Meme Coin: Financial Carnival and Community Experiment in the Digital Age

Meme coins are one of the most eye-catching yet confusing phenomena in the cryptocurrency space. From SHIB, which is derived from a Japanese Shiba Inu meme, to Dogecoin, which gained popularity due to the endorsement of a tech company CEO, these tokens, originating from jokes and thriving in communities, continuously challenge the values of the traditional financial world with their extreme price volatility and massive wealth effects.

Are they truly worthless digital bubbles, or do they represent a whole new asset class? Placing them in front of the mirror of traditional finance, we can conduct a deep role deconstruction. We will find that Meme coins are not a single role, but a mixture and amplification of multiple marginalized or suppressed roles in the traditional financial world. They are both the ultimate release of speculative desire and a financial totem of community culture, while also possibly serving as a “mirror” to examine the essence of modern finance.

1. Market Level: “High-Risk Lottery” and “Stale Stocks or Junk Bonds”

From a traditional finance perspective, Meme coins are far removed from the “value investment” tools (such as blue-chip stocks and government bonds) that ordinary investors encounter in traditional finance; their closest counterparts are lottery tickets and casino chips.

High-risk lottery or “casino chips”. The essence of traditional lottery lies in the fact that the buyer pays a certain, small loss (the purchase amount) to gamble for a very low probability but high return possibility. Meme coins completely follow this logic. The vast majority of buyers do not base their decisions on an analysis of the underlying technology, application scenarios, or cash flow discounting------because these do not exist in the vast majority of Meme coins. Their investment decisions stem from a simple belief: there will be the next “more foolish” person who will take over at a higher price from them. This is a perfect interpretation of the famous “greater fool theory” in financial history in the digital age.

Unlike traditional lotteries, the “draw” of Meme coins is not a definitive point in time, but rather a continuous process. This process is triggered by a trending topic on social media, a call from an influential figure, or a sudden community celebration. Its price chart no longer reflects the fundamentals of the business, but is a real-time electrocardiogram of group emotions. Stories of a sudden 500% surge and instant “ankle cuts” alternate, forming the daily routine of this large-scale online gambling.

Highly speculative “penny stocks” and “junk bonds”. Some may compare them to “penny stocks” or “junk bonds” in traditional financial markets. Indeed, they share the characteristics of “high risk, high potential return”. However, the risk dimensions of Meme coins are more complex and extreme. “Penny stocks” at least have a legal entity behind them, with assets, operations (no matter how weak), and are subject to securities regulators. While price manipulation exists, it still operates within a certain legal framework. Although “junk bonds” carry a high risk of default, their pricing is still based on the issuer's credit rating, asset collateral, and expected future cash flows, with a relatively mature analysis system.

Meme coins are mostly created on decentralized networks, with no actual controllers and no business income. Their smart contracts may hide vulnerabilities, and the founding team can remain anonymous. Even more terrifying is the “rug pull,” where developers suddenly withdraw funds from the liquidity pool, causing the token's value to plummet to zero in an instant. This accumulation of systemic risks makes the risk level of Meme coins far exceed any similar entities in traditional finance, pushing speculation to unprecedented heights.

2. Cultural Aspect: “Cult Stocks” and “Social Currency”

If meme coins were merely a gamble, they might not possess such resilience. Their deeper magic lies in successfully transforming financial instruments into cultural symbols and social tickets. In this regard, the best analogy is the GME stock from the “GameStop incident” in 2021, which amplified its cultural attributes.

The Communityization of Financial Behavior and Identity Recognition. The core of the GameStop incident was that retail investors on a certain forum collectively bought GME stocks that were heavily shorted by institutions, successfully “snipe” the Wall Street hedge funds. In this process, GME stocks were no longer just simple equity investment certificates; they became a “banner,” a kind of “belief,” a “weapon” for grassroots retail investors to fight against the financial elite system. Holding GME became a declaration of identity: “I am a member of this community, I stand on the opposite side of Wall Street.”

Meme coin has pushed this community financial behavior to a new peak. Holding a certain well-known Dogecoin means that you agree with its satirical slogan “the people's currency,” understand its origin from the 2013 parody of Bitcoin, and join a global, humor-filled community movement. Another well-known canine coin has built a massive “army,” strengthening the sense of belonging and mission of its holders through a complex ecosystem narrative and a burning deflationary mechanism. Here, investment is no longer cold data analysis, but a warm identity recognition and community co-construction.

“Social Capital” Accumulation and Monetization. In the age of social media, attention is the most scarce resource. The essence of Meme coins is the financialization and packaging of collective attention. A successful Meme coin is a cultural gene that can self-reproduce and spread virally. Early discovery and promotion of a certain Meme coin can not only bring financial returns but also accumulate considerable “social capital” within the community------you are seen as a visionary “prophet” or an interesting “meme king.”

attention attracts capital inflow

3. Behavioral Aspect: “Emotional Value” and “Speculative Bubble”

Throughout financial history, Meme coins are not an unprecedented monster; they are merely the latest incarnation of the cyclical speculative bubbles in human history in the digital age. By comparing it to the Dutch tulip mania, the South Sea bubble, and the dot-com bubble, we can clearly see the astounding similarities in history.

