling is fun, but so is doing literally anything else that doesn’t also guarantee you’ll lose money, which is a lot less fun.

2. Loneliness reduction - Absolutely no one is waking up in the morning and thinking to themselves, I hope I make some new friends in the new memecoin discord I joined. No, instead, they’re planning to post a couple of “To the moon! Wagmi!” while calculating when to sell to book profits, or arguing with other holders about why price isn’t going up. If this is the plan to reduce loneliness, you’re better off lonely.

3. Identity, Finding a similar crew - No one wants to be known as a $PEPE or $Dogecoin holder, and identity why someone buys a memecoin. This argument could’ve made sense for NFT communities back in the day, but even then, that argument is false when money is involved. I can agree with finding a similar crew, but ask yourself this - Do you really think someone is investing in memecoins because they want to find other people in similar circumstances who are doing this?

4. Hope Provisioning - Only point I can agree with - when you’re buying a memecoin, just like when you’re buying a lottery ticket, you’re buying hope.

5. Friendships - Friendships can happen due to proximity in a discord every day, facing the shared trauma of the memecoin price crashing or the joys of seeing it pumping. But you just can't say that friendships and relationships are a utility of memecoins, especially when price is the main attractor that is bringing the people together. If everyone's pumping up the price with the eventual goal of exit, it's not a community. Friendship can't be bought, only made.

6. Being part of a cutting edge culture - Wrong, again. There’s nothing cutting edge about memecoins because there’s no technology that you can geek out over. Every AI company discord or even altcoin discords are better cutting edge places, where people aren’t complaining or manifesting the price all the time. Some memecoins that actually build products can be respected as having a cutting edge culture like $BONK & Shiba Inu, but then again, the memecoin ideology specifically says that memecoins are those that don’t have products, so those are out.

7. A guild in the MMORPG that is crypto - We’re reaching the point of the list where you’re making up stuff just because you can make up stuff. No memecoin gives you a guild, unless you are the founder of that memecoin, and even then, your guild will not hesitate to scapegoat you when the price plummets regardless of how much money everyone made.

8. Greater sense of participation and contribution compared to software altcoins - This is a very roundabout way of saying that because the memecoin does nothing, and you do nothing, you’re doing nothing collectively - and thus participating in the nothingness. In a software altcoin, you can’t write “To the moon!” on discord and post about the memecoin on X, and feel like you’ve contributed to the community, but in the memecoin discord, you can! Something that rewards your uselessness shouldn’t be celebrated as a utility, but here we are.

9. Relatability + Emotional Connection - Wrong again. See points 5 & 6 as to why.

10. Mission + Meaning - The only mission is the mission to make money. Meaning is non-existent, and there are far better places to find meaning than searching for it in memecoins.

11. Entertainment + Being Happy - Wrong, and repetitively wrong. See 1 & 2 for answers why.

12. Collective artistic expression - If memecoins were a collective artistic expression, there would be some sense of aesthetic beauty in them. There is a small element of it, which I’ll talk about later, but that relates to risk. There is no collective self expression, only the collective prayer of people wishing for price to go up and if there’s one thing that doesn’t qualify as art - however hard pointing that out might be, because everything can be considered art, it’s surely not memecoins.

13. Collective imagined reality - This is just a nicer way of calling people investing in memecoins as delusional & BS artists. An ideology where the proponents are smart enough to mask this meaning behind words, but still label the supporters as accurately as they appear to them - with something clearly negative, can’t survive.

14. Collective storytelling and lore building - Zero memecoins have this utility, and there is no incentive for people to do this effectively. NFTs, on the hand, do sometimes end up having comic books and graphic novels based on them, simply because the art that started them attracted the talent necessary to build this cultural capital. If memecoins started actually storytelling and lore building, at least they’d be interesting. AI memecoins are trying to do that and may succeed, but till then, this can be written off as wishful thinking as best, and just a plain lie at worst.

