🟪 The New Meme Machines

The New Meme Machines

Richard Dawkins coined the term “meme” in his 1976 study of evolution, The Selfish Gene.

The evolutionary biologist devoted the last chapter of his seminal book to “self-replicating units of cultural transmission” (aka, memes), which he defined as “anything that behaves like a gene in human culture” by replicating itself “from one brain to another.” 

Memes were relegated to the end of the book, almost as a footnote, because they didn’t seem particularly important. He included them only to “downplay the gene as the only unit of natural selection” — if there is life on Mars, Dawkins is certain it will be a product of natural selection, but not certain that it will have anything to do with genetics.  

He illustrated that point by arguing that virality doesn’t just apply to infectious diseases, but also to culture, which he took as evidence that there could be other, yet undiscovered, forms of evolution.

Dawkins, of course, did not propose that memes are how evolution likely works in alien species — unless, perhaps, they have the internet.

Writing as he was in 1976, Dawkins could not foresee how the internet would put memes into hyperdrive.

We think of memes as Grumpy Cat jpegs rocketing through social media, but Dawkins had something far older than that in mind, like catchy melodies or spoken language — or something that predates people, even: “There are examples of cultural evolution in birds and monkeys.”

The internet, however, hijacked Dawkins’ concept and perhaps even weaponized it. 

Internet memes differ from both genes and the original meaning of “meme” in one fundamental way: Unlike genetic evolution, internet memes do not spread by a process of natural selection. Instead, they are put in the world with a premeditated intent to spread a particular idea and sometimes to achieve a particular result.

This, I would argue, makes internet memes the genetically modified version of Dawkins’ original concept.

For better and worse, ideas now spread differently — and more deliberately — than they used to.

If you’re still inclined to dismiss memes as nothing more than frivolous time wasters, consider that Pepe helped elect a president in 2016.

The internet caused a step-change evolution of memes, with real-world consequences.

Crypto might come to represent the next step-change — because memes are now tradeable (with consequences to be determined).

The bull case for BONK

I wouldn’t blame you for thinking nothing good can come from the advent of tradable memes — just because something is tradeable, doesn’t mean you should trade it.

Even lots of crypto natives have reservations about memecoins, mostly because they make the rest of crypto look unserious.

But memecoins keep happening — they were arguably the biggest winner of 2023 — so evolutionary logic would suggest they must have some purpose. 

As a long-time fan of Warren Buffett-style value investing, I have until recently dismissed the idea that memecoins could have any investing purpose. 

They are tradeable, so they have prices, sure, but not value — because value requires earnings (or the prospect thereof) and a true memecoin does not have any prospect of ever having any earnings.

But I've been following crypto long enough now that I have apparently been corrupted — memecoins are starting to make sense to me.

I now see the argument that memecoins can have something akin to value as a tradeable representation of an idea.

I don't know how to quantify that as ideas are entirely intangible — which makes memecoins something like a tradeable version of the accounting concept of goodwill. 

Investing in goodwill seems like a terrible idea (imagine buying the Coca-Cola brand but without any claim on Coca-Cola’s earnings), but trading it might not be. 

If you think a token represents an idea that’s about to go viral, it makes sense that, as the idea spreads to more people, more people will buy the token, causing the price (if not the value) of the token to go up.

I’m not sure it’s possible to determine the value of that opportunity in absolute terms, but you can assign a relative value to almost anything.

On a relative basis, for example, I can see the case for why BONK might be considered “cheap.” 

(Excuse me for a moment while I do penance for that sinful thought by re-reading Ben Graham’s Intelligent Investor.)

Compared to Pepe (a bad idea) and DOGE (a joke idea) and SHIB (a response to a joke idea), BONK seems downright sensible.

Airdropped in December 2022, when Solana was 95% off its highs, BONK was conceived as a token (literally) of thanks for all of the developers and users who had stuck with Solana in its moment of need following the downfall of Sam Bankman-Fried.

That arguably makes it a more substantial type of meme than your standard memecoin. 

It might be more descriptive to call BONK a “mascot” or “community” coin — something that represents the Solana ecosystem in an intangible, but widely recognized way.

Putting a dollar value on the community value of a token is of course arbitrary (as arbitrary as WeWork’s infamous community-adjusted EBITDA metric).

But consider that DOGE, which represents nothing, is “worth” $11 billion, SHIB, which trades on Ethereum but doesn’t really represent it, is worth $5.5 billion, and PEPE, which (to most non-crypto people) represents unsavory politics is worth $500 million.

By comparison, BONK’s $680 million market cap looks, dare I say, reasonable.

That may just mean that my mind has been infected by a self-replicating unit of cultural transmission — but that in itself would illustrate the power of memes and memecoins.

Richard Dawkins has grudgingly accepted the power of internet memes, but I imagine memecoins would be a step too far for him — and putting a valuation on them would be a step too far for almost anyone inclined to put valuations on things.

They are probably right.

Tomorrow I'll come to my senses and give you the (counterintuitive) bear case for BONK.

― Byron Gilliam

We're Watching

In today's episode of Empire Santi and Jason dive into recent crypto market volatility triggered by an analyst report forecasting SEC rejection of a spot Bitcoin ETF. They discuss the risks of overleveraging during bull runs, debate the usefulness of "economic security," and managing greed in seek of high yields. The conversation then turns to an in-depth analysis of the emerging trend of "restaking" protocols and discuss concerns about adding fragility and centralization risks. To close out they discuss the pending SEC decisions around several Bitcoin ETF filings . Thanks for tuning in!

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