Narrative-driven value. At the core of all speculative bubbles is the “narrative” replacing “fundamentals” as the core of pricing. In 17th century Holland, the value of tulips detached from their ornamental qualities as flowers, driven by a narrative of “rarity, uniqueness, and status symbol,” where a bulb of the “Forever Augustus” could be exchanged for a mansion. In the early 21st century internet bubble, the value of companies was no longer dependent on their profitability and cash flow, but rather on the grand narratives of “clicks,” “user growth,” and “new economic models.”

Today's Meme coin derives its value entirely from the narratives of “community power”, “cultural symbols”, and “rebellious spirit”. A social media post by the CEO of a well-known tech company has an influence far beyond any financial report. This reveals a timeless aspect of human nature in financial markets: people will always be attracted to a compelling story and the dream of quick wealth.

The fear of missing out. In every bubble, “fear of missing out” is the core fuel driving irrational price increases. When seeing people around getting rich overnight by buying a certain Meme coin, rational thinking is often replaced by a strong sense of anxiety. This emotion is amplified infinitely in the cryptocurrency market, where trading occurs 24/7 and information spreads at the speed of light.

At the same time, every era finds a rational explanation for its own bubbles that says, “this time is different.” During the Tulip Mania, people believed that the demand for beauty was infinite; during the internet bubble, people believed that traditional valuation models had completely failed; and during the Meme coin frenzy, followers shouted, “the community is the value,” and “decentralization changes everything.” However, history has repeatedly proven that when the music stops, the narrative goes bankrupt, and the law of gravity will ultimately take effect, prices will return to their intrinsic value— for the vast majority of Meme coins, this value is infinitely close to zero.

4. Beyond the Boundaries of Traditional Finance

Although we found many analogies, Meme coins are not a simple replication of traditional roles. They deconstruct and transcend traditional financial models through blockchain technology, showcasing their unique characteristics.

Low threshold and no entry restrictions for issuance. In the traditional world, issuing stocks or bonds requires tedious legal procedures, investment bank underwriting, and regulatory approval, making the threshold extremely high. In the cryptocurrency world, anyone can create and issue their own Meme coin in just a few minutes with minimal costs and some technical knowledge. The extremely low threshold for issuance has caused the market to explode in an almost “wild growth” manner, while also leading to a mix of quality projects and rampant fraud.

Globalization and Instantaneity of Liquidity. A “penny stock” traded on the US OTC market may have very poor liquidity, making it difficult for ordinary investors to buy and sell. In contrast, a top-tier Meme coin can achieve 24/7 global instant trading after being listed on decentralized or centralized exchanges worldwide. This deep and uninterrupted liquidity provides a breeding ground for ultra-high-intensity speculative activities, which is unmatched by any traditional speculative instruments.

The Vacuum of Regulation and the Ambiguity of Morality. Traditional financial activities operate within a strict regulatory moat designed to protect investors and maintain market stability. In contrast, the world of cryptocurrencies, especially in the realm of Meme coins, remains largely a “lawless territory.” The absence of regulation grants significant freedom and room for innovation on one hand, while on the other hand, it allows for market manipulation, insider trading, fraud, and other behaviors to go almost unpunished, pushing the principle of “buyer beware” to its extreme.

Meme coin may force us to rethink some fundamental questions in extreme ways: What is value? Besides resource allocation, what human emotions and social needs does the financial market carry? It is like a “mirror of truth,” revealing the speculation, frenzy, and tribal instincts that have always existed within the financial system but are shy to admit, wrapped in a rational shell. It has turned high-frequency speculation in Wall Street trading rooms into a game that every mobile user can participate in; it has transformed the social networks of elite clubs into a global, interest-based digital community.

Therefore, the fairest evaluation of Meme coin may not simply be to dismiss it as a “scam” or to elevate it as a “revolution.” It is more like a complex polyhedron:

For gamblers seeking quick riches, it is a digital casino.

For young people seeking a sense of belonging, it is a cultural community.

For financial scholars, it is an excellent experimental field for behavioral finance.

For regulators, it is a dangerous zone that urgently needs to be regulated.

For the entire society, it is a modern fable about technology, humanity, and greed.

Meme coins may, like most speculative bubbles in history, experience a long period of silence after the frenzy, with the vast majority of projects ultimately going to zero. However, what it reveals—the role of community power, cultural narratives in value creation, and the profound impact of technology on financial inclusion—may permanently change our understanding of “finance.” In the future, where traditional finance and crypto finance continue to collide and merge, this seemingly absurd carnival of Meme coins may just be that jarring yet undeniable unique melody.