Are Memecoins Valuable?

[yankees60]

Anyone here own any?


Are Memecoins Valuable?
https://disciplinefunds.com/2025/02/12/ ... arratives/

2) Are Memecoins Valuable?

There’s been an explosion in so-called “memecoins” in recent weeks. Of course, our President ignited the trend with the introduction of Trump and Melania coin, but there’s been a million other iterations as well. I will be blunt about this. These are bad assets that have no underlying economic utility and no reasonable value basis. Here’s why.

To understand this we have to understand what gives something “value”? It’s an interesting question. Similar to what gives something “beauty”? It can be highly subjective especially in the case of things like collectibles such as baseball cards or paintings. Collectibles fly in the face of classic economic cash flow generating value because they rarely if ever have economic utility. Stocks, for example, often become more valuable with time because their underlying cash flows are derived from real economic utility. As profits grow the presumably scarce shares become more valuable. Behavior can impact the volatility of expected value, but there is typically an underlying driver of long-term value, especially when done thru something like an index fund which reduces single entity risk.

Collectibles are primarily perceptive value, typically nostalgic value. Some commoditized collectibles (such as gold coins) blend economic utility with nostalgic value, but this isn’t true of many/most collectibles. We don’t love the Mona Lisa just because we perceive it as beautiful. It harkens back to an era (the Renaissance) and person (da Vinci) that was transformative for our species and the way we perceive and value the importance of art in our culture. Most paintings are only valuable to the person who makes them. My daughter’s drawings are terrible, but I personally love them, I will keep many forever, but they are only valuable to me. In order for it to become valuable to the culture it must transcend personal perceptions of value and become culturally valuable in a nostalgic manner.

Memecoins not only have zero nostalgic or social value, but they also derive zero value from real economic utility. They are a purely speculative instrument. I have no doubt some Memecoins could achieve a degree of nostalgic value. But finding that coin isn’t like looking at a balance sheet of a successful company with economic utility and cash flows. It is more like living in 1900, having no idea who Honus Wagner is, whether he will ever be a good baseball player and trying to pick that specific card out of the thousands that will be produced during the early 1900s before his card is produced in 1909. Oh, and then you have to keep that card through numerous traumatic economic events and be patient enough for it to accrue its uniquely special value. This is more like playing the lottery than anything else. Fun? Sure, but a high probability and productive allocation of capital? Unlikely. Memecoins are the same basic thing.

[flyingpylon]

I have a tiny bit of Dogecoin that I purchased for entertainment value... given recent events I am increasingly fond of it.

[yankees60]

https://www.nytimes.com/2025/02/09/us/p ... ecoin.html

Early Crypto Traders Had Speedy Profit on Trump Coin as Others Suffered Losses

Some traders made tens of millions off a new cryptocurrency launched by President Trump and his sons. Many others lost out.

The curious trade came a little past 9 p.m. on Jan. 17 — a $1,096,109 bet less than two minutes after the soon-to-be president of the United States posted on his social media account that his family had issued a cryptocurrency called $Trump.

In those first minutes, a crypto wallet with a unique identification code beginning 6QSc2Cx secured a giant load of these new tokens — 5,971,750 of them — at the opening sale price of just 18 cents each, starting a surge in the $Trump price that would soon reach $75 per token.

This early trader, whose identity is not known, walked away with a two-day profit of as much as $109 million, according to an analysis performed for The New York Times.

But the fast profits for early traders, whose names are unknown but some of whom appear to be based in China, came at the expense of a far larger number of slower investors who have cumulatively suffered more than $2 billion in losses after the price of the token crashed.