Betrayal of crypto ideals… or its true purpose?

When Satoshi Nakamoto created Bitcoin (BTC), the anonymous cryptographer envisioned a world where people would be freed from the iron shackles of banks and tyrannical governments.

What he probably didn't expect, however, was a crypto industry that was badly affected by the frog, cat and dog symbols, along with the spraying of racist memes.

If the coverage of the fourth Bitcoin is overshadowed by the speculative mania in meme coins – including on the Bitcoin network itself – it is not surprising to see a very vocal debate on the value of cryptocurrencies to the crypto industry.

What we can answer – they now have a total value of $51 billion in market capitalization.

What is meme coin? “Crypto Dump”

Many vocal critics, including the famous anonymous crypto analyst Pollinia, have become disillusioned and angry with the recent boom in MiM Coin, arguing that they have no place in the crypto ecosystem.

In his last blog post on Medium, in which he essentially quit crypto, Pollynia slammed meme coins as “just a vehicle to transfer wealth from the masses to the ugliest people on the planet.”

The analyst notes that the wave of racist meme coins (dubbed “SlurFi” by some) represents the nadir of the token form of reporting.

In 2024 things have reached a new level: racist, sexist and other shitty memecoins.

“At this point, this evil in crypto is banal and commonplace. This has become a crypto-identity – of course, some useful things, but it is mostly plagued by fraud and absolute corruption,” Pollinia added.

Meme Coins are also plagued by carpet dragging, scams, and malicious taxes and are often run by corrupt founders who don't know what they're doing.

A recent study from the magazine found that 1 in 6 new base meme coins are outright scams, while 91% have at least one security vulnerability.

According to BlockAid, more than 50% of presale tokens on Solana between November and February were fraudulent.

Is the recent meme coin crash contributing to real builders leaving the industry? There is a fair degree of “financial nihilism” in the argument that nothing means nothing. Everything in crypto is a meme, and it's a “moderate curve” to support purposeful projects.

Michael Dempsey, a managing partner at a New York-based venture capital firm, says, “Seeing meme coins doing better than the bear market over the past few years is leading to disappointment/failure for crypto developers.”

“Building something of lasting value is a long emotional journey, and it can be tough after two years of bear markets. […] From crypto curiosity to return and the main power gap is gambling.

Another venture capital executive, Eddie Lazarin, chief technical officer at Andreessen Horowitz, said meme coins are “destroying the long-term vision of crypto that has kept many in the space.”

Are meme coins worth attention and users?

But ignoring the racist signs, carpets, and hoaxes meme coins aren't all bad. Some argue that the attention meme coins bring is still a net benefit to crypto. It's a net benefit to blockchain networks as traders race to buy and sell coins. In particular, Solana, Baez, and BNB chain are benefiting from the large influx of meme coin startups looking for a cheap way to trade coins.

Over the past few months, layer-1 blockchains BNB Chain and Avalanche have spent millions of dollars trying to bring meme coin magic to their networks to drive network growth.

Arbitrum, a community proposal on the Ethereum Layer-2 network, is looking for a massive $3.3 billion fund to open meme coin floodgates. Fittingly for a meme coin proposition with billions in demand, it was knocked down within an hour.

0xkawz, who created the meme coin fund proposal, said, “Every day we see headlines about how Solana meme coins go from 0-100M+ FDVs in a matter of days.

“There's no reason why Arbittrum DAO shouldn't at least try to instigate a meme coin initiative. […] It's hard to argue that Solana, and more recently BASE, have taken all the attention,” he added.

Solana meme coins crazy drives use

In mid-March, Solana's network activity briefly surpassed that of Ethereum as traders hoped to catch the next runaway meme coin hit. As of March 15, trading volume reached $3.5 billion, surpassing older and slower rival Defilama by more than $1.1 billion.

The rampant activity tested and found the network's size limits, with up to three-quarters of all transactions failing at once. This was explained in the patch after a month.

A speculative digital blockchain chosen from the last cycle, BNB Chain, is showing that same market. As part of the “Meme Innovation Campaign,” the chain announced in April that it will allocate up to $1 million to reward developers who achieve a 30-day volume of more than $2 billion on the network.

“When the community sends a clear signal that something is important to them, we try to deliver on it,” said a BNB chain spokesperson, adding that meme coins have the potential to bring more users into crypto. “Noise in the crypto market”.

Solana's head of strategy, Austin Federa, said meme coins are gaining traction on Solana because the tokens are “tight proxies for online culture and community.”

“For example, some meme coins like BONK have brought communities together and built a vibrant ecosystem that resonates with the wider crypto space.

“We're seeing this momentum because Solana's cost structure makes it cheaper for projects to launch tokens and send transactions.”

Meme coins make millions of bet addicts

Coinbase's Base network has also been a big winner in the recent meme coin rush, with the total value of the Layer-2 network recently surpassing $5 billion per L2Beat data.

