Planet Money: The Memecoin Casino

Summary

Planet Money: The Memecoin Casino – A Comprehensive Summary

Podcast Information:

• Title: Search Engine
• Host: PJ Vogt
• Episode: Planet Money: The Memecoin Casino
• Release Date: March 28, 2025
• Description: In this episode, host PJ Vogt delves into the fascinating and often chaotic world of meme coins, exploring their origins, technological advancements, cultural impact, and the intricate dynamics that make them both alluring and perilous for investors.

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1. Introduction to Meme Coins

The episode opens with PJ Vogt and his co-hosts discussing the perplexing rise of meme coins in the cryptocurrency landscape. They draw parallels between the current economic climate and previous episodes of Planet Money that demystified complex financial phenomena.

PJ Vogt (04:08): "I'm so glad that we're still managing to explain the bewildering moment, even if it's as silly as Meme Coins."

2. The Birth of Dogecoin: From Joke to Reality

The narrative traces back to 2013 with the creation of Dogecoin by Jackson Palmer, an Australian product manager. Initially intended as a satirical response to the proliferation of speculative and often fraudulent cryptocurrencies, Dogecoin leveraged the popular "Doge" meme featuring a Shiba Inu dog.

Jackson Palmer (14:06): "I had one browser tab open with this article about Doge... I just thought, Dogecoin, that's hilarious."

Originally meant to critique the crypto space's tendency toward pump and dump schemes, Dogecoin surprisingly gained a substantial following. The community even engaged in charitable donations, showcasing a positive side before fraudsters began exploiting it for their gain.

Jackson Palmer (15:42): "I feel guilty enough for creating Dogecoin, which I'm sure that people have lost money on in the past, and that pains me."

3. Technological Advancements: Ethereum's Role

The introduction of Ethereum marked a pivotal technological shift, enabling the creation of multiple cryptocurrencies on a single blockchain. This innovation significantly lowered the barrier to entry, allowing virtually anyone with minimal technical expertise to launch a new coin.

Zeke Fox (16:27): "Ethereum made it so that you could keep track of multiple cryptocurrencies on the same blockchain. You could just create a new coin right on top of Ethereum's underlying infrastructure."

This accessibility led to an explosion of Initial Coin Offerings (ICOs) around 2017, many of which were later revealed to be scams, perpetuating the cycle of speculative frenzy and fraud within the crypto market.

4. Cultural Shifts and the Meme Phenomenon

The COVID-19 pandemic catalyzed cultural shifts, with isolated individuals turning to meme stocks and later, meme coins, as outlets for expression and investment. Platforms like Pump Fun emerged, blending internet humor with financial speculation.

Zeke Fox (19:05): "Pump Fun is a place where the newest juvenile inside jokes of the Internet can be transformed almost instantaneously into tradable financial instruments."

5. The Rise of Pump Fun: Democratizing Meme Coin Creation

Pump Fun revolutionized meme coin creation by simplifying the process to a point-and-click experience. Launched in January 2024 by young entrepreneurs in London, Pump Fun allowed over five million coins to be created within its first year, each vying for attention in the bustling meme economy.

Nick Navis (25:25): "Pump Fun has made it incredibly easy to make new meme coins... the homepage is just constantly updating with images of coins that have just been born."

Despite its user-friendly interface, Pump Fun quickly became a hotspot for chaotic and often unethical promotional tactics, leading to the eventual removal of its livestream feature to curb the mayhem.

6. The Mechanics of Meme Coin Trading: A Casino Analogy

The episode likens meme coin trading to a casino, where the majority of participants lose while a small fraction wins. Analytical data from Dune Analytics reveals that only about 3% of traders on Pump Fun have made significant profits, highlighting the inherently risky and zero-sum nature of meme coin investments.

Zeke Fox (35:05): "Only 3% of traders on Pump Fun ever made $1,000."

This dynamic fosters a "fear of missing out" (FOMO), driving continuous investment despite the low probability of success.

7. Influence of Key Opinion Leaders (KOLs)

Influencers play a crucial role in the meme coin ecosystem. High-profile figures like Elon Musk have historically swayed market movements, as their endorsements can trigger price surges through sheer follower reaction.

Nick Navis (32:13): "If Elon Musk will talk about whatever the coin is about."

The reliance on KOLs creates a self-reinforcing cycle where their mentions lead to increased investments, further amplifying their influence over the market.