15. Defying social norms: Hilarious to think about getting rich off of memes → Reflexive self fulfilling prophecy - These are three merged into one, all of them wrong and wishful thinking. The people getting rich of off memes are exceptional cases, not the norm. Nothing about the prophecy is self-fulfilling and just because something is impossible - doesn’t make it less impossible, no matter how much word salad you package it in.

16. ….and finally, volatility, aka trading vehicle, aka Token - What? Trading and token was the utility all along? The token is the utility? Who would’ve thought?

This slide is the biggest indication that memecoins are doomed. It's not the fact that it's false entirely, but if the face of memecoin supercycle had to make all this up, you can't really trust anything else they say - because they fundamentally lack the courage to tell you the truth.

Now, let’s talk about the real utility of memecoins, because the ideology has clearly failed us.

What a memecoin provides is hope and a permissionless opportunity.

The truth is - memecoins, just like meme stocks, can go up in price and be worth billions of dollars. They can also fall down in price and be worth nothing. Both of these things can happen quickly. If you want to ride the wave and you’re not afraid to lose it all, you can join the ride.

But the biggest lesson from memecoins is the one that they hope you'll dismiss as context (and just invest in memecoins)- which is not to invest in VC funded alt coins with poor tokenomics.

Especially the ZK-infra-layer2 token which has no reason to exist.

Every token with tech has early investors who can't wait to make their money back. You weren't early, even if you were made to believe so. So, you shouldn't invest in any token unless you can clearly identify what the technology is - whether the technology really needs the token, what the long term incentives of holding the token would be, whether the token is inflationary or deflationary, what percentage of the token has already been allocated to insiders and VCs - and if anyone tells you their token might be the next store-of-value or currency, you shouldn't think twice about running away.

Now, there is Bitcoin and there are altcoins. Eth might be ultra sound money. Solana might be ultra fast money. There are countless other altcoins worth exploring and putting your money into, but there's also a large graveyard in the future filled with alt-coins which are in the top 100 right now. This may include billion dollar projects like XRP and Cardano, and memecoins like Shiba Inu & Wif if they fail to innovate.

Memecoins are a reaction to what feels like a rigged game. I think it's going to go similar to the NFT-wave, where there are memecoins launching every day - new memes will rapidly gain traction and capital and rapidly lose them. Some tokens may just survive from one cycle to another and get long term holders like Dogecoin. Some memecoins may start movements, and even products themselves to flex their technical prowess. At the end of the day, the motivation is the same regardless of what anyone spins up - everyone's trying to make money and they’re all trying to make lots of money fast.

I don't think that's a bad thing in any way.

I'd want to live in a future where you, because you're intelligent enough to spot trends early, invest in a memecoin called "$TrumpCard" when it's at $1000 market cap. Months pass and nothing happens. Then in a rally, Donald Trump says "The democrats, the crazy democrats, they don't want the Trump card. I'm telling you, the trump card is too much for them. It’s too much for them. But we love the Trump card, am I right? We love the Trump card here."

The video of him saying this goes viral because of the way someone in the rally is nodding their head behind him. Suddenly, $TrumpCard shoots up 1000x in price. You sell and you're a millionaire overnight.

Whatever you do, it's your choice. The risk is yours to take, and if you lose your house and life savings this time, no one's coming to save you. There's something beautiful about that which is hard to articulate, but just the unhinged expression of human will and the ability to take risks for unlimited upside shouldn't be condemned.

What should be condemned are sleazy con artists pretending this is anything different than what it is. You're not investing in a movement. You're not investing in a community. You're not investing in friendships. You're definitely not joining a cult, despite the self proclamations. Even those in cults are honourable enough to put an exit price on relationships.

Just like you can't buy love, respect and friendships, you can't buy your way into a place where everyone is expecting the price to go up so that they can leave with more money than they came with.

It's a casino, should be admired like a casino, and while kayfabe can work in pumping prices in the short term, it can't work forever.

VI.

One thing that stands out about the ideology of memecoins is that they address the issues that society is facing. Just like an addict always has excuses for his next hit, the memecoin ideology has some truth to it -

Loneliness is the highest it has ever been. But memecoins won't solve this, for reasons I've already mentioned above.

