Meme Startup

Memes as Currencies: Past, Present, Future

We have known what makes good money for a long time. Aristotle told us money has to be durable, portable, divisible, and rare, such as gold and silver. Now, over 2000 years, we are finding he may have been wrong, at least in part, by a strange new trend in cryptocurrency that borders on the absurd or even stupid: memecoins.

Past

In the past, many things have been currencies. Gold and silver are the most famous and the longest lasting. Aristotle was certainly not wrong about that. Other than that, seashells in various forms have been used. Even Manhattan was famously purchased for a small amount of beads. But these currencies were also durable, portable, divisible, and rare, at least for some time.

Coming closer to the present, after World War 2, the US dollar became the standard of money for the world. Although pieces of paper, they were more like certificates for gold and silver under the “gold standard” that the world’s nations agreed upon to stabilize markets after the war ruined most of Europe. A few decades later, Richard Nixon’s administration realized the government and Federal Reserve had so badly mismanaged the gold standard system, that the US would no longer be able to redeem dollars for gold. Expectations by many were that inflation and monetary chaos would explode. Now looking back 50 years, it didn’t. Most speculated that because the US dollar could buy oil, the lifeblood of the economy, and because the dollar was backed by the US military that was largely unmatched, of course the dollar would retain value. But what if they were wrong?

Present

After the financial crisis of 2008, Bitcoin emerged on the scene. It looked to challenge the US dollar system that was being managed worse than ever. Bitcoin was backed by computing power and electricity to mine it, so you could say the value came from that backing. But what if that too was wrong?

Dogecoin, a clone of Bitcoin, was created as a joke. It started a trend on Reddit of tipping other users for their posts, but could not be considered valuable. Today the value of Dogecoin is >$10 billion dollars and can even be used to buy numerous things in the real world, even a car. However, it was also backed by computing power and electricity power, so you could say the value was in this power like it was for Bitcoin, being backed by more than a dog picture.

In the past year, the trend of memecoins exploded. What has been realized, but not fully appreciated is that memecoins have no intrinsic backing. They are just communities of people speculating on their value. What is shocking is that the value of many memecoins have reached market caps >$1 billion dollars in weeks or even days.

But why? Nobody has yet analyzed this experiment closely, but the currencies listed above throughout history and today have one and only one thing in common: They are memes. No, not the funny pictures you see on the internet. The concept of a meme was first defined by Richard Dawkins (yes, that Richard Dawkins) as a way to explain how cultures emerge and evolve. Just like a gene is the unit of DNA that is passed from one generation to generation, a meme is the unit of an idea that is passed from person to person in a society.

Based on Dawkins’s definition, internet nerds later coined the term meme for the funny pictures that often were spread and reposted like wildfire, but with memecoins, we may be starting to understand what memes really are: They are social currency. When represented in the form of physical objects or digital assets, from gold to cute dog pictures, they can become currencies that have real value. In some cases, multi billion dollars of value.

Future

So what’s next? The creators and investors of memecoins do not yet understand what is happening. They are creating and buying the memecoins because the numbers are going up, gambling or speculating that they can make money. What is interesting is that, following the success of Dogecoin, many memecoins are represented by a picture of a dog or cat. Why? Likely because dogs and cats are highly valued in our society. They are loved by most and are catered to by massive pet economies, despite the fact that pets offer little value at all today other than emotions and companionship.

What may be coming next is that memecoins will begin to grow further and more seriously. It is tough to know if it will be a dog, cat, or something else. Markets are tough to predict. Just like Bitcoin has taken over a decade to reach where it is, being declared “dead” by many economists and market commentators, we will likely see the same thing for memecoins. In 20 years, we may see a memecoin challenge the US dollar or another major global currency. That would of course be ridiculous, just like the history of money itself.

Gold and Silver.

The oldest surviving currencies. The oldest surviving money. The oldest surviving meme?

In the oldest written story, The Epic of Gilgamesh, Utnapishtim loaded his silver and gold into the boat before the great flood, mirroring the story of Noah and the ark.