Memes and the Cryptocurrency Market: Key Drivers of Adoption and Hype Cycles

Author: Jesse Walden; Compiler: Sissi@TEDAO

After nearly ten years of smart contract platform development, By the end of 2023, many people are disappointed that the most popular cryptocurrency products are still centered on the cryptocurrency itself, rather than how it is applied.

These cryptocurrency-focused products focus primarily on assets as investment vehicles: users buy, earn, trade, borrow, and use leverage to operate including Assets including online currencies, meme coins and non-fungible NFTs are expected to rise in value. In this process, some people get rich quickly, while others lose their wealth instantly. In cryptocurrency circles, this extreme situation is often celebrated by self-proclaimed "geeks", but outside it is criticized by traditional financial institutions.

Many people are disappointed because they believe cryptoassets lack innovation beyond being used as investment tools. However,the demand and acceptance of these products in the market is very high. I believe thatthis trend will not only continue but also become stronger. I will elaborate on my point: the reasons for this are complex and often overlooked.

From this perspective,cryptocurrencies can be considered “the democratization of the investment landscape.” Robinhood already does this for stock trading. Cryptocurrencies enable this for a variety of Internet-native forms of value, including currency, digital art, internet memes, and early-stage tech projects.

In the world of cryptocurrencies, the democratization of investment, both internally and externally, manifests itself in attractive speculation, which confirms the saying :“The most interesting outcomes are often the most likely to happen.”What happened to phenomena such as GameStop, Dogecoin, Bonk, Dogwifhat, etc.?

The recently released movie Dumb Money attempts to show the cultural context behind this trend. The film takes us through a world of modern retail investing characterized by online accessibility, the influence of social media on the dissemination of information, a little guy versus the big guys mentality, and fighting for the opportunity to be a part of it.

For traditional financial institutions, this kind of speculative investment seems like a joke, perhaps a strange form of entertainment. But for participants, it could be a gamble on the lottery, a sport, a team game played with friends online, or a mixture of these elements. Like all games, there are always winners and losers. At the same time, there are always those who try to gain an advantage through unfair means (which requires fair adjudication).

Whenever I meet cryptocurrency entrepreneurs, I always ask them how they got into the field. The most commonly heard story is that they started with speculative investments such as Bitcoin, Ethereum, ICOs, DeFi Summer or NFTs. Countless people made their first significant income this way. This resonates with me because it has been my own experience. For many entrepreneurs, myself included, these early investments were life-changing—they went from having little to no savings to having some and the confidence to take risks.

These investments suddenly made them early investors in some projects or communities with promising technological prospects. These initial investments sparked their interest in the underlying technology or idea, and many went into work in the cryptocurrency industry or founded their own startups. While many times investments don't pan out,it's hard to gain access to such cutting-edge financial opportunities just by paying attention elsewhere.

In extreme cases, meme coins retain the same appeal to those who pay attention even today. The opportunity to participate in economic growth attracts many entrepreneurs and users – which is important because some of these users learn from these experiences how to think and act like investors. It often starts with something seemingly simple (like a token representing a dog), but eventually leads to serious psychological changes and people start to contribute more seriously to the field with money, effort or skills. In this chaotic and volatile free market process, many people have also been harmed. However, despite this,speculative investment continues to be the driving force behind the growth of cryptocurrencies and, in turn, the development of the technology towards non-speculative applications.

Towards the end of 2023, the speculative side of the cryptocurrency space became mainstream again. It has the most activity, users, and attention. At the same time, technology platforms that do not require special permissions are also constantly developing, providing the possibility for innovation in non-speculative applications. The question is not whether these non-speculative applications will have an impact, but when they will have a validating effect on the former speculative boom.

Shunning speculative reality may seem more "classy" even in failure, while embracing speculation is seen as a path to success The “low-end” approach. But the reality is more complex: speculation can be a powerful strategy, not only to attract users into the field, but also to invest them in the success of the project and the industry as a whole;Speculation is not just a purpose; It can also be a means to achieve an end.