“There was a lot of energy in Base,” Base creator Jesse Pollack said at a hackathon presentation in New York on April 20, which was re-recorded and posted on X.

The Base founder said that while speculation is driving the movement, one of the aspects of memes he's most optimistic about is the creative ways meme communities have tried to onboard new followers.

“How do we put our culture in the hands of so many people,” Pollack said, “is an explosion of these Cambrian boarding experiments where people are taking tons and tons of shots at the goal.”

The more we believe, the more we will see these memories bring millions of people in the coming years [to Base] – They're going to be one of the biggest drivers because they're constantly doing that work to get more and more people on board in a really innovative way.

“Base's mission is to bring the next billion users on-chain, and we're encouraged by the recent activity on Base,” a Coinbase spokesperson told the magazine.

Vitalik Buterin thinks that meme coins can be used for good

Ethereum founder Vitalik Buterin wrote in a recent blog post on his website that while he has “zero enthusiasm” for coins named after “total political maneuvers, scams, carpet pulling,” he sees potential in tokens that can support important public projects. Or allowing people from low-income countries to earn a living.

“If people value entertainment, and if funded games at least sometimes provide that, then could there be a more positive aggregate version of this whole concept?” he said.

Notably, one of Buterin's most successful investments to date was turning $25K in Dogecoin, which he bought in 2016 and sold in 2020, into $4.3 million.

Meme coins with real world utility

Thomas Tang, vice president of investments at crypto venture capital firm Ryze Labs, told the magazine that he believes Mame coins can be a “go-to-market strategy” for an entity or business.

Tang cited DEGEN on Base as a recent example. It started out as a tip token for users on Farcaster's Degen channel to reward others for good posts, but later evolved into its own layer-3 chain.

“You've gathered a whole community of people that are indicated in this token […] It has become very popular because everyone is fighting each other and everyone is getting it,” Tang said.

“So they built layer 3 based on that.”

The DEGEN chain was launched in late March as a layer-3 network on top of Base and uses DEGEN as a native gas token.

The developers say that the new chain will enable experiments with referrals, community rewards, payments and play. It's still mostly used for meme coin speculation, but the move made Degen the fastest protocol in the Ethereum ecosystem, hitting 37.12 transactions per second on April 18. Demand is a bigger driver of TPS scaling solutions than pure technical capability.

Dogecoin and meme coin communities

CK Zeng, co-founder and chief investment officer of ZX Squared Capital, sees meme coins as a product of the concentration economy and argues that Dogecoin (DOGE) is a good example of meme coin history gone right.

“In the beginning, no one knew how to use Dogecoin.”

But if you find a large network of people with similar interests and build a community […] Things can happen. Coin is just a platform,” Zeng said.

Some even argue that all crypto, including projects that claim to actually do something, is meme-driven.

Dogecoin was launched in December 2013 by software engineers Billy Marcus and Jackson Palmer.

The cryptocurrency now has a market cap of $26.7 billion, making it the eighth most valuable cryptocurrency, behind USD Coin (USDC) with roughly 4.6 million non-zero addresses, according to BitInfoCharts.

Elon Musk accepts Tesla as a form of payment for its products, and there are hints that users could one day buy an entire car with it.

A similar thing happened thousands of years ago when merchants from ancient Rome and China met to trade along the ancient Silk Road, Zheng said.

“There was no dollar back then. “There was no Chinese yen,” Zeng said, adding, “Through generation and generation of exchange, gold was introduced as a medium of exchange.”

“Same thing with Dogecoin. If there are 7 or 10 million people using Dogecoin, that would be a community. […] It's a snowball effect, and the more people you have, the higher the value of the property.

There is also a large camp of people who don't like meme coins, but are willing to tolerate them because one of the ideas of crypto'score is that they are open and license-free.

What are meme coins if not the freedom to trade?

“Overall, I believe meme coins are good because they reflect the community's commitment to protecting digital property rights through a free and open market,” Yuga Koehler, head of engineering at Coinbase, wrote on X in March.

“Meme coins are one of the purest expressions of citizens being able to exercise their freedom of commerce without any distractions.”

Solana founder Raj Gokal is among them, calling out VCs who suggest that memecoins scare off “serious developers”.

“If you're too weak to be angry about how young people choose unlicensed systems for fun, you simply won't get here,” he said.

“I value people's desire to have fun, and I'd rather the crypto space swim in this situation than resist it,” Buterin added in a blog post.

However, Zeng says he ultimately sees Mame Coins as just a “sideshow.”

“Every cycle, there's a certain amount of hype, and people use that cycle to test new things,” Zeng said, adding that NFTs have grown in popularity during the recent bull run.

“I personally see Bitcoin as a fundamental driver in terms of the crypto ecosystem.”

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Felix Ng

Felix Ng first started writing about the blockchain industry through the lens of a gambling industry journalist and editor in 2015. Since then, he has moved on to cover the blockchain space full-time. He is very interested in innovative blockchain technology aimed at solving real-world challenges.