It's difficult to climb the status hierarchy, and definitely not as easy as the boomers had it. Memecoins won't solve this, but it can give you hope. You can hyper-gamble your way to elite status, but if you fail, you have to join or continue in the rat race. You can risk it all and play it big - and in the end, you'll either hear, "Your Lamborghini is waiting, sir," or "Just put the fries in the bag, bro" depending on which way the price goes.

One thing I will tell you from my own experience is this - After every cycle, when Bitcoin ends up crashing the least, people collectively have the same epiphany: There is Bitcoin and there are Altcoins. Bitcoin is digital gold and will never go to zero, so I might as well invest in Bitcoin from now. This is a very normal epiphany to come to, especially when every other token has crashed -60% to -90% from their all-time-highs and all memecoins have gone to zero.

Ethereum and Solana, despite also crashing in the cycles of the past, have proven to be solid investments, so most people decide to rotate into these alts when markets are running high - something endearingly known as “Alt Season” which lasts for a few months before Bitcoin and everything else starts crashing.

Because memecoins chose VCs and altcoins as their enemies, it may happen that AltSeason ends up being Meme Season this cycle, but ask yourself this question - do you really think any of the memecoins on Solana or the memecoins on Eth or Base are courageous enough to be critical of the chain they’re on, risk upsetting the community of that chain, or would they silently disappear as silently as they appeared?

Each cycle crash acts as a cleanser, wiping out the grifters and con artists, the vaporware startups and the non-functioning protocols. Tokens, based entirely on momentum, like memecoins, simply go to zero. Discords get shut down, and you're left holding the bag. People, at this point, try to dox the founders, the devs, anyone they can hold off. They wish death upon them, try to sue them, try to start tokens and projects to "un-rug" the dead projects, but soon everyone realises that the music has stopped and move on with their lives, poorer but hopefully, wiser.

The beginning of the cycles are different. Every popular memecoin can 10x or 100x from here. They can also go to zero as something new, shiny and popular comes along and takes the spotlight. It's a game of luck and zero skill - and no, sitting and clicking the BUY button while dreaming of riches, rationalising your gambling choices, requires no skill despite what you’re being made to believe.

What does require skill is what happens behind the scenes. One thing you'll notice about every memecoin is that they don't have a public face associated with them. This is usually because successful memecoin founders - and by successful, I mean people who have made money by launching a memecoin themselves and successfully selling early, already have contacts that they hope to shill to - first. Just like VCs in private markets get the tokens allocated at attractive valuations, there are people buying early into memecoins who know exactly what series of events to trigger to pump the coin, and then dump on actual retail.

Sometimes, these tokens survive the dump and take off. Sometimes, there's no dump and it's a long con instead. Sometimes, and I hope this happens more frequently, there's no motivation of dumping and it's just meant to be a joke that takes off surprising even the insiders who ignored the tokens.

More times than not, without a supporting product, without utility, without a roadmap, and just vibes, investing in memecoins rationally doesn't make sense.

One exception to this is creator coins - launched by popular creators. Creators always have an audience to shill, who will be very angry when the price plummets, so there's at least some accountability and personal risk involved for the creator themselves - despite the very easy payoff associated with the token.

Overall, I'd still want to live in a world where memecoins exist. If you think blockchains are not meant for silly things such as these, you're welcome to just build something more useful. But I also think that if you're thinking of investing in memecoins, there are much better ways of spending your time and energy - and it's the same reason why you're better off not trading stocks. Your time is valuable and you can't remain sane for long enough staring at charts and screens, and there's always a better thing you can do than that.

Don't fall for the charlatans, the false ideologies and lies. It's just memes. Enjoy them. Get rich or poor off them if you have to, but understand that there's no memecoin super cycle.

Memecoins won’t be worth hundreds of trillions of dollars and take over the world.

The only meme that can be, already exists, and that's Bitcoin.