8. The Dark Underbelly: Fraud and Manipulation

The episode exposes the darker aspects of meme coins, including outright fraud and manipulation. From anonymous creators cashing out during live promotions to shadowy groups leveraging crypto influencers, the environment is rife with deceptive practices aimed at enriching a select few at the expense of the majority.

Nick Navis (36:53): "These days, many meme coin boosters are just promising that there will be enough other chumps out there to cash you out when the time comes."

9. Conclusion: The Future of Meme Coins

Despite the evident risks and low success rates, the allure of meme coins persists, fueled by continuous technological advancements and cultural trends. The episode hints at an ongoing narrative, inviting listeners to explore further in the follow-up story, "Parable of Peanut, the Meme Coin."

PJ Vogt (37:33): "Why do people still invest in meme coins? It feels like a giant casino... just updated and put onto the blockchain."

The discussion underscores the importance of understanding the speculative nature of meme coins and the factors driving their persistent popularity in the financial ecosystem.

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Notable Quotes with Timestamps:

• PJ Vogt (04:08): "I'm so glad that we're still managing to explain the bewildering moment, even if it's as silly as Meme Coins."
• Jackson Palmer (14:06): "I had one browser tab open with this article about Doge... I just thought, Dogecoin, that's hilarious."
• PJ Vogt (15:42): "I feel guilty enough for creating Dogecoin, which I'm sure that people have lost money on in the past, and that pains me."
• Zeke Fox (16:27): "Ethereum made it so that you could keep track of multiple cryptocurrencies on the same blockchain. You could just create a new coin right on top of Ethereum's underlying infrastructure."
• Nick Navis (25:25): "Pump Fun has made it incredibly easy to make new meme coins... the homepage is just constantly updating with images of coins that have just been born."
• Zeke Fox (35:05): "Only 3% of traders on Pump Fun ever made $1,000."
• Nick Navis (32:13): "If Elon Musk will talk about whatever the coin is about."
• Nick Navis (36:53): "These days, many meme coin boosters are just promising that there will be enough other chumps out there to cash you out when the time comes."
• PJ Vogt (37:33): "Why do people still invest in meme coins? It feels like a giant casino... just updated and put onto the blockchain."

---

Production Credits: This episode was produced by Willow Rubin, edited by Jess Jiang with assistance from Keith Roemer, fact-checked by Cierra Juarez, and engineered by Neil Rauch. Executive Producer Alex Goldmark oversaw the production, ensuring a seamless and insightful exploration of the meme coin phenomenon.

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Stay Tuned: Don't miss the continuation of this intriguing story in the next episode, "Parable of Peanut, the Meme Coin," available now on the Planet Money feed and linked in the show notes. Whether you're a crypto enthusiast or a curious listener, this episode offers a deep dive into the quirky and consequential world of meme coins.

Transcript

[Alexi Horowitz Ghazi]

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[PJ]

Hey PJ. How are you?

[Alexi Horowitz Ghazi]

I'm good, I'm good. I'm enjoying the very beginning of spring.

[PJ]

Yeah, me too. Although I'm already schwitzing.

[Alexi Horowitz Ghazi]

You're schwitzing already? You're schwitzing in mid March.

[PJ]

I Don't know what climb my people evolved around, but I still haven't found it yet.

[Alexi Horowitz Ghazi]

I'm so sorry to hear that.

[PJ]

Yeah, it's okay.

[Alexi Horowitz Ghazi]

Everyone should have at least one season they enjoy.

[PJ]

It's true. I'm still in search.

[Alexi Horowitz Ghazi]

This is Alexei Horowitz Ghazi. He's a reporter whose work I very much enjoy. He's also one of the hosts at Planet Money. Does that show need an introduction? They're a long running, very smart NPR show that explains week by week, the world of things driven by markets. So just a couple of weeks ago, we actually did a story with one of your NPR colleagues, Bobby Allen, that was about Doge, the government commission.

[PJ]

Yes, the legend.

[Alexi Horowitz Ghazi]

The legend. Today we're doing a story with you that actually, weirdly, a little bit is like almost lore or backstory to Doge. Like it's in part about Doge, the Meme coin.

[PJ]

Yeah, it's like about like the other branch of the Internet Butterfly effect of the Doge meme.

