Alexi Horowitz-Ghazi
Appearances
Up First from NPR
Gambling with Memes
Dogecoin, you'll remember, was first invented as a cheeky response to the wave of sketchy Bitcoin copycats. And you can think of the current memecoin moment as a sort of like doubling down on the joke.
Up First from NPR
Gambling with Memes
And early last year, that sort of nihilistic feeling fused with yet another technological leap forward. Zeke Fox says, this time in the form of a new website.
Up First from NPR
Gambling with Memes
And the idea behind the platform was basically to demolish the barrier to entry for people making new meme coins, to create a place where people could launch and then promote their own coins as a sort of social media experience. Let's go to Pump.fun. Will you give us a little safari?
Up First from NPR
Gambling with Memes
Zeke took us on a little tour of the Pump.Fun website. It looks a bit like a throwback to the Flash websites of the 90s. All bright neon text and JPEGs of memes.
Up First from NPR
Gambling with Memes
Some who've made a lot of money. Pump.fun has made it so incredibly easy to make new meme coins that the homepage is just constantly updating with images of coins that have just been born. Coin after coin after coin.
Up First from NPR
Gambling with Memes
Because you can think of Pump.Fun as this hyper-literal attention economy. If a coin creator can't generate enough excitement around their meme coin, they won't be able to ensnare enough buyers to get it to take off.
Up First from NPR
Gambling with Memes
That, of course, is the precocious and a little devious 13-year-old from the beginning of our story.
Up First from NPR
Gambling with Memes
So that's the first group, the people without much clout who have to find some way to grab attention for their meme coin. Now, there's a second group of meme coin creators, and their big strategy is to already be famous.
Up First from NPR
Gambling with Memes
But the third and final group of meme coin creators are the real power players. These are the shadowy groups of well-resourced insiders who know how to play the game.
Up First from NPR
Gambling with Memes
Like, one of the big reasons Dogecoin is still the most valuable meme coin is because Elon Musk started tweeting about it in 2019.
Up First from NPR
Gambling with Memes
And if they can get enough price liftoff, their coins will graduate from Pump.Fun to bigger platforms with whole new groups of potential buyers. Like one platform aptly named Moonshot to the biggest exchanges like Binance and Coinbase.
Up First from NPR
Gambling with Memes
But regardless of whether a coin dies on the launchpad or makes it to the moon, there's one group that makes money no matter what. Because pump.fun gets a 1% cut of every trade made on the platform.
Up First from NPR
Gambling with Memes
Which raises the enormous question, why do so many people continue to invest in a system that feels so clearly rigged against them? Why do people still invest in meme coins?
Up First from NPR
Gambling with Memes
But instead of people promising financial gains based on some underlying value, these days, many meme coin boosters are just promising that there will be enough other chumps out there to cash you out when the time comes. Call it a chump and dump.
Up First from NPR
Gambling with Memes
Hello, Alexi. Hello. Yes. Over the past few months, you and I have been on a deep dive into the world of meme coins. We've been spelunking in the crypto mines. We've been getting lost in them because over the past decade, meme coins have gone from a one-off joke to a speculative frenzy worth tens of billions of dollars.
Up First from NPR
Gambling with Memes
Bitcoin was launched in 2009 and it was pitched as a sort of utopian alternative to government backed currencies. It was a way for people to pay each other without having to rely on the existing financial system.
Up First from NPR
Gambling with Memes
And this was the seedy state of crypto that inspired what is widely considered to be the first meme coin, Dogecoin.
Up First from NPR
Gambling with Memes
Here's how it would work. Some programmers would create a new coin. They'd hype it up as the next Bitcoin, maybe do some sketchy stuff to fake demand, and get people to buy in, all to pump up the price. And when enough money had flowed in, they would sell off all their coins. They would dump their holdings. The price would collapse, leaving everyone who'd bought in holding the bag.
Up First from NPR
Gambling with Memes
Palmer and a friend coded up a new coin, and in doing so, they married the world of memes with the world of crypto.
Up First from NPR
Gambling with Memes
And pretty quickly, fraudsters started to use Dogecoin in the kind of pump and dumps it was meant to critique, which was exactly the opposite of what Palmer had intended.
Up First from NPR
Gambling with Memes
And to understand how that barrier to entry started to change, we called up Zeke Fox. Zeke is an investigative journalist at Bloomberg and author of the book Number Go Up, Inside Crypto's Wild Rise and Staggering Fall.
Up First from NPR
Gambling with Memes
So a blockchain is basically a ledger that everyone can see, and it keeps track of how many tokens someone has of a given cryptocurrency. It used to be that in order to make a new cryptocurrency, you had to code up a new blockchain. So Bitcoin had its own blockchain. Dogecoin had a different one. But Ethereum made it so that you could keep track of multiple cryptocurrencies on the same blockchain.
Up First from NPR
Gambling with Memes
You could just create a new coin right on top of Ethereum's underlying infrastructure.
Up First from NPR
Gambling with Memes
Yet, Zeke says, this round of crypto speculation was also limited in its impact because the majority of investors just did not understand the basics of transacting on the blockchain, like how to set up your own crypto wallet or trade coins.
Up First from NPR
Gambling with Memes
The technological part was the rise of mainstream crypto exchanges like FTX and Coinbase. These platforms made it easier for retail investors to buy and sell cryptocurrencies, and that helped swell the market to new heights.
Up First from NPR
Gambling with Memes
The rise of the meme coin was still to come. Most crypto bros were still focused on mainstream cryptocurrencies like Bitcoin and Ether. And the most radical speculators were obsessing over things like non-fungible tokens or NFTs, like those weirdly expensive Bored Ape cartoons people were buying. Apes together strong. Planet of the speculative ape investments.