Meme Coin: A Celebration and Reflection in the Encryption World

Meme coins are undoubtedly one of the most eye-catching and perplexing phenomena in the field of encryption. From the massive SHIB ecosystem born out of a Japanese Shiba Inu meme to the dogecoin that surged in popularity due to the influence of a tech giant, these tokens, which originated from jokes and thrived within communities, continuously challenge the values of the traditional financial world with their dramatic price fluctuations and enormous wealth effects.

Are they truly worthless digital bubbles, or do they represent a brand new asset class? Placing them in front of the mirror of traditional finance, we can conduct a deep role deconstruction. We will find that Meme coins are not a single role, but rather a mix and amplification of multiple marginalized or suppressed roles in the traditional financial world. They are both the ultimate release of speculative desire and a financial totem of community culture, and may also serve as a “mirror” to examine the essence of modern finance.

1. Market Level: “High-Risk Lottery” and “Zombie Stocks or Junk Bonds”

From the perspective of traditional finance, Meme coins are very different from the “value investment” tools that ordinary investors encounter in traditional finance, such as blue-chip stocks and government bonds (. Its most accurate counterpart is lottery tickets and casino chips.

High-risk lottery or “casino chips”. The essence of traditional lottery is that the purchaser pays a certain, small loss ) to purchase lottery amounts (, in order to gamble on a very low probability but high return possibility. Meme coins completely follow this logic. The vast majority of purchasers do not base their decisions on an analysis of the underlying technology, application scenarios, or discounted cash flow ------ because these do not exist in the vast majority of Meme coins. Their investment decisions stem from a simple belief: that there will be the next “more foolish” person who will take over at a higher price from them. This is the perfect interpretation of the famous “greater fool theory” in financial history in the digital age.

Unlike traditional lotteries, the “draw” of Meme coin is not a deterministic point in time, but rather a continuous process. This process is triggered by a hot topic on social media, a call from an influential figure, or an unexpected community carnival. Its price chart no longer reflects the fundamentals of the business, but rather serves as a real-time electrocardiogram of group sentiment fluctuations. Stories of instant surges of 500% and sudden “ankle cuts” alternate, forming the daily routine of this large-scale online gambling.

Highly speculative “penny stocks” and “junk bonds”. Some may compare them to “penny stocks” or “junk bonds” in traditional financial markets. Indeed, they share the characteristics of “high risk, high potential returns”. However, the risk dimension of Meme coins is more complex and extreme. “Penny stocks” at least have a legal entity behind them, owning assets and businesses ), no matter how weak (, and are subject to securities regulators. While price manipulation exists, it still operates within a certain legal framework. “Junk bonds” may have high default risk, but their pricing is still based on the issuer's credit rating, asset collateral, and future cash flow expectations, with a relatively mature analytical system.

Meme coins are mostly created on decentralized networks, with no actual controllers and no business revenue. Their smart contracts may hide vulnerabilities, and the founding team can remain anonymous. Even more frightening is the “rug pull,” where developers suddenly withdraw funds from the liquidity pool, causing the token's value to plummet to zero in an instant. The accumulation of such systemic risks makes the risk level of Meme coins far exceed any analogs in traditional finance, pushing speculation to unprecedented heights.

2. Cultural Aspect: “Cult Stocks” and “Social Currency”

If Meme coin is merely a gamble, it may not possess such tenacious vitality. Its deeper magic lies in its successful transformation of financial tools into cultural symbols and social entry tickets. In this regard, its best analogy is the GME stock in the “GameStop incident” of 2021, which magnified its cultural attributes.

The Socialization of Financial Behavior and Identity Recognition. The core of the GameStop incident was that retail investors on a certain forum collectively bought GME shares, which were heavily shorted by institutions, successfully “targeting” Wall Street hedge funds. In this process, GME shares ceased to be a simple certificate of equity investment; they became a “banner”, a kind of “faith”, and a “weapon” for grassroots retail investors against the financial elite system. Holding GME became a declaration of identity: “I am a member of this community, and I stand on the opposite side of Wall Street.”

Meme coin has pushed this community financial behavior to a new height. Holding Dogecoin means you acknowledge its “people's currency” satirical slogan, understand its origin from the 2013 meme that mocked Bitcoin, and join a global community movement filled with humor. Shiba Inu coin has built a large “SHIB Army,” reinforcing the sense of belonging and mission for holders through a complex ecosystem narrative and burning deflationary mechanism. Here, investment is no longer cold, data analysis, but a warm identity recognition and community co-construction.