[Alexi Horowitz Ghazi]

Who would have thought that like, that would be the meme that has far reaching legs into American culture?

[PJ]

I know. That changed world history. I didn't expect it.

[Alexi Horowitz Ghazi]

Yeah, it's funny, I mean, Planet Money, your show, which when we were beginning to pilot Search Engine, we talked a lot about Planet Money and how at its genesis we were like in the mortgage crisis and everybody was looking for explanation and Planet Money kind of like arose to make sense of something that needed sense making. I feel like we are now entering once again a moment in which the economy is both confusing and somewhat terrifying. And it's like, I'm very glad Planet Money is here.

[PJ]

I'm so glad that we're still managing to explain the bewildering moment, even if it's as silly as Meme Coins. Yeah, it feels like it's becoming more and more impossible to avoid, even if you want to. This whole question behind crypto the whole time is whether or not there's actual utility to it, whether or not it's actually a kind of utopian world building project, or it's just a kind of nihilistic, irreverent cesspool. And I feel like this moment with Meme Coins is really like getting to the heart of that question.

[Alexi Horowitz Ghazi]

I really had not understood how much Meme Coins had evolved since I was last seriously covering crypto. But that world has gotten much stranger and wilder, even compared to just 2022, for a very specific reason. This is a story about why that happened. I first heard it on Planet Money, but I liked it so much I wanted to share it with you here. I'm going to let Alexi take it away.

[PJ]

On the night of November 19, 2024, this baby faced kid, he looks around 13 years old, used a new online platform to launch a brand new cryptocurrency into the world. We're not using his name because he did all this anonymously. The cryptocurrency he created is what's known as a meme coin, which is a kind of joke currency, something that doesn't hold any inherent value besides what other people on the Internet are willing to pay for it. The kid named his coin Gen Z Quant. He spent a few hundred dollars to buy up about 5% of the total supply of his new coin. And then he also started livestreaming on the platform. Somebody else recorded the livestream, which is why in the video you can hear the kid and a couple other voices. Are we bonded yet or what's good? In the video, you can both see the kid's face and a chart showing the coin's price. Within seconds, the list of people buying the coin starts to stream in and the little green price line on the chart starts shooting upward like a rocket ship trying to reach escape velocity on its way to the moon. At first the kid seems surprised. Wait, what?

[Alexi Horowitz Ghazi]

He said, wait what?

[Nick Navis]

I'm so confused.

[PJ]

But then he gets this kind of devious grin on his face. His cheeks start to get a little flushed. He moves his cursor over to a sell button on the website and with one click, he cashes out the entirety of his holdings in Gen z quant. Some 51 million tokens for a cool $20,000 or so you feel clip. There's a murmur of surprise from other people watching the livestream in the chat, a little burst of fire emojis starts popping off and the price of Gen Zquant then immediately collapses. The green line on the price chart turns red and takes a nosedive. And for a moment, the kid again seems shocked at what he's been able to do.

[Alexi Horowitz Ghazi]

Holy fuck. Holy fuck.

[PJ]

And then the kid makes it clear he is not in fact so confused he seems to know exactly what's happening. He extends both of his middle fingers to the camera and utters a line that's become kind of infamous in the crypto world. Thanks for the 20 bandos. Thanks for the 20 bandos. Thanks in other words, for the $20,000 or so that this group of total strangers on the Internet had just transferred right into his account. The kid then stands up starts tugging at his hair and just takes a moment to revel in what he's pulled off. Yo, yo, yo, yo, yo.

[Alexi Horowitz Ghazi]

What the fuck?

[PJ]

And I think maybe the most absurd part of all this is that the kid then goes on to pull this exact same move to two more times with two other meme coins he created that very same evening, betting over $50,000 in total.

[Alexi Horowitz Ghazi]

Nah, nah, nah, nah, nah, nah, nah, nah, nah, bro.

[PJ]

And when you take a step back and just think about what's happening here, it's kind of wild, right? We are living in a time where a 13 year old can create his own cryptocurrency, successfully hawk it to a bunch of strangers on the Internet over livestream video, and then rip them off for tens of thousands of dollars not once, not twice, but three times in all from the comfort of his own home and all before bedtime. If someone pulled this move on a market like the New York Stock Exchange, they might have had government regulators knocking on the door. But meme coins are kind of a wild west. And the thing is, what this one kid did is just a tiny glimpse into this much bigger economic story. Just one example of a transformation rippling across the Internet. There are thousands of these meme coins being launched every single day now, involving everyone from literal children to social media sensations like Hoktua or Mu Dang the Pygmy Hippo to the President of the United States. It's the kind of thing that makes you wonder, how in the world did we get here? Hello and welcome to Planet Money. I'm Alexi Horowitz Ghazi and I'm joined by freelance reporter Nick Navis.

