The Threat of Memenomics
Yet crypto meme narratives are like a virus — they spread and spread, taking over host after host. Eventually, they will infect large swaths of a community, to the point where even those who should know better end up infected, because they feel compelled to consider the calls of the masses, no matter how irrational those calls may be.
Nearly a decade ago, I was drawn into the cryptocurrency space by the idea that we were building advanced protocols to revolutionize economic systems and empower individuals. Now, however, the crypto space has become significantly meme-infected. We have become obsessed with achieving good market performance, often at the expense of network functionality.
Bitcoin, in particular, exemplifies this plague of prioritizing memenomics over functionality. While the initial proposal for Bitcoin envisioned it as a model for “peer-to-peer electronic cash,” the philosophy of memenomics has totally distorted this vision. Over time, Bitcoin has shifted its focus from being valued as a functional digital cash system to now being valued as (competitively useless) “digital gold.”
The problem is that sacrificing functionality totally undermines the central prospect of the digital gold narrative — the suggestion that Bitcoin has some fundamental value to begin with, like how gold does in the real world. However, if Bitcoin is a system full of flaws, totally outmatched from a technical perspective compared to its competition, and entirely failing in achieving the peer-to-peer electronic cash vision outlined in the whitepaper, then what value does Bitcoin really have?
But how many Bitcoin “investors” have even read the Bitcoin whitepaper? I’m going to assume it’s less than 1% of them. Does anyone even care about the original purpose anymore? Does anyone care about the functionality of the system? Does anyone realize how far the vision has been distorted?
In the whitepaper, “privacy” was valued to the extend that it even got its own section — yet who cares about the privacy offerings of Bitcoin nowadays? They’re nonexistent. Everyone just wants to eventually exchange Bitcoin for fiat. There’s no way to even acquire a practical amount of Bitcoin without using fiat, unless you’re paying for a very expensive mining rig (+ energy costs) or using another cryptocurrency to get it.
So is the Bitcoin community now scrambling to implement new privacy solutions? Is Bitcoin rushing to turn into another Monero? No. No one cares because privacy has nothing to do with making money — which is the only thing Bitcoin holders seem to actually care about these days. And how do they make money? Meaningless market speculation, baby! People just need to regurgitate the memenomic narratives they hear on forums until they finally pressure some other suckers to buy up their bags.
It’s all so insulting to the original vision that clearly sought to build a system that actually achieved something of real value and meaning to the world.
However, the threat of memenomics isn’t just a matter of ideological differences — it also degrades the foundations of a system until there are questions about its fundamental sustainability. This degradation can be achieved manually, by creating problems, or through pure neglect, by refusing to solve problems. Oftentimes, it’s a combination of both.
As soon as Bitcoin reaches max supply, the network will be entirely reliant upon fees to incentivize miners. However, if no one’s actually using Bitcoin and everyone is hoarding it like “digital gold” then there won’t actually be any fees being paid, or at least not the healthy amount you’d actually want to see for such a system. This suddenly makes mining significantly less profitable. If mining isn’t profitable, then miners won’t mine. This can jeopardize the security and decentralization of the network. First, it’ll severely reduce the amount of miners overall, forcing the remaining ones to fight over scraps. Second, it’ll push (concentrate) mining operations into areas where energy is cheap and mining is more affordable (aka centralized).
So, overall, if we take a step back, we can observe that Bitcoin is outdated, slow and expensive, isn’t private, and it’s unwilling to address its flaws to any significant degree. It’s an empty, technologically inferior network that has abandoned the pursuit of its own founding vision in order to prioritize unsustainable memenomics that push for the creation of a “digital gold” global ponzi.
This is the future that memenomics proponents are pushing for — a future that is barren of any value and meaning beyond “crypto price go up!”
That being said, protocols like Polkadot, Tezos, Solana, Avalanche, Cardano, Ethereum, etc. are all built with inherently more functionality than Bitcoin. A prioritization on memenomic philosophical tenets, therefore, may not entirely debilitate a protocol, but only sabotage it for no good reason.
Let’s look at Cardano — your traditional-enough layer-1 crypto with a max supply cap.
Hypothetically, from a “store of value” perspective, the max supply cap is supposed to reward ADA holders. The idea is that a limited supply will increase the value of each individual ADA, as new ADA can’t be introduced to the system past a certain number. It’s all pretty straightforward stuff. There’s no deeper meaning to it.
Now, we’ve never actually seen this “max supply = more value” theory play out, of course. However, even if we assume that the idea has merit, and that it does meaningfully contribute to the value of ADA, it still comes at the cost of sacrificing Cardano’s own economy.
A max supply cap necessitates that staking and validating (aka powering & securing the network) must be entirely incentivized by fees. Consequently, Cardano will consistently require higher fees, all else being equal, compared to cryptocurrencies that don’t institute max supply caps. These fees would discourage users and businesses from using the network, as they would obviously prefer alternative networks offering, practically, the same functionality at lower costs. So, even under the assumption that a max supply system would encourage an increase in ADA value, it would still simultaneously decrease value by reducing the demand for actually using the Cardano network.
Memenomics.
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