What is a Meme?

A meme is a unit that carries cultural ideas and symbols, constantly spreading and propagating in people's consciousness. Like genes, memes vary in their ability to spread; those that resonate strongly tend to endure, while less impactful ones are quickly forgotten.

The internet introduced the concept of "internet memes," which facilitate the rapid spread of memes and cultural ideas through images, videos, GIFs, and jokes. A study likened the spread of internet memes to diseases, stating that "memes spread in a viral mode, reminiscent of disease spread by an SIR model," infecting "individuals."

The spread of internet memes is akin to the spread of infectious diseases.

"Meme coins" are cryptocurrencies whose value derives solely from associated memes. Essentially, they bring financial value to the concept of memes.

With the emergence of meme coins, cultural ideas, symbols, and their propagation can be traded and speculated upon. Their value is based on the relevance of the meme and its ability to capture mindshare, creating a new market where cultural resonance can be quantified and holds financial value.

A Brief History of Meme Coins

The table and graph below provide a brief overview of Crypto cycles and the meme coins that rose during these cycles:

POW Meme Coins

Proof-of-Work (POW) meme coins were primarily designed for miners to allocate their resources to mine and sell new tokens. Many of these meme coins first appeared on the "alternative cryptocurrency" subforum on Bitcointalk. While many meme coins failed to enter exchanges, those that succeeded were traded on platforms like Cryptsy and BTC-E, which are now closed. Each meme coin is typically differentiated by factors such as name and brand, hash algorithm, block time, and supply, all contributing to their overall narrative (or "meme").

The first wave of tokens post-Bitcoin was "meme coins," which, apart from a new idea, offered little intrinsic value. The graph below shows some examples:

All these tokens, except Litecoin, died out (reasons include low trading volume and market cap, lack of exchange support, susceptibility to 51% attacks, etc.). This could be attributed to several factors: weak meme stickiness (lack of cultural longevity) and participation cost issues (each meme coin is a complete blockchain).

Litecoin's enduring popularity may be attributed to the meme value (digital silver) derived from Bitcoin, its much earlier appearance compared to other meme coins, and continuous support from numerous exchanges.

Dogecoin: The First Meme Coin

In the summer of 2013, the original Doge meme ("much wow, such applause") began spreading on 4chan and Reddit. On December 8, 2013, Jackson Palmer and Billy Markus leveraged this cultural trend to launch Dogecoin on Bitcointalk. It was the first cryptocurrency based on an internet meme.

Dogecoin's success birthed a new category of cryptocurrencies that were funny, humorous, ironic, used celebrities (like Kanye West, Max Keiser), animals (like Pandacoin), or aimed to capture specific communities. These were launched as Proof-of-Work tokens on Bitcointalk's "Alternative Cryptocurrency" subforum. "Technical details" became less important; everything centered around the "meme." The graph below shows some examples:

ICO Craze and Ethereum's Rise

Ethereum's rise sparked a wave of innovation, bringing new use cases, better user experiences, and new users.

Some specific improvements include:

• Easier token launches (ERC20 standard)

• Bringing in new user demographics (non-miners)

• Token creators could earn more money (unlike zero-premine PoW tokens, ERC20s were sold directly through ICOs)

• Introduction of interoperability/unified ecosystems/unified wallets (via ERC20s)

The ICO era birthed a wave of more "serious" projects like theDAO, Filecoin, Tezos, EOS, Cardano, Tron, and Bancor, aiming to have utility or purpose beyond meme value. During this period, there were few meme coins that, while not particularly eye-catching, still garnered some attention.

One such example is the Useless Ethereum Token, launched in June 2017, which mocked the concept of ICOs and raised 310 ETH in its ICO.

Although Dentacoin's initial goal was to be the "cryptocurrency for dentists," it is still considered a meme coin and peaked at a $2 billion market cap in January 2018.

HAYCOIN was the first ERC20 token listed on Uniswap and one of the meme coins created during this era (2018). Created by Uniswap's founder Hayden Adams for testing the Uniswap protocol, it initially didn't garner much attention or trading volume but resurged in 2023 due to its historical significance.

Collectible Memes and Early NFTs

Beyond cryptocurrencies, a subset of frog Pepe memes called "Rare Pepes" emerged, which were not publicly released and carried a watermark saying "RARE PEPE DO NOT SAVE" if leaked.

During 2016 to 2018, a group of Counterparty developers and Pepe meme enthusiasts created the Rare Pepe wallet Pepe Cash, planning the "Rare Pepe meme" for trading on the Counterparty protocol.

Rare Pepes are often considered the second-ever NFT series and continue to hold value, with some selling for over $500,000.

With the release of CryptoPunks, MoonCats, and CryptoKitties, NFTs entered the Ethereum era, representing unique tokens pointing to images and media. EtherRocks, initially a Reddit joke in 2017 featuring a collection of 100 multicolored clipart rocks, gained popularity in 2021, reaching a floor price of 305 ETH in August ($1 million).

Another example is Unisocks (SOCKS), launched by Hayden Adams in May 2019, offering 500 physical socks exchangeable with SOCK (ERC20). Each sock's price has soared to $53,000, possibly making them the world's most expensive socks.

DeFi Summer

In June 2020, Compound Finance introduced a new token distribution method called "liquidity mining" or "yield farming," where users lock assets to provide liquidity and earn token rewards.

This innovation kickstarted "DeFi summer," peaking with "food coin" yield farms offering 10,000% annualized returns (in meme coins) for locking tokens in Yam or Pickle contracts.

Meme Stocks and Dog Coins

Stimulus measures, rate cuts, cheap capital, and COVID lockdowns created a high-risk environment globally in 2021.

Retail traders on Reddit popularized the "Gamestock" meme early in 2021, causing a rapid stock price surge, fueled by Robinhood's user-friendly experience and commission-free trades.

The "GME" frenzy led to speculation in other assets, especially those available on Robinhood. DOGE, listed on Robinhood in 2018 at $0.008, gained attention in 2021 due to Elon Musk's tweets, peaking at a $90 billion market cap in May 2021.

DOGE's popularity spawned more dog-themed meme coins like Shiba Inu, Floki, and Safemoon, reaching high valuations within months.

NFT Craze: "Meme Coins with Pictures"

The ERC721 standard and platforms like OpenSea birthed NFTs, unique cryptographic assets representing "cultural" or "meme" expressions.

Notable NFTs include CryptoPunks, Bored Apes, Squiggles, and Pudgy Penguins, used as profile pictures on Twitter and Discord, symbolizing status and "club membership."

Recent Trends (2023+)

As crypto rebounds from bear markets, new memes, cultures, ideas, and ecosystems emerge, with memes attracting increased interest and attention.

Common Patterns

Every cycle sees some form of meme coins, presenting in various tech forms like PoW coins, ERC20s, and NFTs, leveraging attention, narrative, and hype for survival and propagation.

Memes precede coins; the most successful meme coins leverage existing meme popularity for promotion.

Crypto-native memes are just beginning to spread beyond the crypto circle, like Pudgy Penguins.

Low prices attract speculation; price itself becomes a meme.

Strong communities and marketing are crucial for meme coins' success.

From wild growth to specialized operations, meme coins evolve.

Imagery and slogans drive meme propagation.

Opportunities

With over $600 billion in market cap and $13 billion in daily trading volume, meme coins hold significant financial value.

Catching the next meme early can be profitable for creators and investors, expanding influence and becoming early believers for returns, whether as a ticket to wealth or following specific KOLs.