[Zeke Fox]

Hello, Alexi.

[PJ]

Hello. Yes.

[Zeke Fox]

Over the past few months, you and I have been on a deep dive into the world of meme coins.

[PJ]

We've been spelunking in the crypto mines.

[Zeke Fox]

We've been getting lost in them. Because over the past decade, meme coins have gone from a one off joke to a speculative frenzy worth tens of billions of dollars.

[PJ]

Today on the show, the story of the Meme Coin Casino. How a few technological leaps and cultural shifts helped turn a seedy Internet backwater into a giant cryptocurrency gold R.

[Alexi Horowitz Ghazi]

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[PJ]

Okay, so in order to tell the story of how we got to this moment where we are constantly awash in new meme coins, we have to begin at the beginning. And in the beginning, of course, there was Bitcoin.

[Zeke Fox]

Bitcoin was launched in 2009 and it was pitched as a sort of utopian alternative to government backed currencies. It was a way for people to pay each other without having to rely on the existing financial system.

[PJ]

But in the years after its launch, there was also this whole wave of often sketchy new bitcoin copycats. And this is where you start to see this pattern develop that's characterized the world of cryptocurrency ever since. A cycle of grand utopian promises, followed by a period of frenzy speculation and outright fraud.

[Zeke Fox]

And this was the seedy state of crypto that inspired what is widely considered to be the first meme coin, Dogecoin.

[PJ]

The story starts back in 2013 with a guy named Jackson Palmer. Palmer was an Australian product manager at a tech company, and he believed that there was something fundamentally useful about what crypto promised to do. But when he looked around at some of these speculative new cryptocurrencies, he saw that people seem to be using crypto as a kind of cash grab. Basically, some people were running what are known as pump and dump schemes.

[Zeke Fox]

Here's how it would work. Some programmers would create a new coin, they'd hype it up as the next bitcoin, maybe do some sketchy stuff to fake demand and get people to buy in, all to pump up the price. And when enough money had flowed in, they would sell off all their coins, they would dump their holdings, the price would collapse, leaving everyone who'd bought in holding the bag.

[PJ]

As Palmer looked around, he thought crypto was turning into kind of a joke, so why not turn it into an actual joke? He described how he came up with the idea in an interview with our daily podcast, the indicator. Back in 2018.

[Alexi Horowitz Ghazi]

I'd come home for the day in an Australian kind of tradition. You know, cracked open a beer and I was just sitting around. And the way it kind of came together was that I had one browser tab open with this article about Doge. And right next to it, I had CoinMarketCap, which is a very popular website for checking the valuations of cryptocurrencies. So my tab names kind of almost spelled it out for me in a way. And I just thought, dogecoin, that's hilarious.

[PJ]

Doge, you may remember, was this super popular Internet meme built around the image of a dog, a quizzical looking shiba inu, and it was paired with these kind of grammatically challenged captions like such, wow. And much amaze.

[Zeke Fox]

Palmer and a friend coded up a new coin, and in doing so, they married the world of memes with the world of crypto.

[PJ]

For Palmer, Dogecoin was An attempt at convincing the crypto curious to make more rational investment decisions. But instead, the good people of the Internet decided to pull a giant irreverent yes. And to Palmer's joke coin, they started buying more and more of them. Palmer was surprised, and at first, he went along for the ride. He and a community of fellow crypto jokesters donated their increasingly valuable dogecoins to charity. And for a while, things were going well.

[Alexi Horowitz Ghazi]

But whenever you have something that's going really successful, you have a successful community like that, and there's a monetary element to it. It's like blood in the water, right? Like sharks can, like, smell it from miles away.

[Zeke Fox]

And pretty quickly, fraudsters started to use dogecoin in the kind of pump and dumps it was meant to critique, which was exactly the opposite of what Palmer had intended.

