It is a parable of the attention economy. A celebrity created entirely by social media, “tuah hawk girl” Haliey Welch, helps launch a crypto asset that stokes a viral frenzy and then explodes.
The Hawk memecoin was worth $490m (£385m) hours after its launch on December 4, but now has a market capitalization (the value of all Hawk coins in circulation) of $17m.
Welch, a Tennessee native who rose to fame for her response to a saucy question in an interview earlier this year, was immediately accused of scamming her followers on social media. Crypto commentator Stephen Findeisen, who goes by Coffeezilla, described the launch as a “rug pull,” the term for when developers hype a crypto scheme for short-term gains and then shut down the project.
However, Hawk is still negotiating and Welch has said his team “hasn’t sold a single chip.” Welch representatives have been contacted for comment.
The furor has come amid a boom in memecoins, which were valued at around $20 billion in their entirety at the beginning of the year but are now worth $118 billion, according to CoinMarketCap, which monitors memecoin prices. cryptocurrencies. And they are flooding the market by the thousands. At one point in November, the memecoin platform pump.fun launched 69,000 tokens in one dayaccording to data from the cryptographic analysis firm Dune.
Experts say memecoins, the latest darling in the cryptocurrency field whose true economic value is endlessly questioned, have no fundamental value.
“It’s just a phrase attached to a digital currency. It has no value,” says Carol Alexander, professor of finance at the University of Sussex.
Memecoins are based on two prominent features of the digital economy: memes and cryptocurrencies. The first is an online image or video clip that is endlessly modified and recycled on social media to capture the zeitgeist (think Moo Deng the hippo or, more timelessly, the distracted groom). A cryptocurrency is a digital asset built on a blockchain, a decentralized ledger that tracks ownership of a cryptocurrency or other digital asset.
Sam Baker, a UK-based memecoin trader, says many of the coin releases are based on internet trends you’ve “never heard of” and rely heavily on influencers to push them in a variety of ways. of channels, from Discord to X and Telegram. .
He recognizes that there is “no intrinsic value” in memecoins and that there is “no rhyme or reason” to which one will be successful. Recent releases include coins based on the new Netflix series Squid Game and the fall of Bashar al-Assad’s regime in Syria.
“It’s a pure form of gaming,” Baker says. “It’s like buying a lottery ticket. But some of them are going to increase by 10,000% or 20,000%.”
Memecoins, Baker says, are a fusion of two pillars of the digital economy that span different eras of the online boom.
“It’s about monetizing people’s attention on social media,” he says. “It is a crossover from web 2.0, which is social networks, to web 3.0, which is decentralized finance and cryptocurrencies. Although they are crazy, memecoins represent the modern monetization of the attention economy.”
There is also a link to meme stocks, or shares of publicly traded companies, which posted huge gains after being promoted on social media and bought by amateur investors. The classic example is GameStop, a struggling video game retailer whose value rose after a Reddit community invested in the stock.
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The renewed popularity of memecoins can be traced back to Donald Trump’s victory in the US presidential election, with the market value doubling since his victory. Trump is strongly associated with cryptocurrencies, and during his campaign he pledged to end the “persecution” of the industry. Bitcoin, the most valuable digital asset, has been the big beneficiary, as its value surpassed $100,000 for the first time a month after Trump’s victory.
Cryptocurrencies attract influential figures on the American political right such as Peter Thiel, the Silicon Valley billionaire, because they avoid the establishment by flying under the radar of regulators and not being backed by a central bank. Memecoins are also cheap for retail investors, with many of the tokens costing a fraction of a cent.
Creating them is relatively simple, according to Alexander: just mint, say, $4,000 worth of tokens on a blockchain (Solana is especially popular among memecoin creators) and advertise them on social media, hoping to sell them for a profit. Once purchased, they can also be traded on exchanges.
One of Trump’s biggest supporters, Elon Musk, is a long-time supporter of the first memecoin, Dogecoin, based on a meme featuring a shiba inu dog. Launched as a parody of the cryptocurrency market, Dogecoin is now worth $60 billion, even if its direct use in transactions is limited to a few companies like Tesla, where Musk is CEO.
Merav Ozair, founder of consulting firm Emerging Technologies Mastery, says Trump’s victory has sparked a new wave of hype around cryptocurrency-related assets.
“The new administration promised that it would be very favorable to the crypto space. The new commotion is due to the elections,” he says.
But, he adds, the basics around memecoins haven’t changed. “It’s just about going to a casino and seeing what number is going to win.”