Exploring the Value of Memes​​

Forward Original Title ‘Exploring the Value of Memes: Financial Nihilism, A New Type of Social Security’

TL;DR

I believe meme coins are beneficial to society. Even within the cryptocurrency realm, this is a controversial stance. Many argue that meme coins distract from the core technological innovations of cryptocurrencies, and some claim they are fundamentally valueless.

Overall, I think meme coins are good because they reflect society’s commitment to maintaining digital property rights through free and open markets. Meme coins represent one of the purest expressions of citizens exercising their freedom to transact, where people don’t need to justify their legitimate purchases and sales; their preferences should be the arbitrators of economic decisions, highlighting the principles of individual autonomy and market freedom. Conversely, in most markets (perhaps except those overwhelmingly impacting national interests), regulators or legislators should not need to decide what can or should be bought and sold. Limiting the meme coin market based on personal preferences is to oppose the more general free market principles. Restricting the meme coin market for personal preferences is opposing the more widespread principles of the free market.

Whether meme coins have intrinsic value or not, the above arguments stand, but the assumption that meme coins are fundamentally valueless is increasingly untenable. An intuitive indicator is the market price. For example, Dogecoin’s lowest market capitalization during the 2022 bear market was 7.7 billion USD.

DOGE from 2020 to Now

This would put DOGE’s market capitalization on par with that of News Corporation (the parent company of FOX News and a constituent of the S&P 500 index) at the same time, which was valued at $9.1 billion. Even in times of cryptocurrency downturns and high interest rates, the market continues to reflect significant value in DOGE.

There are many explanations for this, ranging from skepticism to ideology. Skeptics might assert that those holding large amounts of DOGE have an incentive to prevent the price from falling too far, hence supporting the price through further purchases. Cryptocurrency ideologues might argue that all currencies, including the dollar, are meme coins, because their value comes from social conventions, which is a form of mimicry or meme. (As economist Paul Krugman once said, fiat currency is backed by “men with guns,” making meme coins appear more benign than their alternatives.)

I believe both explanations are correct to varying degrees, and there’s a third explanation: meme coins are primarily a cultural phenomenon rather than a financial one. They are channels through which people express collective humor, dissent, or camaraderie using new technology. Through meme coins, communities form around common jokes, cultural moments, or socio-political sentiments, enabling them to participate in a form of digital expression that transcends traditional financial mechanisms. Meme coins become symbols of shared identity or cause, their value deriving not just from market dynamics but also from the popularity of the values reflected by the meme coins.

It’s easy to see such activities as “financial nihilism”: as Joe Weisenthal writes in the figure below, it’s an extreme distrust of the existing system, with a hope to dismantle it by exposing its absurdity:

Indeed, some aspects of meme coin activity are likely driven by financial nihilism. This sentiment reflects a broader trend of pessimism fueled by inflation, uncompetitive wages, unaffordable housing, unsustainable sovereign debt, and political polarization, among other factors.

However, it gets interesting when one attempts to scrutinize or deny financial nihilism as a philosophical stance. The so-called financial “laws” are neither inviolable nor inherently moral; in fact, they’re not even consistently observable. It wasn’t until the 1950s that investment banks started using the discounted cash flow model as a method for corporate valuation, based on the research of scholars like Fisher, Modigliani, and Miller. Similarly, the concept of the “risk-free rate” is a product of the Capital Asset Pricing Model invented by Treynor et al. in 1962, less than 70 years ago. These relatively new concepts are hard to call moral standards; they are theories with varying predictive effectiveness. So, why is questioning the traditional system often characterized as a moral failing rather than a critical inquiry into its effectiveness?

One answer is that those who benefit from the current system, especially those working in traditional finance and the regulatory bodies surrounding it, want to maintain it. To do this, they need to deny any systems that challenge it, including cryptocurrencies and meme coins. The outright denial of financial nihilism shows a bias towards maintaining the current financial order, without considering the existence of any alternatives.

Another answer is that people think meme coins are rife with fraud and scams, and there is indeed some truth to this. Meme coin enthusiasts should demand honesty and transparency from their community just as they demand price increases. I suspect that many of the most vocal opponents of meme coins are those who have been scammed in some way, and I sympathize with them. Those who commit fraud should be held accountable by the community or the state.

Some scams are meme coins, but not all meme coins are scams. On this note, I will disclose the meme coins I hold. This is by no means financial advice; any of these meme coins could go to zero. Instead, this is an expression of my personal cultural sentiment and a commitment to transparency:

• MOCHI: The cutest chain cat. I believe cuteness is a universal value that transcends cultures and has the power to unite people, plus I like cats.
• TOSHI: Currently the highest-value cat on the chain.
• JENSEN: A community modeled after NVIDIA’s CEO.

I recently tweeted, “Structurally, meme coins aren’t much different from social security.” This statement might sound sarcastic, but the two share some unexpected similarities:

• Community-based value: Both meme coins and social security require collective belief. The value of meme coins comes from community consensus, similar to how the effectiveness of social security is rooted in society’s commitment.
• Redistribution mechanism: Both meme coins and social security redistribute wealth. Meme coins redistribute wealth among investors, while social security transfers income from the current workforce to retirees.
• Dependence on new participants: The sustainability of meme coins depends on attracting new investors, similar to how social security needs continuous contributions from the working population to pay benefits to retirees. The difference is that social security faces the risk of bankruptcy.

As a form of cultural expression, meme coins need time to earn people’s trust, especially in an industry that has clung to doctrines about what value is for decades. But even without this, meme coins have social value because they are an important litmus test for financial freedom. Fraudulent practices should be eradicated, and people should have the right to trade using any medium, including meme coins.

Disclaimer: This article is reproduced from odaily, originally titled “Exploring the Value of Memes: Financial Nihilism, A New Type of Social Security,” copyright belonging to the original author, yuga.eth. If there are objections to the reproduction, please contact the Gate Learn team, and the team will handle it promptly according to the relevant process.

The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.

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Disclaimer：

1. This article is reprinted from [odaily]. Forward the Original Title‘探究Meme的价值：金融虚无主义，一种新型社会保障’.All copyrights belong to the original author [yuga.eth]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
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