Betraying the ideals of cryptocurrencies…or their true purpose?

Betraying the ideals of cryptocurrencies…or their true purpose? what he probably didn’t expect was the cryptocurrency industry being rife with poorly drawn frog, cat and dog symbols, along with a few racist memes.

Betraying The Ideals Of Cryptocurrencies…Or Their True Purpose?
Betraying The Ideals Of Cryptocurrencies…Or Their True Purpose?

With coverage of Bitcoin’s fourth halving overshadowed by the speculative mania of meme coins – including the Bitcoin network itself – it is not surprising to see a very frank discussion about the value of meme coins to the cryptocurrency industry.

Which we can answer – they now have a combined market cap of $51 billion.

What is Mimi coin? “Crypto-dump”

Many critics, including popular anonymous commentator Polynya, are disappointed and angry about the recent boom in meme coins, arguing that they have no place in the cryptocurrency ecosystem.

In his recent blog post on Medium, where he angrily quit cryptocurrencies, Polynya denounced meme currencies as “merely a means of transferring wealth from the many to the most obnoxious people on the planet.”

The analyst highlighted reports of a wave of racial coins (dubbed “SlurFi” by some) as representing a nadir in the token format.

“Things have hit a whole new bottom with 2024: racist, sexist, and other idiotic memes.”

“At this point, this evil in cryptocurrencies is considered normal and normal. “This has become the identity of cryptocurrencies – sure, some useful stuff, but mostly full of scams and utter decadence,” Polynya added.

Mime coins are also rife with rug sweeps, scams, malicious taxes and are often run by incompetent founders who don’t know what they are doing.

A recent investigation by Magazine found that 1 in 6 new cryptocurrencies are outright scams, while nearly 91% of them have at least one security vulnerability.

According  to BlockAid, more than 50% of pre-sale tokens launched on Solana between November and February were malicious.

Is the recent decline of the meme currency contributing to the real builders abandoning the industry? There is a fair degree of “financial nihilism” in the argument that nothing means anything; Everything in crypto is just a meme anyway, a “meaning curve” to support projects that actually have a purpose.

“Seeing meme cryptocurrencies leads to disillusionment/abandonment by cryptocurrency makers to an even more extreme degree than the bear market of the past few years,” says Michael Dempsey, managing partner at Compound, a New York-based venture capital firm.

“Building something of lasting value is a long emotional journey, and it can be difficult after a two-year bear market (…) to then have a crypto-curious bounce back, and the main energy void is gambling.”

Another venture capital executive, Eddie Lazarin, chief technology officer at Andreessen Horowitz, says digital currencies “undermine the long-term vision of cryptocurrencies” that has kept many of them in the space.

Are meme currencies worthy of attention and users?

But ignoring racist symbols, scams, and scams, meme coins aren’t all bad. Some argue that the attention meme coins bring is still a net benefit for cryptocurrencies. It’s certainly a net benefit to blockchain networks as traders race to buy and sell coins. Solana, Base, and BNB Chain in particular are benefiting from the large influx of meme groups looking for a cheap way to trade coins.

In the past few months, two tier-one companies, BNB Chain and Avalanche, have launched $1 million worth of funds to try to bring the magic of coins to their networks to drive network growth.

The Layer 2 Ethereum network community proposal Arbitrum is also seeking a massive $3.3 billion fund to open the floodgates to the popular coin. As befits a meme coin proposal asking for billions, it was rolled out within an hour.

“Every day, we see headlines about how Solana meme coins went from 0 to 100 million+ FDVs in a matter of days,” says 0xkawz, who created the meme fund proposal.

They added: “There is no reason why Arbitrum DAO cannot at least try to stimulate a meme coin initiative (…) It is difficult to argue that Solana, and more recently BASE, have captured all the attention.”

Solana meme coins are making the usage craze

In mid-March, Solana network activity briefly surpassed Ethereum network activity as traders hoped for the meme coin’s next runaway success. Trading volume on March 15 reached $3.5 billion, outpacing its older, slower competitor by more than $1.1 billion, according to DefiLlama.

Frantic activity tested the network’s scaling limits and found them wanting, with up to three-quarters of all transactions failing at one point. This was addressed in a patch a month later.

BNB Chain, a pick from the last cycle, is eyeing the same market. The chain announced that it will allocate up to $1 million throughout the month of April to reward developers who reach over $2 billion in 30-day business volume on the network as part of its “Meme Innovation Campaign.”

“When the community sends a clear signal that something matters to them, we strive to implement it,” a BNB Chain spokesperson says, adding that memes have the potential to attract more users to cryptocurrencies whether they end up being just a cryptocurrency or not. “Hype in the Cryptocurrency Market.”

Memes are getting a lot of attention on Solana largely because tokens have become “rigorous agents of culture and community online,” says Austin Videra, Solana’s head of strategy.

