Just as the mass communication theorist McLuhan said in 1964 that “the media is the message”, today’s crypto market “meme is the message”.
There is no shortage of “surge myths” in the crypto circle, such as Dogecoin (Doge), Shiba Inucoin (SHIB), Dogelon Mars (ELON) and other meme legends that have skyrocketed hundreds of thousands of times last year. However, this type of pumping project is difficult for traditional financial people to accept, leading them to classify it only as a Ponzi scheme. But is it really just that? Just as the mass communication theorist McLuhan said in 1964 that “the media is the message”, today’s crypto market “memes is the message”.
The most fundamental difference between traditional finance and encrypted finance is that traditional finance is very good at using valuation models to find the true value of assets, so as to find undervalued assets. However, this model cannot be applied to encrypted assets, so Bitcoin, an asset with no dividends and no cash flow, is regarded by the outside world as a Shit coin, or “rat poison” in the mouth of Warren Buffett.
In fact, the development of traditional finance has been quite mature so far, with sufficient liquidity, arbitrage mechanisms and risk assessment mechanisms, so there is no problem with this valuation method. However, there are still uncertainties in this valuation, and eGirl Capital believes that its formula can be defined as follows:
Price = Value * Deviation Factor _ _ _
Among them, the deviation factors include liquidity, market volatility and speculation, etc., which will affect the intrinsic value, and the multiplication of the two is the market price. Of course, this formula is also only applicable to traditional finance. If it is applied to encrypted assets, the intrinsic value of most cryptocurrencies cannot be estimated, and the final conclusion can only be that the intrinsic value is zero.
At this time, we need another valuation formula. But before that, we need to understand how the “intrinsic value” of encrypted assets is generated?
“Consensus accumulation” in the cryptosphere
Unlike traditional finance, the value of encrypted assets does not depend on valuation, but on the accumulation of consensus, gathering a group of people with common beliefs into a community, relying on the most basic supply and demand model, the supply remains unchanged, and the demand increases. Price increased.
Therefore , the most fundamental difference between traditional finance and encrypted finance is that traditional finance needs to see the estimated cash flow model to create supply and demand, while encrypted finance relies on consensus to create a supply and demand model.
Taking Bitcoin as an example, the consensus accumulated by the community can be roughly divided into three types: 1.) The ledger that cannot be tampered with; 2.) The total amount is limited; 3.) The distrust of the existing monetary system. After the institution enters the market, it is also necessary to establish a consensus on “asset allocation”.
Since value is accumulated by consensus, the speed and breadth of message transmission are also key factors. At this time, the role of “memes” is crucial.
The Accelerator of Crypto Consensus: Meme Culture
Meme is of Greek origin and means “imitated thing”. Richard Dawkins, a professor of evolutionary biology at Oxford University, defined memes as “cultural transmission units” in “The Selfish Gene”, which has several characteristics: short, easy to understand, and reproducible. With memes, the message to be conveyed can be quickly understood and received.
Richard Dawkins writes: “We are a machine of a chain of funds, and the use of memes to spread culture is ingrained in our genes.”
Memes are also commonly used in online community marketing. The reasons are: first, memes are not refined, and simple words and fonts can resonate; second, the speed of dissemination is fast, through the short and easy-to-understand “graphics and text modules”, and after being used many times, the meme has already been used for many times. A set of prediction logic can achieve the effect of “instant accurate communication”.
Linda Xie, former product manager of Coinbase and founder of Scalar Capital, once said: “A good meme spreads much better than a long good article.” For the crypto community, memes are not only interesting and accurate communication, but also The spreading effect of its viral spread also brings about community cohesion and a “wealth effect”.
In fact, the principle is not difficult to understand, the faster the diffusion, the more demand. And the higher the demand, the same supply, the price will rise; after the price rises, it will further trigger the spread, even chasing high, so the price will rise again.
The Wealth Effect of Crypto Market Meme Culture
In July 2020, a short video about Dogecoin went viral on Douyin, a community software with a global user base of 800 million, “Let’s all get rich! Dogecoin is almost worthless, but Douyin has 800 million users. Just invest $25. Once the price rises to $1, you’ll have $10,000!”
In just one day, the price of Dogecoin soared from $0.0028 to $0.0043, an increase of more than 50%, and the market value also increased from $287 million to $540 million. Last year, the price of Dogecoin rose to $0.7 due to successive tweets from Tesla founder Musk and the self-proclaimed godfather of Dogecoin. Overall, Dogecoin’s annual increase in 2021 is 3,500%, and if calculated at the highest price, the increase is as high as 15,100%.
Interestingly, Dogecoin itself is a meme, and its original logo is a mocking Shiba Inu meme. There is no text in the picture, and you can add it at will.
After the success of Dogecoin, more and more Doge series meme coins appeared in the market. For example, the Shiba Inu Coin (SHIB), known as the Dogecoin killer, has achieved a maximum increase of 870,000 times in 2021 due to its activities to replace Dogecoin and the issuance of NFTs.
And the Doge Sloan Mars coin (hereinafter referred to as Musk coin, $ELON), which combines the strongest meme in the crypto circle with Dogecoin and Musk, is released in May 2021, and the price has also risen from $0.0000000078 to the current $0.00000072 The US dollar rose about 91 times, and even rose nearly 300 times at one point.
$ELON price chart, Source: CMC
Of course, while the wealth effect of this fast-spreading memecoin is staggering, the decline is also rapid. However, this does not affect how much the crypto circle loves meme coins.