[Alexi Horowitz Ghazi]

Yeah, tell me about it. Right. The irony is definitely, definitely not lost on me. You know, I feel guilty enough for creating dogecoin, which I'm sure that people have at some, you know, I know that people have lost money on in the past, and that pains me.

[PJ]

In the years that followed its creation, dogecoin ended up spawning dozens of copycat cryptocurrencies, or copy doges, I guess, in this case. But the number of these new meme coins was still limited by the technical expertise someone needed to make one. You needed to be able to essentially copy and tweak Bitcoin's underlying code.

[Zeke Fox]

And to understand how that barrier to entry started to change, we called up Zeke Fox. Zeke is an investigative journalist at Bloomberg and author of the book Number Go Up Inside Crypto's Wild Rise and Staggering Fall.

[PJ]

What do you do when you're not digging into the smarmy back corners of the crypto world?

[Nick Navis]

I've got three little kids, so I like to hang out with them and I hope they never get into meme coins.

[PJ]

Yes, keep them, keep them quarantined. Zeke says that first revolution that helped spawn our meme coin filled moment was a cultural one. The one where dogecoin helped marry the world of memes to the world of crypto. But the second revolution was a technological leap. It came a few years later with the invention of a brand new blockchain called Ethereum.

[Zeke Fox]

So a blockchain is basically a ledger that everyone can see, and it keeps track of how many tokens someone has of a given cryptocurrency. It used to be that in order to make a new cryptocurrency, you had to code up a new blockchain. So Bitcoin had its own blockchain. Dogecoin had a different one. But Ethereum made it so that you could keep track of multiple cryptocurrencies on the same blockchain. You could just create a new coin right on top of Ethereum's underlying infrastructure.

[PJ]

And this new Ethereum blockchain helped set off a massive surge in new cryptocurrencies starting around 2017 or so. They were called initial coin offerings, or ICOs. And these coins were often framed as useful new technologies, cryptocurrencies that would have some sort of real world utility.

[Nick Navis]

This was the time when people were still really pitching blockchain as, like, the solution to all the world's problems. So in general, these ICOs were like, it's the blockchain for dentists, or this is going to be the blockchain that helps track agriculture.

[PJ]

It's Bitcoin for farmers.

[Nick Navis]

Yeah, but people are basically trading them just on hype. And studies afterwards found that something like 3/4 of all the ICO's initial coin offerings were scams or fraud.

[PJ]

You can see that same quintessential pattern playing out again here. An era of utopian promises turning into a whirlwind of fraudulent deceit.

[Zeke Fox]

Yet Zeke says this round of crypto speculation was also limited in its impact because the majority of investors just did not understand the basics of transacting on the blockchain, like how to set up your own crypto wallet or trade coins.

[PJ]

But then came the third revolution. That helps explain how we got to our current meme coin moment. And this one had both a cultural element and a technological one. The cultural part happened around the time of the COVID 19 lockdowns, when a bunch of bored day traders stuck at home started banding together to buy meme stocks. Companies like AMC and GameStop. This was the marriage of meme culture and the entire stock market.

[Zeke Fox]

The technological part was the rise of mainstream crypto exchanges like FTX and Coinbase. These platforms made it easier for retail investors to buy and sell cryptocurrencies, and that helped swell the market to new.

[Nick Navis]

Heights during that huge crypto bubble of like, 2021, 22. There certainly was some meme coin trading, but it was not the focus of cryptocurrency traders.

[Zeke Fox]

The rise of the meme coin was still to come. Most crypto bros were still focused on mainstream cryptocurrencies like Bitcoin and ether. And the most radical speculators were obsessing over things like non fungible tokens or NFTs. Like those weirdly expensive Bored Ape cartoons people were buying.

[PJ]

But as we have learned in the cyclical history of crypto, number that go up must eventually come down. Which is exactly what happened in November of 2022. That's when it was revealed that the founder of crypto exchange ftx, Sam Bankman Fried, had been secretly using billions of dollars of customer funds to make massive risky bets.

[Nick Navis]

In winter, 2022, FTX collapses. And that's like the nadir of the crypto market.

[PJ]

Crypto winter, some might call it.

[Nick Navis]

Yeah.

[PJ]

So how do we go from crypto's dark night of the soul to an era teeming with more meme coins than we can keep track of? And who? Winners and losers of this brazen new world? That's coming up after the break.

