Sometimes timing is everything.
The other day we discussed the idea that cryptocurrency's greatest value would come from the social layer. This is a concept where we already see trillions of dollars being generated. The issue is that, presently, it is not captured.
Tokenization does this. With cryptocurrency, we can capture this value and put it to use. People are generating trillions of dollars per year in value, with a small portion going to companies via their platforms. As for those producing it, they are left with very little.
With experimentation comes progress. Unfortunately, it is not a clear path. There are often twists and turns as people get involved without the desire to move things forward. With cryptocurrency, this usually means dealing with those who look at the monetary aspect only.
This is what Buterin alluded to.
In this article we will discuss his comments along with what truly needs to take place.
Memes Coins Are Cash Grabs And Not Social
Vitalik's main problem with what is taking place in this realm is we are seeing nothing more than cash grabs. Anyone who followed the meme space understands this.
What does this have to do with the social layer on the Internet?
Actually, these are the epitome of social tokens. The idea is to assemble around a particular subject in a manner that generates value. This can be captured through the token.
The problem is clear when we read what Buterin stated:
The problem, Buterin emphasized, was not with meme coins as a caategory, but instead the fact that most don’t serve a purpose beyond making money.
“I'm feeling quite unhappy about with ‘this cycle’s celebrity experimentation,’ so far,” he wrote. “‘Financialization as a means toward an end’ I can respect if the end is worthy—healthcare, open source software, art, etc.”
What he is pointing out is actually the problem with almost all of cryptocurrency. We still have the overwhelming percentage of people involved who are still married to nothing more than "price go up". Instead of building something infinitely more valuable, there is a rush for a few point on whatever token or coin is being held.
At the same time, founders introduce initiatives with the intention of pulling a few million out. Certainly a nice payday but far short of what could be accomplished.
It is easy to see how this is vastly different than creating an ecosystem system, perhaps with a digital platform at the center, surrounding the topic of interest.
True Social Tokens
The view of cryptocurrency by many who are outside of it is that it serves no purpose. This is something that advocates fight but we have to be honest, this is something we created.
In reality, most of crypto does nothing. There is no activity or advancement taking place. Almost everything is based upon price which means that is the sole focus. As long as money is made, who cares about the initiative.
Pointing to a March 2024 blog post where he shared similar advice, Buterin reiterated that a meme coin project’s “north star” should be where—even if the tokens go to zero—participants are still happy to have been a part of the experience.
“Regular businesses and charities accomplish this goal all the time,” he said. “It's a low bar, but things we build should meet this bar as well.”
It is amazing this even has to be said yet it is 100% accurate.
Imagine starting something with a goal in mind. What a novel idea. At least this appears to be the case in the cryptocurrency world. If it was not, it would not need to be stated.
What is the purpose? What are you trying to accomplish? These are standard questions that startups ask. Without these answers, they would receive no funding.
With cryptocurrency it is different. Instead of asking the basics about something, people throw money in it because they believe it will moon.
And people get mad when there are rules in place such as accredited investors to prevent people from being dipsticks. Of course, when a rugpull or something happens, they people scream how it was a scam and want blood.
How many of these meme coins are tied to anything like this?
“Make something that lasts 10+ years, rather than bubbling around for a few months and then being forgotten,” Buterin said.
True social tokens have a long term plan. While it might not be spelled out to the same degree of a business since, there is a good chance, it was started as something akin to a hobby. There is nothing wrong with an initiative beginning as something fun and transitioning to a serious endeavor as it grows.
It is likely this is how a lot of communities will form.
Fandom is extremely valuable. The problem with meme tokens is they prey upon the greed of the masses to fill their pockets with nothing else in mind. Of course, people fall for it since the majority fail to learn from history and scams continue using the same time-tested tactics.
A fool and his money are soon parted.
Billions
If the people behind these tokens actually thought about things, they would realize the millions they might make could ultimately turn into billions. This could happen without threat of some alphabet agency knocking at the door looking to take the money back.
Could a famous artist (on a global scale) have a token with a market capitalization in the billions? If the fanbase was there, without a doubt.
Someone like Madonna, who still has global popularity, is a prime example. If an ecosystem was built around her fanbase, providing all kinds of products and services, then we could be looking, over time, reaches epic proportions.
After all, 10 million fans means bringing $100 in value to the table. When this happens, we are dealing with a billion entity.
The Madonna community could build different projects, all tied to what other fans want. There is a built in market that could be served. Different services and products could be provided which would only feed into the ecosystem.
Will this happen? Not anytime soon.
Buterin is right. Instead of building social layers, people are only concerned with cash grabs. This is not only from the founders but also those who are buying the tokens. Are they there for some long-term plan? Obviously not since there is none.
They want to get their bank also.
This is why most will not end up making big money in cryptocurrency. They simply are looking for quick extraction.
All the while, human nature gets exploited.