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Can meme coins onboard new people to Cardano?

Published 30.5.2023

Some teams are putting a lot of effort, time, and money to finish their project. They strive for launching a new application on Cardano. Teams may be a little jealous of the success of meme coins. The interest in financial speculation is huge. Is it possible to conclude that people are more interested in meme coins than in the technology itself? We don't think it's that simple. While the success of meme projects is ephemeral, DeFi services are more likely to succeed globally and maintain their acquired status in the long term.

TLDR

The success of Bitcoin and the entire blockchain industry began through financial speculation. Meme coins would not exist without blockchain. People are excited about the ability to easily create digital scarcity and own tokens without having to trust a middleman. Onboarding to DeFi services is underway and the ecosystem is undergoing an important stress test. Meme coins can be an important impetus for the further growth of the Cardano ecosystem. Thanks to meme coins, Cardano can be perceived as a reliable and secure platform for building real financial services.

Why do people love meme coins?

Meme coins would never have come into existence without blockchain technology and smart contract platforms that enable their minting. Never in history, it has been possible to create digital scarcity so easily on the internet. It has never been possible to own something without having to trust a third party.

Today, almost anyone in the world can mint their tokens on Cardano. It is possible to define their exact number. Want to create exactly 21M fancy MONKEY tokens or a great cool NFT collection? You have the possibility.

The craze around meme coins is based on new technological possibilities. Every innovative technology can be used to build something great, or it can be abused. Abuse can be much easier. Meme coins can be seen this way. People are excited about new possibilities and are driven by greed. Tokens can not only be minted but also bought and sold on decentralized exchanges. This opens up huge opportunities for financial speculation.

Meme coins are a smaller, shorter, and simplified version of Bitcoin, whose success is essentially based on financial speculation. If people didn't believe narratives about new internet money, digital gold, or the disruption of states, perhaps blockchain technology would be left in obscurity.

Bitcoin was the world's first of its kind and had a clearly defined mission. This is what meme coins lack, or the mission is not so ambitious. Cardano also has a clearly defined mission, team, and a huge community. What differentiates serious projects from meme coins is first and foremost the mission and the community that believes in achieving the goals. Financial speculation is only a necessary side effect as there must be a scarce resource on which the decentralization of the network is based. The market capitalization of blockchain projects is largely a logical outcome of success (adoption, technological potential, etc.). In the case of meme coins, speculation comes first. No ambitious goals are usually defined. If a goal is defined, any efforts to meet them can only be feigned. A pump is considered a success.

Cryptocurrencies were commonly referred to as a "get rich quick" scheme until a few years ago. Today, this is definitely no longer the case for dominant projects. Although their market capitalization can still grow a lot, it can take decades. Moreover, this is conditional on technological progress and adoption. A certain segment of the population loves risk and gambling, or simply wants to play with new technology and is willing to lose some money in the process. These people will love meme coins.

Can meme coins onboard new users into the Cardano ecosystem?

It's possible, although I think that people who are already in the Cardano ecosystem tend to play with meme coins. Still, there is some onboarding going on.

The advantage of having meme coins is that people learn to use tokens. Some people only stake ADA coins and may be afraid to buy tokens at DEXs. Meme coins allow them to try DeFi services. So meme coins can give people an entry point into DeFi.

Rather than onboarding new people into the Cardano ecosystem, we are onboarding people who are already in the ecosystem into DeFi.

Another advantage is that Cardano's network and DeFi services undergo an important stress test. If meme coins were to render the network unusable, should hacks occur, or even cause the network to collapse, it would certainly not be a good sign. If Cardano passes the test with flying colors, it will be proof that it is suitable for building financial services where security and reliability is a critical features.

Seen through this lens, although most meme coins will disappear, onboarding to DeFi services is ongoing. As more people use the DeFi services on Cardano, more might come later. People like to go where there are already people because they feel safer. Meme coins thus fulfill, perhaps surprisingly to some, a rather important role. They can be seen as the initial impetus for further growth of the ecosystem. What starts with meme coins may end with the tokenization of financial assets.

In the near future, people will trade stocks, currencies, and bonds instead of meme coins on DEXs. We will only look back on meme coins with nostalgia, just as the older among us today remember the first internet browser or command-line-only operating systems.

Teams building serious projects on Cardano can ultimately benefit from the existence of meme coins in the sense that the entire ecosystem grows. As a result, their apps can have more users once deployed. It definitely makes sense to continue building DeFi and other services on Cardano. The success of meme coins will be mostly ephemeral. Building a DEX or lending platform, for example, can be a long-term success.

Conclusion

Most people come to cryptocurrencies for financial speculation. The success of Bitcoin and the entire blockchain industry is based on this. It is important that these people stay in the ecosystem for the principles, freedom, and new opportunities for society. There is a real chance that meme coins will attract new people to the blockchain industry. The important thing is that people learn how to use the Cardano wallet and try out DeFi. They will learn through financial speculation that it is possible to create reliable decentralized financial services. Thanks to meme coins, the total number of all transactions processed by Cardano is growing. This grows trust in the entire ecosystem and institutions can evaluate this when they think about what platform to mint financial assets on.

Although I personally dislike pump & dump projects, the existence of meme coins can have a positive effect on the Cardano ecosystem. It is important that the technological capabilities of the Cardano platform remain visible after the current meme coin mania fades. Cardano's technological abilities must be a stronger perception than a group of disillusioned people who lost money. It is not possible to condemn Cardano technology just because it enabled the creation of meme coins. It is exactly the opposite. It should be seen as an opportunity to build real financial services on a reliable and secure platform. After all, just as we do not condemn Bitcoin because of the unexpected creation of the BRC-20 standard, we cannot condemn Cardano which is very well prepared for minting and transfer of tokens.

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