It’s a parable of the attention economy. A celebrity created entirely by social networks, “Falcon tuah girl” Haliey Welchhelps launch a crypto asset that whips up a viral frenzy and then fizzles out.
The Hawk memecoin was worth $490m (£385m) within hours of its launch on December 4, but now has a market capitalization – the value of all Hawk coins in circulation – of $17m.
Welch, a Tennessee native who rose to fame thanks to her answer to a risky interview question earlier this year, was immediately accused of scamming her social media followers. Crypto commentator Stephen Findeisen, nicknamed Coffeezilla, described the launch as a “rug-in” – the term used when developers tout a crypto system for short-term gain and then shut down the project.
However, Hawk continues to trade and Welch said his team “hasn’t sold a single chip.” Representatives for Welch have been contacted for comment.
The furor came amid a boom in memecoins, which were valued at about $20 billion in total at the start of the year but are now worth $118 billion, according to CoinMarketCap, which tracks cryptocurrency prices. And they are flooding the market by the thousands. At some point in November, the memecoin platform pump.fun launched 69,000 tokens in one dayaccording to data from crypto analytics company Dune.
Experts say memecoins, the latest darling in crypto whose true economic value is continually in question, have no fundamental value.
“It’s just a phrase attached to a digital piece. There is no value,” says Carol Alexander, professor of finance at the University of Sussex.
Memecoins draw inspiration from two important features of the digital economy: memes and cryptocurrencies. The first is an image or video clip online that is constantly edited and recycled on social media. to capture the spirit of the times (think Moo Deng the hippopotamus or, more timeless, distracted boyfriend). A cryptocurrency is a digital asset built on top of a blockchain, a decentralized ledger that tracks ownership of a cryptocurrency or other digital asset.
Sam Baker, a UK-based memecoin trader, says many coin launches are based on internet trends “you’ve never even heard of” and rely heavily on influencers to promote them on a range of channels from Discord to X and Telegram. .
He acknowledges that there is “no intrinsic value” in memecoins and that there is no “rhyme or reason” to success. Recent releases include plays based on the new Netflix series Squid Game and the fall of Bashar al-Assad’s regime in Syria.
“It’s a pure form of play,” says Baker. “It’s like buying a lottery ticket. But some of them are going to increase by 10,000 or 20,000 percent.
Memecoins, Baker explains, are a merger of two cornerstones of the digital economy that span different eras of the online boom.
“It monetizes people’s attention on social media,” he says. “It’s a crossover from Web 2.0, which is social media, to Web 3.0, which is decentralized finance and cryptography. Although they are crazy, memecoins represent the modern monetization of the attention economy.
There is also a connection to meme stocks, or shares of publicly traded companies that have seen huge gains after being hyped on social media and purchased by amateur investors. THE the classic example is GameStopa struggling video game retailer whose value jumped after a Reddit community piled into the stock.
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The surge in popularity of memecoins can be attributed to Donald Trump’s victory in the US presidential election, with the market value doubling since his victory. Trump is strongly associated with crypto, having pledged during his campaign to end the “persecution” of the industry. Bitcoin, the most valuable digital asset, was the big beneficiary, with its value surpassing $100,000 for the first time. a month after Trump’s victory.
Cryptocurrencies are attracting influential figures on the American political right, such as Pierre Thielthe Silicon Valley billionaire, because they avoid the establishment by flying under the radar of regulators and having no backing from a central bank. Memecoins are also cheap for retail investors, with most tokens costing a fraction of a cent.
According to Alexander, their creation is relatively simple: just create, say, $4,000 worth of tokens on a blockchain (Solana is particularly popular with memecoin creators) and advertise it on social media, in the hope of selling them at a profit. Once purchased, they can also be traded on stock exchanges.
One of Trump’s top backers, Elon Musk, is a longtime supporter of the first-ever memecoin, Dogecoin, based on a meme featuring a shiba inu dog. Launched as a parody of the crypto market, Dogecoin is now worth $60 billion, although its direct use in transactions is limited to a few companies like Tesla, of which Musk is chief executive.
Merav Ozair, founder of consultancy Emerging Technologies Mastery, says Trump’s victory has sparked a new wave of hype around crypto-related assets.
“The new administration has promised that they will be very supportive of the crypto space. The new hype is due to the elections,” she says.
But, she adds, the basics around memecoins haven’t changed. “Just go to the casino and see which number will win.”