"The Accumulation and Realization of 'Social Capital'. In the era of social media, attention is the scarcest resource. The essence of Meme coin is the financialization of collective attention. A successful Meme coin is a cultural gene that can self-replicate and spread virally. The early discovery and dissemination of a certain Meme coin not only can bring financial returns but also can accumulate considerable 'social capital' within the community ------ you are seen as a visionary 'prophet' or an interesting 'meme king'.

attention attracts capital inflow

3. Behavioral Aspect: “Emotional Value” and “Speculative Bubble”

Throughout financial history, Meme coins are not a previously unseen monster; they are merely the latest incarnation of the cyclical speculative bubbles in human history in the digital age. By comparing them to the Dutch tulip mania, the South Sea bubble, and the Internet bubble, we can clearly see the astonishing similarities in history.

Narrative-driven value. At the heart of all speculative bubbles is the “narrative” replacing “fundamentals” as the core of pricing. In 17th century Holland, the value of tulips detached from their ornamental value as flowers, driven by the narrative of “rarity, uniqueness, and status symbol,” where a bulb of “Semper Augustus” could be exchanged for a mansion. In the early 21st century internet bubble, a company's value no longer depended on its profitability and cash flow, but rather on the grand narratives of “clicks,” “user growth,” and “new economic models.”

Today's Meme coin derives its value entirely from the narrative of “community power”, “cultural symbols”, and “rebellious spirit”. A social media statement from a tech giant has an influence far beyond any financial report. This reveals a timeless aspect of human nature in the financial markets: people will always be attracted to a compelling story and the dream of quick wealth.

Fear of missing out. In every bubble, “fear of missing out” is the core fuel driving irrational price increases. When seeing people around you become rich overnight by purchasing a certain Meme coin, rational thinking often gives way to a strong sense of anxiety. This emotion is infinitely amplified in the cryptocurrency market, where trading occurs 24/7 and information spreads at the speed of light.

At the same time, every era finds a rationalization for its bubble that claims “this time is different.” During the tulip mania, people believed that the demand for beauty was limitless; during the internet bubble, people believed that traditional valuation models had completely failed; and in the meme coin craze, believers shouted “community is value” and “decentralization changes everything.” However, history has repeatedly proven that when the music stops, the narrative goes bankrupt, and the law of gravity will eventually come into play, prices will return to their intrinsic value------for the vast majority of meme coins, this value is infinitely close to zero.

4. Beyond the Boundaries of Traditional Finance

Although we have found many analogies, Meme coins are not a simple replication of traditional roles. They deconstruct and transcend traditional financial models through blockchain technology, showcasing their unique characteristics.

Low threshold and no admission requirements for issuance. In the traditional world, issuing stocks or bonds requires a cumbersome legal process, underwriting by investment banks, and approval from regulatory agencies, resulting in a very high threshold. In the encryption currency world, anyone can create and issue their own Meme coin in just a few minutes with minimal cost and some technical knowledge. The extremely low threshold for issuance has caused the market to explode in an almost “wild growth” manner, while also leading to a mix of quality projects and rampant fraud.

Globalization and Instantaneity of Liquidity. A “penny stock” traded on the US OTC market may have very poor liquidity, making it difficult for ordinary investors to buy and sell. However, a top Meme coin, once listed on global decentralized or centralized exchanges, can achieve 24/7 global instant trading. This deep and uninterrupted liquidity provides a breeding ground for extremely high-intensity speculative behavior, which is unmatched by any traditional speculative tools.

The Vacuum of Regulation and the Ambiguity of Morality. Traditional financial activities are within a strict regulatory moat, aimed at protecting investors and maintaining market stability. In contrast, the world of cryptocurrencies, particularly in the realm of Meme coins, remains largely a “lawless land.” The absence of regulation, on one hand, grants it significant freedom and innovation space; on the other hand, it allows for market manipulation, insider trading, fraud, and other behaviors to go almost unpunished, pushing the principle of “buyer beware” to its limits.

Meme coin may force us to rethink some fundamental questions in an extreme way: What is value? Besides resource allocation, what human emotions and social needs does the financial market carry? It is like a “mirror of truth,” reflecting the speculation, revelry, and tribalism that have always existed within the financial system but are ashamed to admit under a rational shell. It transforms high-frequency speculation in Wall Street trading rooms into a national game that every mobile user can participate in; it turns the social networks of elite clubs into a global, interest-based digital community.

Therefore, the most fair evaluation of Meme coin may not simply be to dismiss it as a “scam” or to hype it as a “revolution.” It is more like a complex polyhedron:

For gamblers seeking quick riches, it is a digital casino.

For young people seeking a sense of belonging, it is a cultural community.

For financial scholars, it is an excellent behavioral finance experiment field.

For regulators, it is a dangerous area that urgently needs regulation.

For the whole society, it is a modern fable about technology, humanity, and greed.

Meme coins may, like most speculative bubbles in history, experience a long silence after the frenzy, with the vast majority of projects ultimately going to zero. However, what it reveals—the role of community power, cultural narratives in value creation, and the profound impact of technology on financial inclusiveness—may permanently change our understanding of “finance.” In the future where traditional finance and encryption finance continuously collide and integrate, this seemingly absurd carnival of meme coins may be that jarring yet undeniable unique melody.