What’s the point of meme coins?
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This BBC podcast is supported by ads outside the UK. You are actually radioactive and everything alive is. Unexpected elements from the BBC World Service. Search for unexpected elements wherever you get your BBC podcasts. Hello, I'm William Lee Adams and this is What in the World from the BBC World Service. What do President Donald Trump, the pygmy hippo Mudang and the Central African Republic all have in common?

Well, they all have their own meme coin. If you, like me, have no idea what a meme coin is, keep listening. We're going to find out. We'll also ask, what's the point of them? Natalia Jimenez is our business reporter in New York. Natalia, hey. Hi, how are you? Really good, although I'm also very confused about meme coin. So a starting point. What is a meme coin?

Right. So the way I usually explain it is imagine if the stock market and Internet memes had one chaotic baby. That is what a meme coin is. It's basically a type of cryptocurrency. But instead of being built to kind of revolutionize finance like Bitcoin or crypto usually is, it's based on a joke.

The most famous one is Dogecoin, which you might have heard of. And it was literally created as a joke in 2013. So that's what I mean by like joke or like Internet meme. It was based on a dog called Shiba Inu. The creators thought it was funny. And then somehow Elon Musk and the Internet decided to make it worth billions of dollars. So completely based on hype.

meme coins don't have any actual use. And by that, I mean like they live and die on the Internet hype. One day they're all over social media and then the next they just vanish in crypto history. They have funny names, they have funny logos, and you'll see Elon Musk tweeting about them usually. So is the value of a meme coin determined by how many likes and shares it's getting online?

Meme coins are pure chaos. So unlike Bitcoin, they don't have any cap on supply. So Bitcoins, for example, they only have a supply of 21 million coins, right, which makes it kind of scarce and rare.

Unlike meme coins that have trillions floating around, which is why they're often valued at kind of such a low level. Sometimes they're worth fractions of a cent. But their value doesn't come from scarcity. It comes from whether or not it goes viral. What can I buy with them? If I go into a grocery store, I mean, sometimes they don't take my contactless payment. How are they going to take my meme coins?

Meme coins are used to buy things from usual kind of meme coin fans, like fun content online linked to a specific topic. So it's kind of like you are staying within the joke realm, right? It's for...

pure internet use, but you're not going to buy physical things with it. You're not going to go to the grocery store and use a meme coin because unlike Bitcoin, it's not an accepted currency. So some countries use Bitcoin actually as one of their currencies, like El Salvador, but meme coins are not widely accepted by businesses. So it's usually for internet use or sometimes you can just kind of buy and sell them.

Okay, so I can spend meme coin within the meme coin community in a way. Exactly. That's it. Gotcha. Now, given its limited use, why would anyone buy it? The way that I explain it is usually rooted in the idea of FOMO. So FOMO, fear of missing out. Most people don't buy meme coins because they believe in the tech and the technology. They buy them to make a quick buck.

If you think about it, you can see a meme coin go from like...

point one, you know, a value of like a cent to maybe a dollar in a week. And you think if you put $100 in now, maybe it'll increase in value quite rapidly. So it's all about the trust you put in the meme coin. If you buy early and people hype it up, you can get a lot of money from it and then sell it and just cash in on all of the money that you put in in the first place. So for every person who wins...

You know, they do get that big return, but thousands lose when the hype dies down. You mainly just buy it for fun. It's kind of hilarious to own a trillion Pepe coins, for example, even if they're worth less than a cup of coffee. It's based on a cult mentality. And some people hold...

to like hold on to these meme coins forever just for the hype because they like the idea of having it. They like the brand. They like the identity of the meme coin and others just buy a bunch, wait for it to get hyped up and then just sell it in mass.

And you mentioned why people might buy these coins, but who are these people? Are they the extremely rich? Are they people who love surfing the dark web? I mean, who are we talking about? It's actually a mix of people. You have regular people, for example, who are just hoping to strike gold, right?

And then on the opposite end of the spectrum, you have influencers and celebrities who either genuinely like meme coins. I mean, let's give them the benefit of the doubt. Maybe they really do believe in it. Or they secretly own a bunch and are wanting to pump the price to get that return back.

And then right next to them are these crypto whales. So these are big money investors who know how to manipulate the market. They buy very early. They watch the hype grow and then they sell at a perfect time, making massive profits. Now, if I wanted to set up my own meme coin, where do I start? What's the process?

