‘It’s a pure form of gambling’: the stunning boom in memecoins

It is a parable for the attention economy. A celebrity created entirely by social media, “hawk tuah girl” Haliey Welch, helps launch a crypto asset that stokes a viral frenzy and then flames out.

Social media star Haliey Welch, who became an internet sensation after her response to a racy interview question went viral earlier this year, has now been accused of scamming her followers with a cryptocurrency launch.

Welch, who is known as the “hawk tuah girl” because of her distinctive laugh, helped launch a memecoin called Hawk on Dec. 4. The coin was named after Welch’s catchphrase, which translates to “spirit of a hawk.”

But the launch quickly turned sour, with Welch’s critics accusing her team of selling off their Hawk coins and crashing the market. The memecoin was valued at US$490 million hours after it launched, but now has a market capitalization — the value of all Hawk coins in circulation — of US$17 million, according to CoinMarketCap, which monitors crypto prices.

Welch, a Tennessee native, has denied the allegations, saying her team “hasn’t sold one token.” Her representatives have been contacted for further comment.

The furore has taken place amid a boom in memecoins, which were valued at about US$20 billion in their entirety at the beginning of the year but are now worth US$118 billion, according to CoinMarketCap. And they are flooding the market place in their thousands. At one point in November, the memecoin platform pump.fun launched 69,000 tokens in a day, according to data from the crypto analysis firm Dune.

Experts say memecoins, the latest darling in a crypto field whose true economic worth is endlessly queried, have no fundamental value.

“It’s just a phrase attached to a digital coin. There is no value whatsoever,” says Carol Alexander, a professor of finance at the University of Sussex.

Memecoins riff on two prominent features of the digital economy: memes and cryptocurrencies. The former is an online image or video clip that is endlessly tweaked and recycled on social media to capture the zeitgeist (think Moo Deng the hippo or, more timelessly, distracted boyfriend). A cryptocurrency is a digital asset built on top of a blockchain, a decentralized ledger that tracks the ownership of a cryptocurrency or other digital asset.

Sam Baker, a UK-based memecoin trader, says a lot of the coins’ launches are based on Internet trends “you have never even heard of” and rely heavily on influencers to push them on a range of channels from Discord to X and Telegram.

He acknowledges there is “no intrinsic value” in memecoins and there is no “rhyme or reason” to which ones will succeed. Recent launches include coins based on the new Squid Game series on Netflix and on the fall of Bashar al-Assad’s regime in Syria.

“It is a pure form of gambling,” says Baker. “It is like buying a lottery ticket. But some of them are going to rise by 10,000 percent or 20,000 percent.”

Memecoins, says Baker, are a merger of two digital economy cornerstones that span different eras of the online boom.

“It’s monetizing people’s attention from 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 crypto. Although they are bonkers, memecoins represent the modern monetization of the attention economy.”

There is also a link with meme stocks, or shares in publicly listed companies that posted huge gains after being hyped on social media and bought by amateur investors. The classic example is GameStop, a struggling video games retailer that surged in value after a Reddit community piled into the stock.

The renewed popularity of memecoins can be traced to Donald Trump’s victory in the US presidential election, with the market doubling in value since his win. Trump is strongly associated with crypto, having pledged during his campaign to end the “persecution” of the industry. Bitcoin, the most valuable digital asset, has been the big beneficiary, with its value crossing $100,0000 for the first time a month after Trump’s win.

Cryptocurrencies appeal to influential figures on America’s political right such as Peter Thiel, the Silicon Valley billionaire, because they eschew the establishment by flying under the radar of regulators and having no underpinning from a central bank. Memecoins are also cheap for retail investors, with many of the tokens costing a fraction of a cent.

Creating them is relatively simple, according to Alexander: just mint, say, US$4,000 worth of tokens on a blockchain (Solana is especially popular with memecoin creators) and advertise them across social media, with the hope of selling them at a profit. Once bought, they can also be traded on exchanges.

One of Trump’s key backers, Elon Musk, is a longtime supporter of the first ever memecoin, Dogecoin, based on a meme featuring a shiba inu dog.