Key Takeaways:
Bitmex co-founder Arthur Hayes stated that one should not call meme coins stupid before considering all the aspects around these cryptocurrencies, primarily the value they add to their parent blockchains. Hayes expressed his counterintuitive thoughts in an interview with Raoul Paul, the CEO of Real Vision.
It’s All About Marketing
Hayes argued that though meme coins do not have any intrinsic value from the standpoint of traditional finance, they serve as a kind of marketing campaign for the blockchain they are built on.
Since buying or contributing to meme coins requires joining their parent blockchains, the crowd frenzy with meme coins attracts users and developers to the mainnet.
Value Attracts Value
Hayes also asserted that only networks with solid value can support the vibrant culture of meme coins. He pointed out that it is no coincidence that the largest number of successful meme coins are built on the Solana and Ethereum blockchains.
Hays continued that the Solana blockchain, for instance, has grown rapidly after an explosion of meme coins in November of last year. This increase in user base has resulted in an increase in other projects on the platform in the following months.
He said this is also analogous to the boost in activity of the Bitcoin network after an increase of BRC-20 tokens and ordinals on the network.
The Future of Meme Coins
Pal noted that meme coins are likely to bring the attention of millennials and Gen Z investors to crypto. He explained that this is because these generations have a gaming mentality and investing in meme coins is like gaming with money.
Both have agreed that the hype around meme coins will continue. They also noted that the Solana-based meme coin dogwifhat (WIF) has recently surpassed Arbitrum, an Ethereum layer-2 network, in terms of total market cap. While writing, WIF has a market cap of $4.5 billion and Arbitrum at $4.4 billion.
What the Giants Say
Investment experts, on the other hand, think that investing in meme coins also comes with certain risks.
US investment firm Franklin Templeton noted that meme coins are an opportunity to create some quick gains but come with the risk associated with the lack of solid fundamentals, according to their investor note dated March 14.
Ethereum co-founder Vialik Buterin, in his March 29 blog post, has also expressed his general disagreement with the meme coins. However, he has suggested that investors and meme coin developers should find a way to make them useful, instead of simply denouncing or virtue-signing them. He also noted that he is not against people’s wish to have fun and prefers the crypto space to go with meme coin flow.
Conclusion
Despite all the warnings, meme coins have been the best-performing among all the assets in the crypto space in March. Notably, meme coins, on average, gained 20% while the layer-1 network tokens like Bitcoin (BTC) and Ether (ETH) have only appreciated by 6%. DeFi tokens, probably the most utilitarian among the bunch, have only gained 5.4%.
