Author: JP Koning, Moneyness
Compiled by: 0xjs, Golden Finance
Cypherpunks want to change the world. But we ended up creating memecoins.
Our story begins with some very smart and idealistic developers known as cypherpunks, who created a new technology called blockchain. A blockchain is a database but is decentralized. They are touted as 'uncensorable,' thus reducing the likelihood of users being interfered with by third parties.
Cypherpunks have always hoped their tamper-proof databases would thrive, become mainstream, and improve the lives of ordinary people. A video from 2015 showed interconnected power plants, grocery stores, hospitals, and airplanes, then arrogantly claimed that one of today's largest blockchains, Ethereum, would become 'the secure pillar for everything from e-commerce to the Internet of Things.'
Some of you may remember another famous video from the mid-2010s, where young Ethereum co-founder Vitalik Buterin challenged the audience: 'What will you build on Ethereum?' The world responded. Forget internet power plants and grocery stores. The most popular thing built on blockchain is memecoins.
Memecoins are pure gambling. These worthless tokens are often created anonymously and usually have a mascot or Mee loosely associated with them, some famous examples being dogecoin, pepe, HarryPotterObamaSonic10Inu, gigachad, and dogwifhat. Memecoins do not pay dividends and do not bring any production activity. Their price entirely depends on subsequent players repurchasing them at higher prices. The result is a highly unstable pyramid gambling game.
Memecoins do not quite align with the dreams of cypherpunks, who hope to create a fairer system where everything, including all high-end finance (I mean banking, payments, insurance, and investments), has migrated to blockchain paradise. Memecoins are the epitome of low-grade finance. They belong to the same slum as some of the dirtiest members of the financial community: lotteries, slot machines, chain letters, raffles, high-yield investment schemes, and other zero-sum games.
The cypherpunks and their allies are repulsed by memecoins. They hope their blockchain can be used for more noble reasons:
It is siphoning off the energy of cryptocurrency
This is complete fabrication, a total mockery, a clown show
In 2024, things hit rock bottom: Racism, sexism, and other stupid memecoins are just tools that transfer wealth from the majority to the most loathsome people on Earth
Besides undermining the long-term vision of cryptocurrency that keeps many people in this space, memecoins are also not very meaningful technically
Vitalik also complained: 'Even non-racist memecoins often just fluctuate without bringing any value.' In search of a glimmer of hope, he pleaded with memecoin creators to donate part of their supply to charity, just as lotteries are used to fund charitable causes.
The disappointment of cypherpunks with memecoins is understandable. But I don't think cypherpunks should complain. Guys, what do you really think your zero-rule financial foundation will be used for?! Memecoins are the focus.
Memecoins as the basic unit of blockchain
People are naturally inclined to gamble, but gambling has a bad reputation, and many gambling games have been declared illegal. Memecoins are a good example, as they are prohibited from appearing in official financial venues, including their stock exchanges and commodity markets, as well as their casinos and online gambling sites.
In Canada, historically a haven for shady finance, the closest way to issue memecoins is to go the junior gold route. First, establish a gold exploration company, acquire ownership of some worthless property in remote northern Canada, list the company on a junior stock exchange, hype your scam as the next big gold mine, and then sell to the later comers. You essentially create a memecoin; an unfounded token.
But this is the hard way to operate a memecoin. You still need to disguise yourself as a regular company, publish audited financial statements, and hire a board of directors, in addition to providing your real name, which means potential lawsuits or criminal charges. Pure memecoins like dogwifhat are not burdened by any of these expensive real-world obligations and will never obtain listing approval, even on Canada's most dubious junior stock exchanges.
Enter the blockchain, which is essentially anarchic. The blockchain allows people to deploy illegal and unregulated gambling games, and authorities cannot intervene and say, 'Hey, you can't do that.' With mainstream exchanges and casinos shutting them out, it's no wonder memecoins dominate new media.
If your blockchain doesn't have a constant issuance of memecoins, then it is essentially dead. Herds of crazy gamblers trading meaningless, unproductive currencies mark a form of prosperous and fertile, uncensored financial media.
As for the cypherpunk idealists who complain about memecoins, they should put down their pretensions and accept the fact that blockchain may never become the 'pillar of everything.' Instead, blockchain will continue to serve as the main hub for dirty, low-grade finance; things like memecoins and Ponzi schemes will never gain entry into official venues. Many low-grade financial services will be illegal, dubious, or repugnant, as these are things that need to be resistant to censorship. (To be fair, some banned low-grade financial services are quite useful.)
Memecoins are sometimes described as a potential gateway drug or Trojan horse for broader blockchain adoption. 'Once they try dogwifhat, they can't resist my secondary voting project.' But this is just wishful thinking. Serious and respected high-end financial services, like insurance and banking—which we need in our daily lives—will necessarily be legal and thus welcomed by the mainstream environment, so these services and their users will never need to be drawn into the rule-less underbelly like memecoins.
What will you build on the blockchain? Memecoins. They are the basic financial units of cryptocurrency.
