Descartes’ “I think, therefore I am” is as much about the anxiety of the existential crisis he went through (I am) as it is about the action that he proclaims alleviates his anxiety (I think). What if each era has its own Cartesian statement: I consume, post, meme, own; therefore, I am?

I find myself puzzled by the widespread of memecoins in the current era that we seem to be entering and I wonder if it is simply the continuation of a lineage of hive-wide actions that we collectively resort to in order to alleviate the culture-wide anxiety of our times.

I came across Ernest Becker’s “The Denial of Death” in a formative period of my life and much of what I’m suggesting in this post is shaped the book. Becker’s work led to Terror Management Theory which hinges around the idea that actions are spurred by anxiety and mother of all anxiety is the fear of mortality — not existing.

The Posts

The first time that I recall being puzzled by a new hive-wide mode of self-expression was in the 2008-20012 period. Facebook, Twitter and later Instagram were becoming a thing and we were all aimlessly posting on them. I’m sure most of us posted because we had profound things to share. Or perhaps we had the anxiety of not existing in the new medium that the Internet had provided. I post, therefore I am.

Unlike message boards, the social graphs of early Facebook and Instagram weren’t initially formed around shared interests. They were formed around one’s IRL community. This caused a problem. Turns out our IRL social graph wasn’t as passionate about the quirky side of us that we wanted to put on the internet. There was a lot of posting going on in this era, but the posts just weren’t hitting it.

The endless posts into the void of these early social media itself caused yet another source of anxiety — not existing in the culture. Facebook Groups, niche algo-curated communities on Twitter and Instagram were a return to the message board style online communities gathered around a shared interest.

The Memes

There was one element that really made this interest-centric pivot of social media work. The memes. The same way posting on social media came about to counter the anxiety of not existing on the internet, memes came about to alleviate the anxiety we felt by not being able to connect with people on the internet. I meme, therefore I am.

I find Dawkins’ theory limited in explaining the widespread phenomenon of memes. The social media era memes aren’t always postmodern viral spread of ‘ideas’. Our era’s memes represent a metamodern convergence of our shared experience around a specific cultural artifact. Memes are more similar to inside jokes than viruses; not only meaningless to those who lack the context but, utterly unable to convey an idea if the shared experience doesn’t yet exist.

Memes are perhaps the most concise method of converging a group around existing shared experiences or ideas.

But entropy is inevitable and with change there comes new anxieties.

The Coins

The post-COVID era has marked a sort of a popularization of anxietiesthat were previously contained within the crypto circles. It has marked new highs in distrust of authority, the officials and the big tech. It has painfully answered a question every child asks: “Why can’t we just print more money?” If conspiracy theories are a passive means to explain away the source of the current anxiety, memecoins are the proactive approach of embracing agency via a brand new Cartesian statement. I own, therefore I am?

Memecoins are appealing to the current set of anxieties for every reason that crypto idealists wanted crypto to be appealing. Though, they represent the crypto ideals in the most cartoonishly non-idealistic way possible. As the memelord himself says, “the most ironic outcome is the most likely”.

Memecoins are not controlled by the fed or the big tech. They can be fully owned in a digitally native way. They are accessible around the globe to those with little access to financial services or to those frustrated by the limits of financial regulators in the developed world. Memecoins aren’t a holistic solution to these issues but an act of rebellion to prove one’s agency by putting skin in the game.

Ironically, just like the very first memecoin, dogecoin, all memecoins even poke fun at the crypto idealists, reminding us that money is nothing but a meme. After all, there’s no substantial inherent difference between dogecoin and bitcoin.

However, similar to the verb of every other Cartesian statement, this too does not treat the anxiety and only allows us to cope with it.

I. The Role of Speculation

Unlike the sub-atomic scale which as suggested by quantum mechanics is probabilistic, the universe at the scale that we humans interact with is actually deterministic. This means that if we had a perfect understanding of all inputs we could perfectly compute the future. In practice, we do not have perfect and complete inputs or the computation needed to calculate the future. As such, we find ourselves approaching the future in probabilistic terms. Speculation is not a degeneration but a tool that allows individuals to reason about the future state of the world in probabilities. In other word, speculation is a low-computation method for dealing with uncertainties. It has been an essential tool in human survival and progress.

II. The Role of Markets

Markets are the evolution of individual level speculation, allowing a collective to hypothesize about future in the presence of information entropy, chaos of complex systems and reflexivity introduced by inclusion of many agents.

As the number of inputs and complexity of the relationship of these inputs increase the difficulty of speculation about the outcomes also increase. On the other hand, by increasing the number of speculative agents who all put skin in the game based on their own set of information and computation as nodes, the accuracy of the collective increases. The price reflects the collective speculation of all agents (market participants), each contributing their piece of information, however imperfect or incomplete.

This collective speculation is the market. With full acknowledgement of claims that “real communism hasn’t been tried before”, I am going to go on a limb and say that our civilization cannot coordinate without markets.

