A Defense of Memecoins

Memecoins — cryptocoins with little or no point best described as a joke — are having a moment. They are surging in price and, other than Bitcoin, the most exciting thing in crypto right now. I find the mania distressing, so much so that I’ve placed a prominent bet it will fade soon. My viral tweet predicting their demise in the event of a pro-crypto election outcome has been wrong so far. So wrong that I’ve decided to steelman my beliefs.

So without further ado, here’s my defense of memecoins:

Everything serious started as a joke

My class curriculum has a bathtub distribution. We begin by talking philosophically about money, its ephemeral nature and surprising history. Then we get technical, learning how everything works under the hood. But we wrap up getting whimsical, discussing the shifty nature of value and how it applies to everything from luxury goods to fine art to NFTs.

That last lecture is led by my co-instructor. He has a passion for art and art history and begins with Walter Benjamin’s famous essay on art in the age of mechanical reproduction. He then speedruns seminal works of art over the last century, works like Duchamp’s Fountain and Margaritte’s Treachery of Images, and uses them to post provocative questions. We talk about Avant guard and surrealism, and eventually I throw a Jackson Pollock up on the screen, next to a Beeple. Our aim is to challenge the students to think about what makes something valuable.

That was our lecture last week, and even though we’ve been giving it for years, I realized something new: many of these artworks began as a joke.

Duchamp’s Fountain is an upside down urinal that he bought at a hardware store, signed as “R. Mutt”, and submitted to an art fair. Margaritte’s painting is a pipe with a caption that says “This is not a pipe.” The contemporary term for this type of behavior is trolling.

I’m no expert, but I suspect many of the most influential works of visual art, literature and music — the kind of stuff that invented a genre — began as combination of humor and mockery. Chuck Berry was one of the founding fathers of rock and roll, but his only #1 hit was a song named My Ding A Ling. Don Quixote was pure satire before it became known as the first contemporary novel.

All of these works were ultimately a joke, a joke about whatever works came before them, and on the society that enabled such madness. There’s something about humor that helps prepare society for a major shift. Humor softens the defenses of the malleably minded. It also radicalizes the closed minded — to the point where nobody takes them seriously.

Memes all the way down

Memecoins are also a joke. But about what? And on whom? I think the answer is twofold.

First, they are a form of satire against the seriousness of the rest of crypto: the cultish Bitcoin maxis who think Satoshi was a prophet, douchey techno-finance bros bragging on dating apps, and overwrought professors who write long essays that could have been tweets. We all mean what we say, but we all also want to get rich. Very few of us would still be here if that wasn’t on the table.

Second, memecoins are a joke on the neo-liberal notion of markets and their importance in everything. Public markets. Private markets. Ad markets, decision markets, and the marketplace of ideas. Buyers and sellers and investors, oh my! Pundits on the Left and the Right might disagree about tax policy or free trade, but even AOC has a retirement portfolio.

Finance is a profession full of brilliant people who occasionally blow themselves up, beg for a bailout, then look down on you if you question their brilliance. You can’t not laugh about it! Finance is also increasingly democratized, via ETFs and gamified investment apps like Robinhood. Meanwhile student loan debt and housing costs have soared, leading to a very legitimate theory of economic nihilism.

Crypto is the ultimate end state to this process. Doing a SPAC using money and influence is hard, but pushing buttons on pump.fun is easy, even easier than flipping a urinal upside down.

Like turtles, the jokes stack all the way down. It was all too fitting last week when CNBC did a skeptical segment on memecoins, as if the rest of their coverage wasn’t also a bit absurd. This is a TV station that regularly features people in suits debating a single word change in a Fed statement and hedge fund managers making billion-dollar decisions by drawing lines on stock charts.

I actually believe in the democratization that crypto represents. If financial services and markets are a net good, which they are, then everyone should be granted access to them. But you can’t democratize an inherently absurd thing without cracking some jokes along the way.

So it’s fitting that the world’s richest man is a memecoin loving troll. It’s also funny that he co-chairs a Department of Government Efficiency, aka DOGE. And the biggest joke of all might just be how nobody disagrees that the government wastes an insane amount of money, but the point of contention is whether anything can be done about it.

I’m skeptical of Dogecoin’s value. But I’m also skeptical that Elon and Vivek will accomplish anything, partly because I’m skeptical the Swamp will let them.

Unlike the other two, Dogecoin has no illusions about its purpose.

The collective experience

Walter Benjamin’s essay (originally published in 1935) is really hard to understand, but my oversimplified takeaway goes something like this: Art was meant to replicate reality. That used to be hard to do, so whenever someone succeeded, the result was an important work that needed to be enjoyed at an individual level. But now art can be mass produced. It’s not special anymore — it has lost its “aura”. But mass production also means it can be communally enjoyed (or criticized), so art can have a new purpose, to inspire movements or make political statements.

The internet proved him prescient. The democratization of media eventually led to blogs and podcasts and brilliant artists who otherwise would have never stood a chance being discovered on Instagram. But it initially gave us rickrolling and memes, most of which were crude and stupid. We needed the Ebaum’s World stage to prepare us for Vimeo and Spotify stage. Online memes are still with us of course, but now they act like a collective immune system. They help keep new media from becoming as self-indulgent and arrogant as the old.

Memecoins are doing the same for value. They are battle testing the infrastructure before so-called RWAs or “real world assets” (a joke of a name in its own right) show up. Memecoins keep political movements going (RIP P’NUT) and prepare us for scary change like AI agents. On a more practical level, they onboard new users to this funky new world of wallets and gas fees.

A skeptic could agree with all of this and still wonder whether it justifies $100b in combined memecoin value. That’s almost the market cap of Citibank! Perhaps the simplest explanation for the disparity is that the value of the joke is proportional to the extent of the disruption it foretells, and that crypto will ultimately be more disruptive than art or even the internet (Citi has a trillion-dollar balance sheet).

In Conclusion

Memecoins are an important meta for the various changes taking place in society right now. Do I think you should own them? Absolutely not! (But if you are dying to FOMO into something, I can only recommend this one. Otherwise I urge you to stay away. Even if they don’t collapse, there’s an upper bound to how much they can ultimately appreciate, and the parts of crypto that aren’t a joke like Bitcoin are going mainstream. Memecoins can’t do that.

There’s a point at which any joke becomes so widespread that it’s no longer funny, and you can usually spot the inflection point if you pay close attention. It tends to start with professors writing essays.

You are welcome.