Inventory of the dog series meme coins
According to the dog series of meme coins compiled by Crypto.com in March this year, the top three current market capitalizations are Dogecoin (DOGE), Shiba Inu (SHIB), and Elon (ELON).
Among them, Dogecoin is the oldest meme coin. Although many people think that Dogecoin originated as a joke, in fact, its founder Jackson Palmer’s original intention was to use the most popular and ironic image of Shiba Inu at the time to mock the hype of altcoins that copied Bitcoin.
“I think Dogecoin will be a complement to Bitcoin.
People who have never played with cryptocurrencies can use it to get started, and I think hands-on is the best way to get started with economic theory.
If there is an interesting cryptocurrency like Dogecoin, it can help everyone understand what happened at that time and lower the threshold for entering cryptocurrency. I think it’s a very good seed to give people a sense of their environment. “
Shiba Inu Coin (SHIB) is an “anonymous project” that appeared in August 2020. It is officially called the Dogecoin Killer and is a decentralized community experiment. Since the official did not hold any tokens, 50% of the token SHIB was locked in Uniswap as transaction liquidity (the official said that the private key had been discarded), and the remaining half was airdropped to Ethereum founder Vitalik Buterin, so it was It is believed that its issuance mechanism is quite fair, and there is no suspicion of reselling to the community, and the officially launched liquidity mining mechanism can also encourage community trading and holding.
Dogelon Mars , the protagonist of space adventure comics
If the above two dog memes are a mockery of hype and a decentralized experiment, then Dogelon Mars (ELON), the third-largest dog meme in the current dog series, is an enhanced version of meme culture.
Dogelon Mars combines three memes in the circle: Doge + Elon + Mars, among which Mars is not only the planet Musk wants to immigrate to, but also the currency price skyrocketing To the Mars metaphor.
At present, Dogelon Mars (ELON) has been listed on several mainstream exchanges, namely Crypto.com, OKEx, KuCoin, Huobi and Gemini.
In order to enhance the meme properties of Dogelon Mars, the official also specially tailored space comics for him, and the protagonist is Dogelon Mars. The background of the comic is 2420. Dogs have successfully colonized Mars at this time, but Mars is still in danger. After another group of “annihilators” arrived, they destroyed the city of Dogs, and Dogelon Mars was born in this environment. At the end of the story, Dogelon Mars was sent to another planet.
This manga is now in serial 4
“I’m Dogelon Mars, join me and let’s sail to other planets” — Official Community Slogan
Memes like this also seem to have caught the attention of the community, with Dogelon Mars’ official Twitter following reaching 520,000 and Telegram group membership exceeding 87,000. Interestingly, the Dogelon Mars community communicates in a very special way, with very little verbal communication, and most of them communicate with meme memes.
In addition, Dogelon Mars also launched NFT. The NFT trading platform OpenSea sells four serial comics and a picture of a dog driving a sports car.
more than memes
The development of meme culture in the crypto space is undeniably hype, but also positive, such as the consensus represented by Bitcoin: decentralization and free money. But through the spread of meme culture, there will be more and more people who will build consensus because of common ideas.
In particular, millennials have received a lot of meme culture in news reading. It is not difficult to understand why the proportion of millennials who agree with Bitcoin is increasing year by year. Of course, it boils down to the culture that Bitcoin represents, but the memes are also accelerating and self-reinforcing.
The same phenomenon happened with Dogecoin and Shiba Inu, which are now starting to become payment options as well. For example, thanks to Musk’s strong push, some of Tesla’s products now accept Dogecoin as payment, and Musk even called on McDonald’s to accept Dogecoin as payment. In addition, AMC Theatres, the largest movie theater chain in the United States, has officially accepted Dogecoin and Shiba Inu coins as payment currencies.
And these results are the consensus further strengthened into belief. As the token continues to develop and the technology changes with each passing day, the accumulated consensus will be stronger in the future, thus gradually forming a cycle of self-reinforcement.
The Valuation Formula of Crypto Assets
Remember the traditional financial valuation formula we mentioned earlier?
Price = Value * Deviation Factor
Since there is no way for crypto assets to find intrinsic value through traditional valuation, eGirl Capital has proposed a revised model that incorporates the meme culture of the crypto world.
Price = Value * Deviation Factor * Speculative Premium/Discount (Price = Intrinsic Value * Deviation Factor * Investment Premium/Discount)
Among them, Value (intrinsic value) refers to “a standard for measuring the value of assets”, usually obtained by calculating its net realizable asset value; while speculative premiums or discounts refer to speculation, attention, and other intangible factors. This part of the value may not have any source basis, but it may represent all the values in the circle.
It is undeniable that the explosion of meme culture and meme coins can be attributed to loose monetary policy, but the meme culture in the crypto circle seems to have long been ingrained, from the food series DeFi tokens in 2020, to the animal series NFT, meme culture. The rapid spread also changed the supply and demand of these tokens.
It is foreseeable that the same may happen again in the future bull market, so for the cryptosphere, meme hotspots are crucial. But in any case, the Doge series of meme coins seem to have become part of the meme culture, and Doge coins will be hyped almost every time during the bull market, and even become a means of payment after accumulating more consensus from the hype stage.
And Dogecoin and Shiba Inucoin have also proved the power of meme consensus, and can even create a positive cycle and strengthen the community, so other dog series memes, such as the current third largest dog meme coin Dogelon Mars or other new Whether the meme can successfully take over the baton and then rise is the next focus of the meme culture.
Finally, I would like to remind readers that the price of meme coins rises and falls quickly, and remember the importance of asset allocation.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/how-does-crypto-meme-culture-change-supply-and-demand-models-to-create-consensus/
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