“For example, some cryptocurrencies, like BONK, have brought communities together and built vibrant ecosystems that resonate in the broader cryptocurrency space.”

“We are seeing this momentum because Solana’s cost structure allows projects to launch tokens and send transactions inexpensively.”

Meme Coins Make Millions Addicted to Base

Coinbase’s core network has also been a big winner in the recent meme rush, with the total value of its layer 2 network recently surpassing $5 billion, per L2Beat data.

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

The Base founder said that although speculation is driving the activity, one aspect of memes he was most optimistic about was the creative ways meme communities have tried to attract new followers.

“What it has led to is this kind of Cambrian explosion of qualifying experiences, with people taking tons and tons of shots on goal to say ‘how can we get our culture into the hands of more people,’” Pollack said.

“The thing that we’ve built more conviction on is that in the coming years, we’re actually going to see these memes bring millions of people (to the base) — they’re going to be one of the biggest drivers because ‘We’re constantly doing this work to get more and more people through this in a really creative way.’

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

Vitalik Buterin believes  coins can be used for good

In a recent blog post on his website, Ethereum co-founder Vitalik Buterin wrote that although he has “no enthusiasm” for coins labeled “totalitarian, scam, rug-pulling political movements,” he sees potential in Tokens that can fund important public projects. Or even allow people from low-income countries to earn a living.

“If people value fun, and financial games seem to provide that at least sometimes, can there be a more positive version of this whole concept?” He said.

It is known that one of the most successful investments Buterin ever made was turning $25,000 into $4.3 million using Dogecoin, which he bought in 2016 and sold in 2020.

Meme coins have real world interest

Thomas Tang, vice president of investments at crypto venture capital firm Ryze Labs, told the magazine that he believes memes could be a “go-to-market strategy” for an entity or company — turning the token into a rallying point for the community.

Tang cites DEGEN on Base as a recent example. It started as a tip token for users on Farcaster’s Degen channel to reward others for good posts, but later turned into a tier 3 series of its own.

“I brought together a whole community of people who tipped with this symbol (…) and it gained huge fan popularity because everyone tipped each other, everyone carried it,” Tang said.

“So they built Layer 3, based on that.”

The DEGEN Chain was launched as a layer 3 network built on top of Base in late March, and uses DEGEN as its native gas token.

Developers say the new series will enable experiences around tipping, community rewards, payments, and gaming. It has been mostly used for cryptocurrency speculation so far, but activity saw Degen reach 37.12 transactions per second on April 18, making it the fastest protocol in the Ethereum ecosystem. Demand is a big driver for TPS solutions scaling rather than pure technical capability.

Dogecoin and memecoin communities

CK Zheng, co-founder and chief investment officer at ZX Squared Capital, sees meme coins as a product of the attention economy and says Dogecoin (DOGE) is a “good example” of a meme coin story gone right.

“Initially, no one knew how Dogecoin would be used.”

“But if you get a big network of people with the same interests and build a community (…) things can happen. “The coin is just a platform,” Cheng said.

Some even argue that all cryptocurrencies are driven by memes, including projects that claim to actually do something.

Dogecoin was launched in December 2013 by software engineers Billy Marcus and Jackson Palmer, who created it to mock the rampant speculation in the cryptocurrency space at the time.

The cryptocurrency’s market cap now stands at $26.7 billion, making it the eighth most valuable cryptocurrency, behind USD Coin (USDC) with nearly 4.6 million non-zero addresses, according to BitInfoCharts.

Elon Musk’s Tesla is accepting it as a form of payment for its goods, and there are hints that users will one day be able to buy an entire car with it.

Something similar happened when merchants from ancient Rome and China met to trade on the ancient Silk Road thousands of years ago, Cheng said.

There was no dollar then; “There was no Chinese yen,” Cheng said, adding that through “generations and generations of exchange, gold became ingrained as a medium of exchange.”

“It’s the same with Dogecoin. If there are 7 or 10 million people using Dogecoin, it will become a community (…) It’s a snowball effect, and as you have more and more people, the value of the underlying (asset) will increase.

There is also a large group of people who don’t really like meme currencies, but are willing to put up with them because one of the basic principles of cryptocurrencies is to be open and permissionless.

What are meme currencies if not freedom of exchange?

“Overall, I think memes are good because they reflect the community’s commitment to supporting digital property rights through a free and open market,” Yoga Kohler, head of engineering at Coinbase, says in an article.  The subject walks  on X, adding:

“Meme currencies are one of the purest expressions for citizens to exercise their freedom of transaction without any contingency.”

Also among them is Solana co-founder Raj Gokal, who has criticized venture capital firms suggesting that meme coins scare off “serious builders.”

“If you are fragile enough to be appalled by the way young people choose to use unlicensed systems to have fun, you simply cannot succeed here,” he said.

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