Op-ed: Don’t blame memecoins and degens for crypto’s credibility problem Op-ed: Don’t blame memecoins and degens for crypto’s credibility problem
Cryptocurrency's credibility crisis goes beyond the impact of meme coins and degen gambling.
4 min read
Updated: Jun. 2, 2023 at 9:56 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Crypto has always struggled with credibility among no-coiners – who point to the lack of intrinsic value, price volatility, and regulatory concerns, among other issues.
These criticisms seem all the more persuasive when applied to memecoins, which typically exist without an underlying purpose or specific practical use case.
On the flip side, memecoins offer social value and have the uncanny ability to capture the spirit of the times, which, when coupled with hype and the Fear of Missing Out (FOMO), can undergo substantial price increases, leading to exponential gains for early investors.
Memecoins, and their prevalence within the crypto industry, are often cited as significant factors in crypto’s poor standing among the general public. But in fairness, crypto’s credibility problem runs much deeper than memecoins.
Dogecoin is the top dog
On April 17, Pepe rolled out, catching the attention of crypto investors as it surged from zero to an all-time high of $0.00000431 in two weeks.
During this period, social media was flooded with posts about early Pepe investors becoming overnight millionaires – perpetuating a cycle of hype and FOMO, catalyzing further price tailwinds.
The stated purpose of PEPE is “to make memecoins great again.” Its roadmap emphasizes non-technical milestones, including getting trending on Twitter. Its creators are confident that “pure memetic power” can make Pepe the new “king of the memes.”
But taking Dogecoin’s spot will not be easy. Since its release in December 2013, Dogecoin has always been popular, as evidenced by its consistently high-ranking market cap valuation.
In 2021, Dogecoin took things up a notch, particularly among a subset of previously no-coiner investors. Driving this was a grassroots movement in response to Wall Street hedge funds profiting from the demise of Gamestop and AMC.
The reasons why the Wall Street Bets crowd chose Dogecoin as the cryptocurrency to “stick it to the system” are unclear. But it was likely due to the coin’s perception as a “people’s champion.”
DOGE opened in 2021, priced at $0.005, reaching a peak of $0.74 five months later. This equated to a remarkable 14,700% increase. At the time, observers in both crypto and non-crypto circles were in disbelief that a joke cryptocurrency could rise so substantially in price.
A textbook guide on investing will cover topics including learning about market trends, fundamentals, and mitigating risk. Yet, Dogecoin tore up the rulebook to prove that making investment profit doesn’t necessarily require a deep understanding of digital assets or thoughtful research and analysis. In this case, all it took was aping into a hyped coin while memeing and having fun.
Dogecoin’s 2021 rise, and more recently Pepe’s, demonstrate that hype can sometimes trump fundamentals – which has special appeal to the degen that exists in us all.
Memecoins have no sticking power
Two years on from Dogecoin’s all-time high and the coin has failed to recapture its former glories.
Since the Bitcoin top in November 2021, DOGE has been caught in a macro downtrend, finding support around the $0.055 level. Even now, with 2023’s general uptick in prices, DOGE remains notably closer to the bottom of its trading range than the top.
The Dogecoin Foundation has sought to move on from its joke origins, rebranding it as a payment coin in late 2021. But this has yet to trigger a resurgence of interest in the project.
Whether it can achieve a $1 price is a matter of debate. But based purely on price chart analysis, it is clear that the hype and FOMO have moved on.
Following Pepe’s Binance listing on May 5, the token has seen a 71% drawdown – closing three consecutive weeks in the red, with this week on track for more of the same.
Pepe’s 24-hour volume has sunk progressively lower to $120.3 million on June 1 from $1.6 billion on May 5 – indicating a significant waning of demand.
While there is every possibility either token can turn things around, particularly Pepe, due to it being early in its life cycle, investors should be well aware that memecoin booms are often short-lived. Similarly, many memecoins are high-risk speculative plays.
For those reasons, losing money on memecoins is entirely on the one who chooses to invest in them – making sizeable, cannot-afford-to-lose bets on them foolish.
Too often, people call for protection against bad calls, scammers, rug pulls, etc. While appropriate safeguards are necessary for the industry to move into the mainstream, too many instances of loss were self-induced.
Degens
Degens buy particular crypto assets without conducting due diligence and appropriate research. As such, degens have a reputation for valuing profit above everything else, leading some to perceive them as naive and inexperienced gamblers.
But in reality, there is a degen in all of us to a lesser or greater extent. Indeed, a well-balanced portfolio that considers risk against potential gains should include a small allocation to long shots.
Furthermore, to categorize memecoins as high risk while being blind to the risks of so-called blue chips is somewhat myopic, as all crypto investing is risky due to the novelty of digital assets and the facelessness of transacting digitally.
While degens and the get-rich-quick mentality create a market for risky investments, there are other, arguably more significant issues at play.
Crypto’s credibility issues
Aside from memecoins, there are several other factors that have a detrimental impact on the reputation of cryptocurrencies, including:
- High price volatility – making digital assets an unpredictable and high-risk investment. Rapid price fluctuations bring concerns about stability and long-term viability, particularly when investing as a store of value.
- Regulation – authorities continue to play catch up regarding how best to oversee the industry. In cautious jurisdictions, tax evasion, money laundering, and use for illicit activities are used to justify harsh rules. Without legal frameworks in place, the average no-coiner is unlikely to get involved.
- Security – the underlying blockchain technology is considered secure. But weaknesses exist in social engineering, custodial arrangements, and smart contract exploits. Unlike legacy finance, with crypto, once it is gone, there is little redress.
- Scams – from exit scam ICOs to worthless Ponzi tokens, the prevalence of malicious activity is driven by the faceless and global nature of transacting digitally.
- Low adoption – it is estimated just 4.2% of the world owns cryptocurrency. The relatively low uptake deters adoption, as people tend to follow what others are doing.
Admittedly, memecoins are a factor in crypto’s poor reputational standing. However, the issue is more deep-rooted than memecoins alone.
Mentioned in this article
Author 
Samuel Wan
Samuel Wan, a finance professional turned full-time crypto content creator, values individual autonomy and personal freedom in his pursuits.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Dogecoin
$0.42578
Dogecoin is a cryptocurrency created in December 2013 as a joke by software engineers Billy Markus and Jackson Palmer.
