I’m late to the party. I didn’t succumb when Bitcoin was advertised on the Tube or when footballers paraded Instagram with t-shirts promoting fan tokens buyable with a click on a wave of new trading apps.
But over Christmas curiosity got the better of me. I want to know what the Blockchain and Web3 is. Rather than read on Wikipedia or discuss with ChatGPT, I decide to put skin in the game and seek out a life lesson in Memecoin trading.
I start up by creating a Coinbase account, and transferring in £200. Weeks before I’ve been speaking to my mate Dara, who suggests I buy Solana, a coin like Bitcoin that operates on the Blockchain but with different consensus mechanisms, and is apparently a popular crypto currency for buying and selling Memecoins.
I’m immediately £10 down (Coinbase will buy my Solana back for £190) thanks to trading fees charged by Coinbase, which while researching to write this I still struggle to fully understand. I’m told Coinbase’s fee structure varies based on the platform used, transaction type, and trading volume.
With my Solana now bought, I download the Telegram app, and then a bot called Trojan which essentially doubles up as a digital wallet to store my Solana as well as giving me an extremely quick way to buy and sell (I learn this soon after when I mistakenly buy a coin I’m researching with a single click).
For my ‘research’ I use a final bit of digital apparatus: a website called Dexscreener which is a database for Memecoins with graphs and information about their price, market cap, and an array of other metrics.
The first few days are fun. I trawl through lists of Memecoins, of which there are thousands, arbitrarily filtering on some metrics. I discover a whole new part of the internet. The wild west part.
On X/Twitter and Discord there are online communities gathering, hyping up interest in memes and their associated coins. It’s not clear whether they are genuinely enthused by their ‘project’ or putting on a show to entice the next sucker.
I come to the conclusion that a Memecoin is a way of assigning a value to an idea, oftentimes some phrase and a series of images on a theme, and the link I’ve heard made to the art makes some fuzzy sense. “How is it any different, in principle, to Van Gough’s Daffodils?”
It turns out it’s pretty easy to make a Memecoin, and many people do. Which means there are lots of them. There are Memecoins re-hashing old ideas like Rickroll, for cute cats, for dogs with apples in their mouth. Pick an idea and someone has created a Memecoin for it. There are Memecoins that capture trends, like DOGE, the Shiba Inu, and those that tap into the psychology like WOJAK.
I buy a few coins over the course of a week. I buy XMAS on the assumption that it will have momentum from people in a festive cheer. The coin tanks. I eventually settle on a rather ropey ‘strategy’ that people like cute animals. My main holdings are CHIPPY a dog, Michi (a cute cat) and PNUT a squirrel.
Despite some small losses here and there, I’m helped by the frenzied market shortly after the US elections. I sell my coins as prices rise, reinvesting profits into coins that are trading at a discount from their all time high. Soon enough I have £400.
However, a few weeks later the market quickly turns, and as it stands my initial investment of £200 is now worth a meagre £120.
During the Gold Rush of 1848, the people catering to the prospectors; handling gold transactions, selling supplies, and charging passengers or freight to travel to California made lots of money.
And there’s no doubt that the modern sieve sellers, the developers of Solana, Coinbase and Trojan, the trading bot I used to exchange Solana into Memecoins, have done well.
From my two weeks as a Memecoin trader over Christmas, for the price of £80 (and counting) I take away a lesson in hubris. As the value of my coins temporarily sky-rocket it was easy to believe that my luck was thanks to my superior trading strategy. Despite being broadly familiar with these types of attribution biases, I am not immune. Far from it.
My second lesson is in the mystery of collective behaviour.
Looking back it was a fun time to be a market participant. The height of a ‘Stonks Only Go Up’ moment. Markets are influenced by participants’ perceptions, which in turn shape the market themselves.
Memetic desire is derived from the work of French philosopher and critic René Girard. It refers to the idea that desires are not intrinsic or entirely individual but are instead imitative and influenced by observing others.
Girard describes desire as a triangular structure involving three components: the subject, the object, and the mediator (or model). The subject desires the object because the mediator also desires it. This triangle creates a complex interplay where the object’s value is magnified by the mediator’s desire.
Two weeks trading Memecoins was two weeks seeing this concept in action. How fads and trends come and go. It explains bubbles. It explains ‘how’ a particular Memecoins at any given time can rise from noisy internet discourse and become popular extremely quickly (aka going “to the moon!”) But it does not explain ‘why’ this phenomenon occurs for any particular coin.
I’m left wondering whether X/Twitter, Discord and other online platforms can shape these markets, because of the data they hold or the ways they tilt their algorithms.
Laurence.blog 