[Alexi Horowitz Ghazi]

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[Nick Navis]

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[Alexi Horowitz Ghazi]

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[Alexi Horowitz Ghazi]

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[Nick Navis]

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[PJ]

Okay, so at this point, we've seen the same pattern play out over and over in the world of crypto. There's a rush of utopian promises, followed by a speculative rush of shady investments, followed by a sobering collapse as all this sketchy stuff is revealed.

[Zeke Fox]

Dogecoin, you'll remember, was first invented as a cheeky response to the wave of sketchy bitcoin copycats. And you can think of the current meme coin moment as a sort of like doubling down on the joke when.

[PJ]

Crypto exchange FTX collapsed, bringing down the whole crypto market along with it. It was like the ultimate Emperor's New Clothes moment. Even Sam Bankman Fried, the person who seemed to be the face of crypto going legit, turned out to have committed fraud to the tun of billions of dollars. In light of that, some crypto traders stopped believing in any promise of the technology's underlying value. They started to see it as pure, irreverent speculation.

[Zeke Fox]

And early last year, that sort of nihilistic feeling fused with yet another technological leap forward, Zeke Fox says, this time in the form of a new website.

[Nick Navis]

The latest meme coin craze was really enabled by this new trading platform called Pump Fun that made creating a meme coin a point and click experience. And more than 5 million coins have been created in like the year that it's existed.

[PJ]

Pump Fun is a bit shadowy, but as far as we can tell, it was created in January of 2024 by three entrepreneurs in their early twenties in London. We reached out to Pump Fun, but they didn't get back to us.

[Zeke Fox]

And the idea behind the platform was basically to demolish the barrier to entry for people making new meme coins to create a place where people could and then promote their own coins as a sort of social media experience.

[PJ]

Let's go to Pump Fun. Will you give us a little safari?

[Nick Navis]

Yes, definitely.

[Zeke Fox]

Zeke took us on a little tour of the Pump Fun website. It looks a bit like a throwback to the flash websites of the 90s. All bright neon text and jpegs of memes.

[Nick Navis]

I know, it's like, seems like something that only a child could enjoy.

[PJ]

Maybe a man child.

[Nick Navis]

I think there's a lot of kids.

[PJ]

On there, some who've made a lot of money.

[Zeke Fox]

Dump Fun has made it so incredibly easy to make new meme coins that the homepage is just constantly updating with images of coins that have just been born, coin after coin after coin.

[Nick Navis]

I'm looking at their most recent coins and, you know, there's. What if we all hold. 27 seconds ago dogenoit 46 seconds ago liter of hats 1 hour ago what's.

[PJ]

The kind of meme coin leaderboard today?

[Nick Navis]

Like, some of these ones just sort of become like classics and they keep trading. Like, dogecoin is still top dog. I'm sorry.

[PJ]

Top doge.

[Zeke Fox]

That was completely inevitable.

[Nick Navis]

Shiba Inu, which is like a dogecoin ripoff, is very high up there, Pepe. Dog Whiff hat has proven to have some staying power, but I think Fartcoin is the hottest meme coin right now.

[PJ]

Fartcoin's going to the moon.

[Nick Navis]

Yeah. I mean, Fartcoin, to me, it's like, how is this even funny? And so I was asking my favorite meme coin trader source about this. I was like, do you think it's funny? And he said, sometimes the fact that they're not funny is what's funny.

[PJ]

It's like horseshoe meme theory.

[Nick Navis]

Yeah.

[PJ]

Pump Fun is a place where the newest juvenile inside jokes of the Internet can be transformed almost instantaneously into tradable financial instruments. And so you can see the stream of new coins on the site as the cutting edge of what wannabe meme coin millionaires think might go viral.

[Zeke Fox]

Irreverent Internet culture meets the market.

[PJ]

Could anything possibly be more Planet Money than that?

[Nick Navis]

Should we make a coin and find out?

[PJ]

Let's go right to the edge of making a coin and then hover on the edge.

[Nick Navis]

What do you think? Should it be a cute animal?

[PJ]

Yeah, I mean, our mascot is the squirrel from the T shirt project.

[Nick Navis]

Oh, where can I get this squirrel? Do you wanna. I brought a picture of my cat, but we can use the squirrel.

[PJ]

Yeah, just type into Google, type in Planet Money Squirrel.

[Nick Navis]

Uh, it's got a martini.

[PJ]

It's a squirrel with a martini glass.

