CoinDesk Turns 10 – 2020: The Rise of the Meme Economy
As the world locked down for COVID, meme-assets like Dogecoin and Disaster Girl grabbed the attention of a younger generation of retail investors. Three years later, memes are driving value across financial markets. This feature is part of our "CoinDesk Turns 10" series.
Chris Torres liked to doodle. He was good at it. Maybe he could use that skill for charity? In 2011, when the Tōhoku earthquake ravaged Japan, the Red Cross needed donations. So Torres, then 25, went on a livestream and created real-time sketches; he donated tips to the Red Cross.
The chatroom was small and this wasn’t lucrative; over a week he raised $100. And on the final day, Torres asked the chatroom what they wanted him to draw. They tossed out some random words. Cat! Rainbow! Breakfast pastry! So Torres doodled a cat. Later that night he couldn’t sleep -- the cat stuck in his craw. He fleshed out the drawing and worked through the night. At 5 a.m. he posted it to Twitter, Tumbler, and Reddit and went back to bed.
This feature is part of our CoinDesk Turns 10 series looking back at seminal stories from crypto history.
The next morning, Torres woke up to start his new job as a secretary for an insurance company… and then he checked his email. Hundreds of messages. His drawing, the Nyan Cat, had gone viral. A few days later someone posted it to YouTube; the video has now been seen 205 million times. For many, the Nyan Cat is one of the most iconic images online -- as ubiquitous to the internet as the face of George Washington is to history books.
As for Torres? He toiled in obscurity. For nearly a decade he worked a nine-to-five job -- at one point earning minimum wage -- and was then laid off at the start of COVID.
In early 2021, out of work, stuck at home, and with plenty of time on his hands, Torres experimented with NFTs. In February 2021, he sold an NFT of the Nyan Cat for 300 ETH, worth roughly $590,000 at the time. To those just skimming the headlines, the sale signaled that the crypto bull run had gone too far, that the space had lost its collective mind. To Torres, the sale was an overdue recognition of ownership. “It really wasn’t until Web3 that I was able to sustain myself,” says Torres, who now works full-time as an artist and helps other meme-creators monetize their work.
Some view the sale of the Nyan Cat NFT as the birth of crypto’s “meme economy.” Others trace it to Dogecoin. Whatever the origins, Web3 injected energy and money into memes, and memes injected energy and money into Web3. In 2021, this exploded. The price of the original memecoin, Dogecoin, soared from less than a penny to over 75 cents, briefly notching a market cap of over $90 billion. A new breed of yolo-ing “investors,” guided more by Tik-Tok than financial advisors, threw money at meme copycats like Shibacoin. Old-school memes like Grumpy Cat, Disaster Girl, and Harambe sold for eye-popping prices. Memes were the new stocks.
“It was fun and hilarious and uplifting,” says Gary Lachance, the longtime champion of Dogecoin. “Every day I was just laughing harder and harder.” Lachance, one of the most likable people in the crypto space, throws decentralized global events like the “Doge Disco Project,” where people around the world are encouraged to show “proof of partying.”
And people partied. Just how ubiquitous was Doge in 2021? Here’s one extremely scientific datapoint. Another Doge-enthusiast, Julia Love, happened to read my CoinDesk profile of Dogecoin and Lachance. She was intrigued. So she reached out to him. At first, she thought he was “full of it.” Then after he spoke earnestly about “Doge consciousness” for an astonishingly long time, she was charmed. “Nobody does that,” she says with a laugh. “Usually it’s just me.” They first became friends. Now they’re romantic partners.
The meme-economy spread love, the meme-economy spread money. And the memes injected rocket fuel into the last bull run. Some of the memes (like Doge) are obvious, some are more subtle. “Michael Saylor’s laser eyes, that’s a meme,” says Amanda Cassatt, founder of Serotonin. And that meme had impact. “One of the factors that brought us out of the last bear market was the institutional endorsement of MicroStrategy putting bitcoin on the balance sheet,” says Cassatt. The laser eyes were a symbol of this strategy, and that symbol was mirrored and mimicked and spread like the catchiest of memes. (As the bull run sputtered, the laser eye meme would tilt towards ridicule.)
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It’s likely none of this would have happened without COVID. “Everyone was at home on their screens,” says Torres. “This helped with the awareness of NFTs.”
Meanwhile, a new breed of investors shouted “yolo” in the Reddit forums of Wall Street Bets, gleefully making money on “meme stocks” like AMC and GameStop. For them, investing was a thrilling mix of community, social media and gambling. It was even empowering. Why should suits and hedge funds get to make all the money? Wall Street Bets is a “very similar dynamic” to the crypto memes, says Magdalena Kala, founder of Double Down, a VC shop, in that they both had the same philosophy of “we are going to collectively make something pop.”
