Is Every Memecoin A Scam? - YES!

The following is just part of an excellent article by Matt Shea in The Guardian:

Is every memecoin a scam?

According to David Gerard, author of Attack of the 50 Foot Blockchain: “Basically, literally, yes.”

“All of this is like a big game of pretend with made-up financial instruments,” he said. “It’s printing your own made-up money. You print your own Monopoly money and then people buy it from you for real money.”

The best thing you could possibly say about memecoins is that they initially felt like a funny, countercultural way to participate in internet culture. They satirised a financial system that increasingly looked like a silly game to those on the outside. They encapsulated a humorous generational nihilism.

According to Sander Lutz, the nation’s first crypto-focused White House correspondent: “You could consider a memecoin to be a stock in a cultural phenomenon – like Dogecoin and the Doge meme.”

“Another way of defining a memecoin,” Lutz said, “is a cryptocurrency token that has an acknowledged inherent lack of value. The crypto world, outside of memecoins, is full of so many people who are trying to pitch you on tokens that are ‘actually really profound’ or ‘represent a stake’ in some kind of ‘useful network’, but are equally worthless. What makes memecoins different is that there’s none of that noise.”

In other words, all crypto is bullshit, but memecoins are consciously bullshit. . . .

Chase Herro, the co-founder of Trump’s main crypto venture, World Liberty Financial, said about crypto: “You can literally sell shit in a can, wrapped in piss, covered in human skin, for a billion dollars if the story’s right, because people will buy it.”

Most memecoins end up making money for the person who makes them as a “rug pull” or a “pump and dump”. The term “rug pull” was actually invented by the crypto community, and it works like this:

First, you mint a memecoin, and make sure that you and your mates own most of the liquidity pool (the total number of coins in circulation). The size of the liquidity pool – the amount of that memecoin that “exists” – is, like everything else in memecoins, a totally made-up number.

Second, you generate hype around the coin by convincing people it will “moon” (shoot up in value). This usually involves getting a celebrity, influencer or the president of the US, to promote it. People then buy the coin, thinking it will be a good investment. Law of demand means that as people buy it, the “value” of the coin goes up, and since you and your mates own the lion’s share, you get richer.

Then, at a time known only to you, the creator of the coin, and other insiders, you “pull the rug”, selling off all your stock at the newly high price. You make money, and the value of the coins bought by the masses you manipulated shoots back down to zero. It’s basically a way to just trick people into giving you money, dressed up as an “investment”.

A “pump and dump” is pretty much the same thing, but with the slight caveat that you’re doing it with a coin that already exists, rather than creating your own. You buy a cheap coin, “pump” its value by hyping it so others invest, then “dump” all your stock, selling it off at a huge profit and causing everyone else to lose their money. . . .

Lutz told me: “There are a select number of people who’ve made quite a lot of money on these tokens, but they tend to be the same people. They tend to be people who are very well-connected, who are in specific group chats, and who have a lot of existing capital.”

“You’ll always have more people losing than amounts of winners,” according to Gerard. “And the winners never shut up, so you think it’s a winning environment.”