Exploring the Value of Memes

I believe meme coins are beneficial to society. Even in the cryptocurrency space, this is a contentious stance. Many argue that meme coins distract attention from core technological innovations in cryptocurrency, while some claim they are inherently worthless.

Overall, I think meme coins are good because they reflect society’s commitment to upholding digital property rights through free and open markets. Meme coins are one of the purest expressions of citizens exercising transactional freedom; people should not have to defend legitimate purchases and sales. Their preferences should be arbitrators of economic decisions, highlighting principles of individual autonomy and market freedom. In contrast, regulatory agencies or legislators do not need to decide what can or should be bought or sold in most markets (perhaps excluding those markets that have an overwhelming impact on national interests). Restricting the meme coin market based on personal preferences is to oppose a broader free market.

Whether meme coins have intrinsic value or not, the above arguments hold true, but the assumption that meme coins are fundamentally worthless is increasingly untenable. One intuitive metric is market price. For example, Dogecoin’s lowest market value during the 2022 bear market was $7.7 billion.

DOGE’s performance from 2020 to present

This would make Dogecoin’s market value similar to that of News Corporation (the parent company of FOX News, also a company in the S&P 500 index) at the same time, with a market value of $9.1 billion. Even in periods of cryptocurrency downturns and high interest rates, the market continues to reflect the significant value of DOGE.

There are many interpretations of this, ranging from skepticism to ideology. Skeptics may argue that those holding large amounts of DOGE have an incentive to prevent prices from falling to a certain extent, and thus support prices through further purchases. Cryptocurrency ideologists may consider all currencies, including the US dollar, as meme coins because their value comes from social customs, which are imitations or memes. (As economist Paul Krugman once said, fiat money is supported by “men with guns,” making meme coins appear more benign than their alternatives).

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

It is easy for people to view such activities as “financial nihilism”: as Joe Weisenthal wrote in the screenshot below, this reflects extreme distrust of the existing system and a desire to undermine it by exposing its absurdity.

In fact, some aspects of the meme coin phenomenon are likely driven by financial nihilism. This sentiment reflects a broader trend of pessimism, fueled by factors such as inflation, uncompetitive wages, unaffordable housing, unsustainable sovereign debt, and political polarization.

However, things get interesting when people attempt to scrutinize or negate financial nihilism as a philosophical viewpoint. The so-called financial “rules” 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 for corporate valuation based on the research findings of scholars like Fisher, Modigliani, and Miller. Similarly, the concept of “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 qualify as moral guidelines; they are merely theories with varying predictive validity. So why is skepticism of the traditional system often characterized as a moral deficiency rather than a critical inquiry into its effectiveness?

One answer is that those who have 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 blanket denial of financial nihilism demonstrates a bias towards maintaining the current financial order, disregarding the existence of any alternative solutions.

Another answer is the perception that meme coins are rife with fraud and scams, which is certainly valid to some extent. Supporters of meme coins should demand honesty and transparency from their communities as strictly as they request price increases. I suspect many prominent voices opposing meme coins are those who have been swindled in some way, and I sympathize with them. The community or the state should hold those who engage in fraudulent behaviour accountable.

Some scams are meme coins, but not all meme coins are scams. At this point, I will disclose the meme coins I hold. This is by no means financial advice, as any of these meme coins could go to zero. Instead, it’s an expression of my cultural sentiments and a commitment to transparency:

• @mochi_token">MOCHI: The cutest cat on the blockchain. I believe cuteness is a universal value that transcends culture and can unite people, and I also love cats.
• @Toshi_base">TOSHI: Currently the most valuable cat on the blockchain.
• JENSEN: A community modeled after the CEO

I recently tweeted, “Structurally, meme coins aren’t much different from social security.” While this statement may sound somewhat facetious, there are unexpected similarities between the two:

• Community-based value: Both meme coins and social security rely on collective faith. The value of meme coins derives from community consensus, akin to the efficacy of social security rooted in societal commitment.

• Redistribution mechanism: Both meme coins and social security redistribute wealth. Meme coins redistribute wealth among investors, while social security shifts income from current labor to retirees.

• Dependence on new participants: The sustainability of meme coins hinges on attracting new investors, similar to how social security requires ongoing contributions from the working population to fund benefits for retirees. The difference is that social security faces bankruptcy risks.

As a form of cultural expression, meme coins require time to gain people’s trust, especially in an industry that has adhered to dogma about what value is for decades. But even without this, meme coins have societal value as they serve as a litmus test for financial freedom. Fraudulent behavior should be eradicated, and people should have the right to transact using any medium, including meme coins.

Statement:

1. This article originally titled “探究 Meme 的价值：金融虚无主义，一种新型社会保障” is reproduced from [Techflowpost]. All copyrights belong to the original author [yuga.eth]. If you have any objection to the reprint, please contact Gate Learn team, the team will handle it as soon as possible.

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