a16z angrily criticizes Memecoin. Is Memecoin really a shame in the cryptocurrency world?

PEPE, WIF, MEW, BOME... New wealth codes always seem to emerge in the meme coin sector, but is this really good for the cryptocurrency world?

On April 25, a16z Crypto CTO Eddy Lazzarin publicly criticized Memecoin, saying it undermined the "long-term vision" of cryptocurrency, tainted the "public, regulators, and entrepreneurs"' view of the industry, and acted as a casino for a "relatively small group of people."

Previously, Chris Dixon, partner of a16z and head of a16z crypto, also wrote that Meme coins have been able to flourish due to lagging regulation, but these coins have also made it difficult for crypto companies and blockchain tokens with more efficient use cases to develop efficiently.

For believers of Memecoin, especially investors, the above a16z's remarks are too harsh, because some so-called blue chip projects in the cryptocurrency circle have also cut countless people. There is even a view that the cryptocurrency circle is a casino, and the chips are not high or low, and winning money is the kingly way. So in the eyes of various professionals in the crypto industry, what is the existence of Memecoin?

Origin

Memecoin refers to cryptocurrencies that are derived from Internet emoticons, funny pictures, or other humorous elements. At the end of 2013, a software engineer used the Internet emoticon package Doge to issue Dogecoin as a joke. It can be said that Dogecoin started the craze of memecoins.

Compared with mainstream cryptocurrencies such as Bitcoin and Ethereum, the price of memecoins fluctuates more drastically, but they are also subject to speculation by speculators. Some people get rich from it, spreading FOMO emotions, but many others lose everything.

Another feature of memecoins is that they have a huge supply, or even no upper limit. For example, the total supply of Shiba Inu Coin (SHIB) is 100 trillion, and Dogecoin has no upper limit on supply, with a current circulation of more than 100 billion.

Normally, meme tokens do not have a destruction mechanism. Due to the huge supply and relatively low price, millions of meme tokens can be purchased for only $1. Therefore, the purchase threshold of meme tokens is low and the investor participation is high.

One of the reasons for the rise of meme coins is community promotion. The price of coins is often affected by the emotions of social media and online communities, such as Musk's tweets, Trump's campaign, the Squid game, the Spring Festival Gala, etc. Meme coins also rose rapidly with the hype, the market value soared, and new products emerged in an endless stream.

It is precisely because memecoin can continue to create myths of wealth that many investors flock to it and never get tired of it. Even the crypto market is more interested in Memecoin than other sectors. The community circulates "value investment is nothing, all in meme lives in the palace", and therefore, people who claim to be blockchain builders will question the current status of Memecoin.

Opponents: Memecoin hinders the development of crypto technology

This year, a16z took the lead in raising the banner against Memecoin.

a16z Crypto CTO: Memecoin changed the way the public, regulators, and entrepreneurs think about cryptocurrency, making it look like a risky casino, which deeply affected regulatory/legal and blockchain builders' decision-making. I see this damage every day.

Chris Dixon, former a16z partner and head of a16z crypto: The lack of regulation has allowed Meme coins to spread, while innovative projects have struggled. Investors ultimately face more risk, not less.

While previous “meme coins” embodied aspects of internet culture and were mostly harmless, other meme coins are not.

Compound Managing Partner: Seeing the (current status of memecoins) will lead to an exodus of cryptocurrency developers , even more serious than the bear market in the past few years.

ZachXBT: In the past month, 12 Solana pre-sales of Meme coins have raised more than 180,650 SOL (about 26.7 million US dollars). Rug advises the community to be wary of future projects launched by these founders.

Supporters: Memecoin shapes new business forms

Jesse Walden, former partner of a16z and founder of Variant Fund: I think it is very controversial which one has done more damage: a. Projects that promise breakthrough technology to cover up token liquidity plans; b. Meme coins that don't promise anything except volatility and entertainment.

Memecoins are risk-proof, but the former are not. We should focus more on combating the former.

Electric Capitl Partner : Many people use Memecoin as an example of how fraudulent and meaningless cryptocurrency is.

But paradoxically, memecoin needs a blockchain to exist. If memecoin is a socioeconomic game, then you need a platform that can consistently enforce the rules of the game and have global reach.

6thManVentures co-founder : People participating in memecoin does not prevent them or others from participating in other blockchain use cases (DePin, DeFi, games, social, payments, etc.).

Avalanche founder Emin Gün Sirer told Cointelegraph that despite the higher risk of investing in Memecoins, they are bringing value and new users to the crypto ecosystem.

Gün Sirer pointed out that although Memecoins are not considered a valuable investment by the outside world, their real significance lies in attracting more young newcomers to the crypto field in an interesting way. For these people, Memecoins trading is a social signal that can show their ability to select coins and make profits, just like some people use Bored Ape Yacht Club NFT as an avatar to show off their wealth.

Runestone founder: I like the meme ORDINALS•ARE•DEAD.

Founder of VoltCapital : Believe it or not, the garbage signals in the crypto space used to be worse than or even worse than before, which is inherent. The useful reconstruction is that in this cycle, retail investors have become more and more mature-tired of being sold off, so they target long-tail assets and turn them into profits.

MechanismCap Partner: The speculative value of most token networks is far greater than the fundamental value. Memecoin distills speculative value into a game that all retail can participate in; and predatory high FDV token issuance (even with promising technology) makes it almost impossible for retail to win. Memecoin actually reveals the real structural problem

KOL Hongshen@hongshen6666btc : I oppose a16z's claim that memes have a negative impact on the industry. How many of those so-called value coins really have value? Aren't they all just white papers, and then raised funds, hyped, and raised prices for retail investors to take over, especially in this bull market, where the market value starts at 1 billion. The key is that after experiencing the Luna explosion and projects like dot, who dares to advocate so-called value investment? It's better to play memes.

KOL Li Ping @liping007 : a16z CTO said Memecoin is a casino. The essence of currency speculation is a probability game. In terms of the value of the currency harvested by the team and VC, it is also a gamble. The VC cost is 1/10 of the retail investor's purchase price. What is the retail investor's winning rate? From the perspective of long-term value, I think that in the free currency competition, the one that will eventually be widely accepted by people all over the world may be a Meme coin, not a so-called value coin.

Summarize

A16z's remarks triggered a great discussion on the value of Memecoin. From a practical point of view, Memecoin has no use function; from an investment point of view, it may not be inferior to some so-called valuable projects at present. Therefore, it is a bit unfounded to accuse Memecoin of hindering the construction of crypto projects.

But investors need to be aware that although a few traders have made a fortune through memecoins, it is common for them to lose all their money due to market fluctuations.