Episode 37 – Understanding Memecoins – Dogecoin, Shiba Inu & more
There’s only one thing Elon Musk likes more than sending cars into space, and that’s a cryptographically secured comedy DOG. But why? Why would the richest – and possibly smartest – man alive share TWEETS LIKE THIS?
What on earth is going on with these CRYPTO HOUNDS? Where did they come from? Will they make you rich? And do they actually do anything?
Well, stay tuned, because I’m diving into the DOG BOWL to see what tasty morsels I can share with you all. Is it succulent PEDIGREE CHUM? Or a mouthful of MOULDY OLD BISCUITS?
Let’s find out, and welcome to School of Block.
And – of course – if you want more pet related content then, yes – please do like and subscribe and help us help you find canine nirvana.
Let’s go back, I don’t know… thirty, forty, fifty years. The time when BOOMERS – yes, real boomers, not just anyone over 30 – were finding their feet in the grown up world of jobs, houses and finance.
What did the world look like? Well, these Boomers had a pretty straightforward life. Jobs were abundant, inflation was low – mostly – and savings accounts gave decent interest. So, assuming you didn’t get caught up in negative equity in one of the periodic recessions, then you were sitting pretty.
There certainly weren’t any worries for homeowners when property prices did a 10x over just a handful of years.
But now it’s all rather different. Gen X and Y can’t afford to buy a house in the first place. Savings accounts offer 0.4%. Job security isn’t what it used to be and central banks are printing money faster than Usain Bolt makes friends with the Swedish Handball team.
But how do we quantify this reduction in purchasing power? Well, that’s where the CONSUMER PRICE INDEX comes in – monitoring inflation relative to the price you pay for basic purchases. But it doesn’t take savings and investments into account – so the diminishing return on your savings isn’t factored in.
Yes, we are going to get back to 2021’s RAMPANT DOGS, but stay with me here.
So GEN Y and Z, faced with salary increases that don’t keep up with inflation and savings accounts that are behind the pace too, have also had to watch GOVERNMENTS bail out failing BANKS with TAXPAYERS money, driving further inflation. On top of all of this, financial services are harder than ever to access.
With DIMINISHING RETURNS and INCREASING BARRIERS to ENTRY, there had to be another way for these generations to invest and try to secure their financial future. With NOTHING TO LOSE, yes – you can see where we’re going here… that CRYPTO MUTT might just become a rather sensible option.
And that’s because the world of CRYPTO has provided a means to subvert all of these issues – and with the development of DEFI, an ability to access financial instruments and store value.
Crypto has obviously been around a while, over a decade now, but MEMECOINS only really built up a head of steam during the pandemic. Yes, DOGE has been around since 2013 but was originally more of a JOKE than a meme – and yes, there is a difference.
So rewind to early 2020. A rampaging virus, widespread lockdowns, fiscal stimulus for many. Young, digitally literate people were stuck at home, educating themselves about their financial alternatives – using the INTERNET as their main resource, not some fusty old bloke sat at a desk calling himself a financial advisor.
And in the face of the central bank money printing, that fiscal stimulus cheque really needed to go somewhere. Think about it – when someone gives you free money, what do you do? There’s nothing to lose, so do you go to Walmart? Or go to the CASINO?
This was the PERFECT STORM that enabled MEMECOINS to explode.
WHAT ACTUALLY ARE THEY?
Let’s backtrack a step though. What actually are MEMECOINS?
We introduced them back in Episode 17, but for those of you who missed that – a MEME COIN is essentially a CRYPTO TOKEN whose value is based on the narrative, or story around it rather than any fundamental use case. They often start as jokes, but that’s no barrier to their uptake.
And the irony is, that as more people buy the token, the fundamental value of it increases due to the consequential network effect.
But yes – and this is something to be very much aware of – memecoins are driven solely by the consumers who buy them rather than bottom up by a community of developers, like – for example – LOOT.
What does this mean? Don’t expect a MEMECOIN to displace ETH as the platform for DEFI, BITCOIN as a store of value, or the next WEB3 METAVERSE to be built on it.
But here’s the thing: Memecoins CAN be a RATIONAL OPTION for those who haven’t been able to take part in traditional financial services or investments.
With Memecoins people buy into the NARRATIVE, the PERSONALITIES and the ICONOGRAPHY – and when a community comes together like this, it can be incredibly powerful.
The message in a social and cultural sense is that the ESTABLISHMENT can’t tell you what you can and can’t do. What does and doesn’t have value. Because ultimately WE THE PEOPLE determine that, not the fusty old boomer behind the desk.
And we saw that with the cult investing phenomenon of GAMESTOP and AMC. Here young investors came together to BURN THE ESTABLISHMENT and liquidate the PROFESSIONAL SHORT SELLERS of companies they felt didn’t deserve it.
By pumping the prices to astronomical levels the ‘little guy’ had a chance to give ‘old money’ a bit of a shoeing.
And in just the same way, MEMECOINS are out there giving consumers a chance to punch above their weight. Here they don’t have to try to take on the whales in the traditional financial system, or even those swimming in Bitcoin’s waters.
- To start from zero, with zero, in the spirit of creating something out of nothing.
- A professed love of Shiba Inu dogs.
And that’s it. The counter-establishment narrative was strong, consumers came on board and the market cap now rests at around 30 BILLION DOLLARS.
It wasn’t without some wild swings on the way there though – back in May SHIB’s creator sent half of the total coin supply to Vitalik Buterin – the creator of ETH – as a marketing stunt. But Vitalik promptly burned 90% of them and promised to send the remainder to charity. As you might expect, the price dumped.
Which of course leads us on to mentioning the obvious. MEMECOINS are by their nature driven by INTERNET TRENDS.
And that means there is likely to be a TRANSIENT nature to the interest levels in any given coin. So yes – that price can most definitely go down as well as up.
When you hear shillers telling you that the latest MEMECOIN’s use case will dictate a new paradigm – that might just be a top signal. So tread carefully.
And speaking of treading carefully, let’s chat to someone who did just that.
ROBIN SHIB BUYER INTERVIEW
So – PEDIGREE CHUM, or MOULDY DOG BISCUITS? I promised you an answer, and the answer is, well… NEITHER.
Unless of course you can spot the next SHIBA token before it breaks out, and make 5 BILLION DOLLARS in the process, like one inspired individual did last year.
What we’re actually seeing here are the very first stages of a TRANSITION OF POWER from the old top down system, to a new – more equitable – bottom up distribution. We have a new generation discovering the INTERNET OF VALUE.