Thus, speculation is a net-positive at the civilizational level. Even though an order book is a zero-sum where gains one side of the book are losses of the other, at a magnitude of scale higher than the order book itself, the speculation is net-positive for the collective. Without these speculative agents we will not be able to have accurate pricing, universal pricing (as opposed to local), or enough liquidity to transact in meaningful quantities. As unholy as it sounds, traders, hedge funds and speculators at large provide irreplaceable value to our civilization.

III. The Role of Gambling

Equating speculation and gambling is to equate Football to 1700s-style line-infantry battles. One is the real thing, the other is made to scratch the itch that appears in the absence of the real thing. At the individual scale, battles and football might equate, but at the collective scale they affect the populace differently. The same way, at the individual scale, gambling feels similar to market participation subjectively for an individual, but at the collective scale market participation is a net-positive while gambling is zero-sum at best. Equating the two is caused when we evaluate the acts in the wrong scale.

Equating speculation with gambling and condemning both is common practice in Keynesian and Marxist schools of economics. Where as, Austrians and Neoclassical economists emphasis the importance and positive force of speculation.

There is quite a bit of gambling that is optimized for as “usage” within the crypto industry. It is fair to discourage this optimization function — after all, gambling is not positive-sum. Though, equating speculation with degenerate gambling would argue against the main value proposition of crypto.

IV. The Role of Crypto

Others have spoken at length about shortfalls of “blockchain not crypto” in solving any civilization scale problems, so I will not. Crypto is a coordination tool and its largest meta-application is solving the issue of digital-native ownership. Crypto assets represent value, ownership and transfer of it. It’s through digital-native ownership that crypto and web3 create any of their sub-applications.

Ownership without speculation is a confused oxymoron at best, and a maligned marxist take at worst. Speculation is an inseparable part of crypto.

V. The Role of Finance

Finance and financial instruments are the set of tools and pipelines facilitating efficient market-wide speculation.

Finance and financial instruments are not inherently useful in and of themselves. The value is derived from the economic activity that they facilitate, akin to a set of pipelines or transportation infrastructure that facilitates activity of a city but does not cause it. The Wall Street facilitates the financing and pricing of the Western economy.

Decentralized Finance (DeFi), similar to Wall Street and traditional finance are just a set of tools, pipeline and infrastructure that facilitate efficient financing and speculation over crypto assets. DeFi provides a set of tools to operate markets on top of crypto-native infrastructure.

Today we have the infrastructure but no economy to service.

Today, crypto is a ghost town. A city with transport and water infrastructure that has no people and no economic movement. Ghosts towns aren’t uncommon in top-down, centrally planned systems. The infrastructure-first approach to funding and building in crypto is the equivalent of top-down, centrally planned building of cities. The more natural approach is the app-infrastructure cycle approach. Infra first is waterfall. App-infrastructure is agile development.

There are two forerunner arguments for what will be the economies that DeFi will be the financial infrastructure for. Some believe DeFi to a more transparent and efficient replacement for the pipelines of the old economy (TradFi). Others, myself included think that DeFi is a financial infrastructure for net-new web3-native economies — economies that never existed or were even possible prior to this technology. I have in the past discussed the dual path for adaptation of technologies in societies, either streamlining old economies or allowing creation of new ones. For example, the internet brought along things like Expedia which are streamlining of brick and mortar travel agents. The internet also brought along innovations like Airbnb which are expansion of both supply-side and demand-side of short-term personal home rentals, creating markets that weren’t possible at scale before: a net new economy. Other examples of streamlining is digitized news papers and radios while blogging and podcasts were net-new phenomena.

VI. The Role of Gambling in Crypto

I am biased towards net-new economies but I find pursuit of streamlining Wall Street to also be a noble aspiration. What’s left us with degenerate gambling isn’t which one of these two we choose to build. But rather the fact that we have built a financial infrastructure layer that has not found an economy atop it to service.

Speculation is not a 'casino phase' that crypto is going through -- it's an inseparable property of ownership. It's gambling that is not inevitable a result of top-down gonzo investments, bad measurement metrics and early liquidity. The Casino is simply what appears if we build pipelines that do not have an economy to facilitate.

Instead of subsidizing growing economies we’ve incentivized usage of our financial infrastructure without measuring the sum of the equation, only looking at our terms and minuend and mistaking them for addends. When DeFi Summer first kicked-off, folks used “subsidies” and “incentives” to describe the yield farming phenomena. In retrospect it’s clear that we did not subsidize a positive sum but, just incentivized a zero sum.

VII. The Path forward

Speculation is an inherent part of crypto. Gambling is not inherent. Gambling is what we’re left with in absence building real economies on top of our infrastructure.

The path forward is:

• To not incentivize but subsidize where achieving scale is not possible without such subsidies. The difference is that incentives are concerned with the left-hand side of an equation while subsidies care about the right hand side. If the right-hand side is remaining zero-sum, it’s not subsidy — it’s not speculation, it’s gambling.

• To use the correct metrics. TVL is a left-side-of-the-equation metric. It is agnostic of the economic value of an application, merely obsessing about sheer usage, perhaps fallaciously assuming all usage is positive-sum.

• To break the top-down gonzo investments based on the infrastructure myth and embrace the app-infrastructure cycle.