Despite all the silliness, some corners of the cryptocurrency industry have embraced memecoin fever. A petite number of hedge funds do this in search of substantial profits invested in memecoins this year. Other investment firms such as Pantera Capital consider memecoins to be “Trojan horse” will likely introduce up-to-date people to the world of cryptocurrencies.
The idea, says Robert Le, a cryptocurrency analyst at market data firm PitchBook, is that memecoin activity on a particular cryptocurrency network will translate into a ready audience for future projects with practical utility built on the same underlying infrastructure. “It actually adds some value to other real-world projects,” Le says.
The irony is that memecoins have largely escaped the attention of U.S. financial regulators under the Biden administration, while entrepreneurs trying to establish significant apply cases for cryptocurrencies have been targeted for investigations, said Chris Dixon, head of a16z crypto, in an interview with WIRED last year. “The stupidest cryptocurrencies like Dogecoin, which are completely meaningless and stupid – are completely legal,” Dixon said.
There is a potential future in which memecoins could be used by entrepreneurs as a tool to raise capital for stern crypto projects without giving up capital, says Khan. But for now, they represent financial speculation in its crudest form. “We have consistently been in this place where as an industry we are seen as a decentralized version of Macau or Vegas. This won’t help us in any way,” he says.
Whether or not memecoins damage the cryptocurrency industry’s prospects or reputation, a crackdown in some form is likely, industry observers say, such is the amount of money circulating and the level of risk for traders.
“Memecoins is absolutely a PvP game. For someone to win, someone has to lose. Many of the people who can least afford to lose money will lose the most,” says Khan. “At some point there has to be a breakthrough.”
Because memecoins defy easy comparison to traditional investment assets, Le argues, they are perhaps best regulated by gambling authorities. “It is basically unregulated gambling. “It will probably depend on who oversees gambling in each country,” he says. “I’m already hearing directly from some state regulators in the U.S. talking about some type of regulation.” Pump.Fun declined to comment.
But until then, memecoins will continue to do their thing. On December 5, Hailey Welch of “Hawk Tuah” fame released a coin that it lost 95 percent of its value in the first hours of trading, which caused outrage. On the same day, traders were throwing money PNUTa coin modeled after the celebrated squirrel euthanized tardy last year by the Modern York State Department of Environmental Protection, now valued at over $1 billion.
Since the release of MOTHER, Azalea has been constantly promoting the coin to her 7.7 million followers on X through a flurry of comments provocative images AND meme posts. Part of her plan to ensure the coin’s longevity – which is infrequent for memecoins – is to give it some sort of utility. The coin is now accepted as payment by a telecommunications startup in which Azalea has shares. “I plan to stay here for a long time. And it will stay that way,” he says.
Azalea hopes to eventually leverage memecoin into other business opportunities – including starting her own venture capital fund – proving to potential partners and investors that she can recognize and embrace the zeitgeist.
“I have always been a big fan of posters,” she says. “I like to pick on, troll and say things that are a bit provocative. I like to say things and move in a way that I know is memorable… Ultimately, it’s about virality.”