Then there was the macro environment -- ultra-low interest rates, a stimulus check bonanza, easy money from the booming stock market. Cassatt notes that in traditional finance, in this kind of low-rate environment, it’s very typical, even logical, for investors to choose “risk on” assets like tech stocks. That same psychology holds in crypto. People who made money holding bitcoin or Ethereum saw the “risk on” potential for even riskier bets on meme-coins. So why not seek juicier returns?
All of these factors help explain the rise of meme-assets. But there’s something deeper at play: the secret sauce of the memes themselves.
The new pop art
Memes were part of the earliest days of crypto. Early bitcoiners posted “Pepe the frog” in forums, and text-based memes like “digital gold,” “magic internet money,” and “HODL” were a kind of shorthand for the early adopters. “They’re so wholesome and nerdy, and they’re a way of saying that it’s okay to be in this really nerdy crowd,” says Linda Xie, co-founder of Scalar Capital.
Memes and crypto were a natural fit. “Crypto people are almost by definition extremely online,” says Kala, adding that the “crypto community has never taken itself too seriously,” which makes for a “cultural alignment.”
But memes predate crypto, they predate the internet, and they’ve been around since before any of us were born. “Memes have been part of culture going back to Egyptian times,” says Torres. “The hieroglyphics had memes on them.” Julia Love considers the World War II posters of women working at factories (flexing a bicep saying “We can do it!”) a type of meme.
The word “meme” was coined in 1976 by Richard Dawkins, an evolutionary biologist, to describe an idea (or “entity”) that could be easily copied by others. “‘Meme’ comes from the [Greek] word mimesis, which just means to mimic or mirror,” says Cassatt. The way groups of people communicate with each other, she says, is by “mirroring things back to each other,” and this usually takes the form of “packages of visual and verbal.”
Cassatt sees memes as a “Darwinian evolution” of these visual and verbal packages, and “the more memetic they are, the more they spread.” (She views the stories in the Bible as a meme.) By “Darwinian,” she means survival of the viral-iest: the ones that slingshot around the world are the most engaging; the ones that are boring are left to die. And, to Cassatt, it makes perfect sense that memes have gained prominence, as “we’re in an increasingly virtual world.”
This “Darwinian evolution” could even explain the sneaky power of memes. “Memes are the new pop art,” says Ben Lashes, the world’s first “meme agent” who helps creators monetize their work. When a meme goes viral, says Lashes, almost by definition, that’s proof of artistic merit. “Anyone can make a meme and it doesn’t go anywhere. It gets one like from your grandma,” says Lashes. But the memes that we share with our friends? “They have risen up because the collective out there has this emotional, visceral reaction to it.”
Back in the heyday of 2021, Lachance told me that he considered the Doge to be the “modern Mona Lisa.” I took this as a joke. But Lashes is now making a sober and thoughtful case for memes as art -- modern-day Warhol. He notes that the first Grumpy Cat photo was shared by someone who had never posted before. They weren’t an influencer. They had no platform. They simply posted a photo that said “Meet Grumpy Cat;” overnight it had thousands of upvotes. “There’s this X factor when you see something, and it makes you react. It forces you to react. There’s no other choice in your soul than to react,” says Lashes, adding that there’s a “magic element to it.” This is the essence of art.
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So if memes are a valid form of art, then why is it wrong or laughable for the artists -- the meme creators -- to get paid? Or why is it shameful to collect art? It’s true that $590,000 is a lot of money for a pixelated cat. It’s also true that the Nyan Cat has brought joy, or at least moments of levity, to hundreds of millions of people. You could argue that Torres is still underpaid. “Art doesn’t have to always be serious,” says Lashes. “Art can be fun and should be fun.”
Lashes works to get these artists paid. A former musician and frontman for the band The Lashes, for over a decade, he has helped meme-creators get compensated. Consider the “Disaster Girl” meme, featuring Zoë Roth, who was four years old when the photo was taken and is now in her twenties. Lashes describes the Disaster Girl meme as “one of the most epic photos of all time,” but Roth received nothing. She sold it as an NFT in 2021 and it helped pay for her college; she just graduated with a degree in political science.
The Disaster Girl meme, and others like it, have the power to transcend verbal language -- whether you’re in San Francisco or Bangladesh, you’ll get the joke. That helps strengthen communities that are dispersed around the globe, and, as Xie says, “It’s always a search for community in this culture.”
That community was needed in the depths of COVID. “I think people were searching for something to connect to, and to feel like they had purpose,” says Julia Love, who, during COVID, raised a six-year-old daughter while working from home. She found her tribe with weekly Zoom parties for the DDP, or “Doge Disco Party,” where she’d create elaborate outfits and “get really silly,” like the time she and her daughter dressed up as robots and “did the robot” for an hour.
