Author: JP Koning, Moneyness; Translator: 0xjs@黄金财经
Cypherpunks wanted to change the world. But we ended up creating memecoin.
Our story begins with some very smart and idealistic developers, known as cypherpunks, who created a new technology, the blockchain. Blockchains are databases, but decentralized. They are advertised as "censorship-proof," making it less likely that users will be interfered with by third parties.
Cypherpunks have always hoped that their tamper-proof databases would flourish, become mainstream, and improve the lives of ordinary people. A 2015 video shot from connected power plants, grocery stores, hospitals, and airplanes, then arrogantly declared that Ethereum, one of the largest blockchains today, would become "the security backbone of everything from e-commerce to the Internet of Things."
Some of you may remember another famous video from the mid-2010s in which young Ethereum co-founder Vitalik Buterin challenged the audience: "What would you build on top of Ethereum?" The world responded. Forget connected power plants and grocery stores. The most popular thing built on top of the blockchain is memecoins.
Memecoins are a pure form of gambling. These worthless tokens are usually created anonymously and often have a mascot or mee loosely associated with them, some famous examples are dogecoin, pepe, HarryPotterObamaSonic10Inu, gigachad, and dogwifhat. Memecoins do not provide dividends and do not bring any productive activity. Its price depends entirely on subsequent players buying it back at a higher price. The result is a highly volatile pyramid gambling game.
Memecoins don’t exactly align with the cypherpunks’ dream of creating a fairer system where everything, including all of high finance (by which I mean banking, payments, insurance, and investing), has migrated to blockchain heaven. Memecoins are the epitome of low finance. It belongs in the same ghetto as some of the seediest members of the financial world: lotteries, slot machines, chain letters, sweepstakes, high-yield investment programs, and other zero-sum games.
Cypherpunks and their fellow travelers are disgusted by memecoins. They want their blockchain to be used for nobler reasons:
It’s sucking the energy out of crypto
It’s a complete BS, a total travesty, and a clown show
In 2024, things hit rock bottom: racist, sexist, and otherwise stupid memecoins are just vehicles for transferring wealth from the majority to the most annoying people on the planet
Besides undermining the long-term vision of crypto that keeps many people in the space, memecoins don’t make a lot of technical sense
Vitalik also complained, “Even non-racist memecoins often just go up and down in price and don’t add any value.” To find a silver lining, he implored memecoin makers to donate part of their supply to charity, much like raffles are used to fund charities.
Cypherpunks’ frustration with memecoins is understandable. But I don’t think cypherpunks should complain. What on earth do you think you’re going to use your zero-rule financial foundation for, guys?! Memecoins are the point.
Memecoins as the basic unit of the blockchain
People naturally love to gamble, but gambling has a bad reputation, and many gambling games have been declared illegal. Memecoins are a good example, and they’ve been banned from society’s official financial venues, including its stock exchanges and commodity markets, as well as its casinos and online gambling sites.
In Canada, historically a haven for shady finance, the closest you can get to issuing memecoins is to go the junior gold route. Start by forming a gold exploration company, buy up the rights to some worthless property in a remote part of northern Canada, list your company on a junior stock exchange, promote your scam as the next big gold mine, and sell it to latecomers. You’ve basically created a memecoin; a token with no basis.
But that’s the hard way to run a memecoin. You still have to pretend to be a regular company, publish audited financial statements, and hire a board of directors, plus you have to provide your real name, which means potential lawsuits or criminal charges. A pure memecoin like dogwifhat is not burdened by any of these expensive real-world obligations and would never get a listing license, even on Canada's most shady junior stock exchange.
Enter the blockchain, which is inherently anarchic. The blockchain allows people to deploy illegal and unregulated gambling games without the authorities being able to step in and say, "Hey, you can't do that." With mainstream exchanges and casinos closed to them, it's no wonder memecoins dominate new media.
If your blockchain doesn't have a constant stream of memecoin issuance, it's effectively dead. Hordes of crazy gamblers buying and selling meaningless, unproductive currencies mark a thriving and fertile, uncensorable financial medium.
As for the cypherpunk idealists who complain about memecoins, they should just put down their guard and accept that blockchain will probably never be the “backbone of everything.” Instead, blockchain will continue to serve as the main hub for seedy low-grade finance; things like memecoins and Ponzi schemes simply won’t make it to the official arena. Many low-grade financial services will be illegal, dubious, or offensive, because these are the kinds of things that need to be censorship-resistant. (To be fair, some of the banned low-grade financial services are pretty useful.)
Memecoins are sometimes described as a potential gateway drug or Trojan horse for blockchain’s wider adoption. "Once they try dogwifhat, they can't resist my quadratic voting project." But this is just wishful thinking. Serious and respectable advanced financial services like insurance and banking - things we all need in our daily lives - must be legal and therefore welcomed into the mainstream environment, so these services and their users will never need to be sucked into a rule-less substratum like memecoins.
What would you build on the blockchain? Memecoins. They are the basic financial units of cryptocurrency.