In mid-April 2023, a frog memecoin called Pepe dominated discussions in crypto circles after going up parabolically in the span of a few hours, going up by as much as 21,000%. Pepe follows a long list of memecoins led by Doge and Shiba Inu that made millions for some and lost even more money for others.
In early April 2023, Elon Musk temporarily made the Dogecoin logo the face of Twitter. Again, the value shot up, then went back down again after.
Critics point to the memecoins as the worst of the tokens that have absolutely no underlying and redeeming value. Rightfully so, these memecoins might suddenly skyrocket parabolically, but then just crash down and burn spectacularly. There is no buy-and-hold strategy for memecoins. You don’t really hold these.
I hold zero memecoins and am merely examining these from a cultural perspective. I do agree these have no underlying value. These simply reflect a very short time in history when these are valued, but that value is only because it could make money for the holder. There is no emotional attachment to memetokens.
What possible use could memecoins have?
The only possible use that meme coins can have (and this in no way should encourage people to purchase these risky tokens) is these memes make blockchain and crypto less scary.
Take for example Ethereum (I own some) and the new layer-2 scaling solutions like Optimism, Arbitrum, zkEVM, zkSync, Linea, Base, Starkware, MATIC and others (that I don’t own). Personally, I do not really grasp how these things really work. I do know these have future potential for migrating a lot of Web2 functions owned by giant centralized companies to decentralized Web3.
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But other than a high level of understanding, I don’t really know how these work. All I know is they help speed up Ethereum and have lower gas fees.
The terms sound too technical, and too nerdy. I consider myself fairly proficient with technology, but what about the rest of humanity that we claim we want to encourage to migrate to the blockchain? The tribal culture seems almost like a religion or a secret society that has its own jargon, practices and other customs. Seriously, how can ordinary folks adopt it?
Memecoins fill a cultural need. People may not understand zero-knowledge succinct argument of knowledge (SNARK) scaling solutions, but they might own dogs, cats or other pets. It gets through the emotional part of our psyche, not the logical part — especially with cute pets as memes.
Putting a cute face to this technology might be one way to encourage people to experiment with it. Wallets are already too clumsy to use because of hexadecimal wallet addresses. Remembering not to send ETH to a BTC wallet and vice versa is another thing to keep track of for those new to the space. There is actually lots of things you need to learn and remember. Most people will shrug it all off and say, “Why bother?”
Mind you, experimentation could mean buying a few dollars worth. Not plunking several hundred or thousand which is really a gamble on your part. More like buying a few tokens in an amusement park to have a good time. That’s all.
Again, I do not encourage jumping into meme coins. Unlike crypto blockchain infrastructure tokens like Bitcoin, Ethereum, Solana and others, these memecoins tend to be pump-and-dump tokens. Sure you might make a hundred to even a thousand times your money if you enter at the right time, but most people will end up losing their money, so it’s really a gamble.
Looking at the big picture, however, they may help get people into the space. A small way to get their feet wet, before they take the plunge into more serious crypto.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
Zain Jaffer is the CEO of Zain Ventures focused on investments in Web3 and real estate.
This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.