But let’s speak plainly. Some liked Dogecoin for the dances, but more -- many more -- liked it as a way to make money. The meme-economy expanded the scope of what you could invest in. Before memes and NFTs, the main way to invest in crypto was to purchase bitcoin, Ethereum, or other cryptocurrencies. That was intoxicating for many, a turn-off for others.
Memes felt different. Less intimidating. More fun. “I just love that it made investing more accessible to people,” says Xie. “For the first time, this was something related to culture.” Suddenly art-lovers saw something for them on the menu. “I know a ton of people who did so well investing in NFT art and collectibles, and they couldn’t care less about DeFi, bitcoin, and Ethereum” says Xie, adding that the meme-economy ushered a more diverse, more inclusive group of people into the space.
For example, Xie cites the inclusivity of the “Crypto Coven” NFT community (she personally invested in it), which is packed with playful memes about witches. “It’s almost all women, and the community was really welcoming,” says Xie. Or for another vibey community that’s fueled by memes, Kala points to the popularity of, ahem, “CryptoDickButts.”
But does investing in CryptoDickButts really count as “investing”? We’re using that word quite loosely, and somewhere Warren Buffett is convulsing. Even Kala is quick to make a distinction between “investing” and “speculating,” and considers memes to be the latter, as “you’re buying into the story and not much else.”
And she’s fine with that. Assuming you are not risking more than you can afford to lose, should speculation be mocked? Kala argues that the expected value of buying into a memecoin is “much higher than playing the lottery,” yet society doesn’t “judge boomers for buying lottery tickets.”
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The meme-economy made it fun for younger people to think about finance. “I would argue that with memes, it’s a continued progression towards finance as a hobby,” says Kala, who considers it a form of entertainment. “Now entertainment is not just watching a movie on Netflix or going to a concert,” she says, but also includes “gambling or investing as a shared experience.”
Kala says that like the Redditors of WallStreetBets, the meme-buyers were mostly “retail traders” -- regular people with small-ish accounts, as opposed to big institutions like hedge funds. “A much higher proportion of people are just there for the joke,” says Kala. “They’re there for the entertainment, for yolo, for the number going up.” Contrast that with bitcoin, which now has institutional investors like MicroStrategy and Cathie Wood’s Ark Investments. Not so with crypto memes. The value of the memes is only propped up by a shared belief in a story, and as Kala says, “It’s a casino. Everyone knows that at some point the music is going to stop.”
Think about casinos. If you’ve spent enough time in Vegas, you’ll recognize that inflection point, often around 4 a.m., when the vibes shift from tipsy and fun to drunken and dark. Same with the meme-economy casino. “It was a bit too much of a frenzy,” says Xie. “When you have NFTs going for insane amounts of money to participate in the community, it’s antithetical to the space as a whole.” She has sour memories of NFT parties where people parked their lambos as a flaunting of wealth, and says “it drew in the wrong crowd for the wrong reasons.”
The early memes felt organic and goofy and fun -- like Torres drawing a rainbow cat. Then came the grift. Lashes says that once people realized there was money in memes, hucksters would send him DMs claiming to be the meme’s creator, asking him to help them monetize. (Lashes says his group performs due-diligence to prevent this.) “There were a lot of scams and rug pulls,” says Kala. Digital rocks sold for over $1 million. “It’s literally just a rock,” says Xie. “This wasn’t fully based on silly internet culture.”
So the music of the casino, of course, eventually stopped. It had to. If you put $100 in Dogecoin in May 2021 at the peak of its hype -- when the “CEO of Dogecoin,” Elon Musk, hosted SNL -- you would now have only $10. NFT sales slumped by 83% in 2022.
Then again, the silly internet culture is hard to kill. Memes are resilient. Julia Love and Gary Lachance, the Dogecouple, have been crisscrossing the country in a “Dogeclaren” that Love won at a crypto conference, and they’re currently in Japan for a pilgrimage to meet the actual 17-year-old shiba inu that inspired the Doge. (And, while Lachance doesn’t care much about price or speculation, it’s also true that the value of Dogecoin has risen 40% since October). New memecoin PEPE has (at least temporarily) caught fire. And there are even early experiments with AI-generated memecoins. (God help us.)
And not everyone agrees that the meme-economy went too far or became “too much.” Lachance seems almost startled by the idea, arguing that the rise of Dogecoin makes “way more sense than the warfare-currencies dominating the world.”
Lachance says this on a Zoom with Julia Love at his side -- he literally found Love through Doge. Why can’t Doge bring love to others?
“Ideally, Doge becomes the future of all trade and commerce in the world,” says Lachance, not a trace of humor in his voice. He gives a final visual: Imagine going to an authoritarian nation, looking at the currency, and instead of seeing the face of a dictator you see the curious smile of the Doge. Lachance chuckles. So is that too far? Too much? For Lachance, “We’re far, far away from too much.”
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