Right. So a lot of people think that setting up a meme coin is difficult. It's actually not. It's very intuitive. You can go on a website and you can set up a meme coin in a few steps. You can choose a fun name. You can choose a fun logo. Then you set up some rules. You...

create some code, set up some regulation, and basically put it out in the world. What a crypto meme coin needs is hype. So you need to get people to start talking about it. You need a tweet about it. You need celebrities and influencers to peddle it for you. You need a community to grow around this brand. Once it gets that hype and people start buying into it, trading it,

telling other people about it, that's when you get a solid meme coin. We'll go back to Natalia in a minute. Like I mentioned at the start, the Central African Republic has also launched a meme coin. Here's the BBC's Collins Nabiswa to explain why. On 10 February, President Faustin Todera launched a meme coin describing it as an experimental project aimed at uniting the population to support national development. The coin's value experienced a sharp decline shortly after the introduction.

raising concerns about its legitimacy and effectiveness. There has been also very little coverage in local media. I think the latest launch has been very muted and not as high profile as the 2022 project.

In April 2022, the Central African Republic adopted Bitcoin as a legal tender, becoming the first African nation to do so. This move was aimed at positioning the country as a pioneer in blockchain technology. However, this initiative, which was called Project Tsango, faced significant challenges, including infrastructure limitations, skepticism, and legal hurdles.

In August 2022, the countries' constitutional court outlawed several incentives under this project, including granting nationality, land and cryptocurrency to foreign investors.

I think the president is trying to raise the country's profile in the economic market and to lure investors to tap into the country's vast mineral resources using cryptocurrency. We have hardly seen any local businessmen buying this cryptocurrency or saying that they will invest in this cryptocurrency. So the local uptake is extremely low.

Let's go back to Natalia now. You sound very fluent in meme coin, so I'm hoping we can create a little glossary here, go through some phrases. The first phrase I'm hoping you can define is pump and dump. Yes. So first of all, if you're looking to dive into the world of meme coins, listen up. You need to speak the language of crypto. Crypto slang in

Now, what about rug pull?

Yeah, so rug pull is when a project's developers disappear with investors' money. So they usually do that by draining all the liquidity from the market. One day everything looks great, and then the next, the developers have literally vanished into thin air. I mean, like, not a single trace online. No one knows where they are. The website is gone, and your investment is worth nothing. They basically run away. And Natalia, what about bag holder? Yeah.

A bag holder is what you become if you buy in too late into the coin and get stuck with worthless tokens after everyone else has crashed out basically. Could you tell us about the social media star Hayley Welch? I did a quick Google and she's had an interesting experience with meme coin. Yes, she has.

It's important to point out that not every meme coin is a scam, but if we're going to be real here, a lot of them are designed to make the creators rich while everyone else pretty much gets played. It's the wild west of crypto when you're dealing with meme coins. Hype is king. Actual value isn't really a thing. So Hayley Welch is the perfect example. She's known as the Hawk to a girl from TikTok. She launched a meme coin called Hawk based on her persona.

Last year, and within days, it blew up. She pumped it. It hit a market cap of nearly $500 million, which is insane. Except it crashed just as fast. The price plummeted by over 90%, and people started screaming rug pull. So investors claimed they got played. They accused Welch of insider trading and fraud.

pumping and dumping and following that scheme. To be fair, Welch denied selling any of her coins during the surge. She said she was blindsided by what happened and wants to cooperate with investigators, but no one can really get in touch with her. No one really knows where she is.

The whole situation just shows how meme coins can go from a viral sensation to financial disaster overnight. You've used the term wild west in the interview. I'm just wondering, is there any regulation in this area to make it less wild?

So the SEC are the people who regulate finance in the U.S. and they are watching crypto scams really closely. You can definitely get in trouble because if you launch a meme coin, you hype it up and then dump it for profit like Haley's being accused of, that's very much illegal. And even if you don't mean to scam people, you could still get...

caught up in a lot of legal trouble if authorities decide that your meme coins count as unregistered security. So some influencers have already been sued for promoting scam coins and regulators are getting stricter for cases like that. Basically, launching a meme coin isn't illegal, but launching one and pumping it and selling it off in a way that

plays investors is very much a way that you can get the SEC to start knocking at your door. Natalia, say I'm scammed. What do I do? If you've lost your money, you've lost your money. Investing in meme coins is a gamble. It's kind of like the lottery system.

Well, if you launch your own meme coin, we will definitely share. Natalia Jimenez, our business reporter, thank you so much. Thank you. If I launch a coin, I will call it the What in the World coin. Mark my words. It goes bankrupt. It's going to be terrible for our brand. Yeah, okay, true. I take it back. That's all for today. I'm William Lee Adams, and you've been listening to What in the World from the BBC World Service. Seriously, though, we really should do this meme coin thing.

The official What in the World meme is here. You can buy What in the World now. T's and C's. These are not intended to be or the subject of an investment opportunity. Values can go down as well as up. Don't invest unless you're prepared to lose all your money. The What in the World meme coin does not really exist.

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