[Nick Navis]

Wow. This seems like it has a lot of meme coin potential.

[PJ]

Definitely.

[Nick Navis]

So what should we call it?

[PJ]

Well, there's either Animal Spirits or there's PM Squirrel Coin.

[Nick Navis]

PM Squirrel Coin. Okay, so the ticker will be pmsc naturally, for the description. This is the Planet Money Squirrel. Does that sound good?

[PJ]

Oh, God, we're playing with fire. We could launch a coin that just gets out of our hands.

[Nick Navis]

Just so you know you can never take it back.

[PJ]

We did not in fact launch the Planet Money Squirrel coin. Not today, Satan. But it was a shockingly easy prospect. By filling out a few description details and uploading a copy and pasted image from the Internet, you too can be the proud, terrified parent of a new meme coin. But raising that coin to a monstrously profitable adulthood is not so easy.

[Zeke Fox]

Because you can think of Pump Fun as this hyper literal attention economy. If a coin creator can't generate enough excitement around their meme coin, they won't be able to ensnare enough buyers to get it to take off.

[Nick Navis]

It's very easy to create the coin, but what's hard is attracting attention for it.

[PJ]

Now, there are three basic ways people garner attention in this world. And it comes down to how much clout the person might have for the first group. For the people who are cloutless in Cryptoland, Pump Fun offered a solution. It had a livestream feature. So a no name new coin creator could try to build a following by basically carnival barking the merits of their meme coin in real time.

[Nick Navis]

So Pump Fun had like a built in feature where the creators of the tokens could live stream themselves to promote their coins. And this went downhill fast. People were doing like really gross things to try to get attention. There was someone claiming that they had kidnapped the developer of the coin and would torture them. Oh God, somebody killed a chicken.

[PJ]

Dark.

[Nick Navis]

Somebody held a gun to a fish. A kid had his mom flash the livestream one. That was a little sillier. This kid created a coin he was livestreaming while he was streaming. He took the money and then gave the camera double middle fingers and said thanks for the 20 bandos in a high pitched voice.

[Zeke Fox]

That of course is the precocious and a little devious 13 year old from the beginning of our story.

[PJ]

Thanks for the 20 bandos. Pump fun eventually took down the livestream function from its website in response to all of this mayhem. Sort of a classic case of this is why we can't have nice things.

[Zeke Fox]

So that's the first group, the people without much clout who have to find some way to grab attention for their meme coin. Now there's a second group of meme coin creators and their big strategy is to already be famous.

[Nick Navis]

And we've mostly seen kind of like C listers do this. Iggy Azalea launched a coin on Pump Fun. And that one for a long time I was seeing people, I guess maybe mostly Iggy Azalea herself tweeting about her mother coin. Caitlyn Jenner had one.

[PJ]

There was the ill fated Hoktuh coin, which crashed just hours after it launched. And perhaps the most famous or infamous of all the new meme coins was the one launched by President Donald J. Trump.

[Zeke Fox]

But the third and final group of meme coin creators are the real power players. These are the shadowy groups of, well, resourced insiders who know how to play.

[PJ]

The game because there's this whole ecosystem of crypto influencers on places like discord X, TikTok, YouTube. And if these influencers start talking about.

[Nick Navis]

A coin, their followers will start to buy because these people have a track record of talking about coins kind of early on and the coins going on to attract even more attention.

[PJ]

This meme is so fire, it's going.

[Nick Navis]

To burn the Internet down.

[Alexi Horowitz Ghazi]

Guys, I think this meme coin could pull some crazy numbers. And now today, this coin is already about to hit 800k market cap and.

[PJ]

Break through a mill.

[Nick Navis]

And in crypto, these influential people are called KOLs, which stands for key opinion leader. And those people are often paid to promote the coins. And some people will tell their followers, I'm getting paid to promote this coin and other people will not.

[PJ]

Zeke says there is one key leader whose opinion seems to be valued above all others in the world of meme coins. A man who has taken the joke so far as to helm a controversial new government entity named after that original Doge meme.

[Nick Navis]

What is really ideal is if Elon Musk will talk about whatever the coin is about.

[Zeke Fox]

Like, one of the big reasons dogecoin is still the most valuable meme coin is because Elon Musk started tweeting about it in 2019.

[Nick Navis]

But it's not just dogecoin. A lot of the most successful coins have had some connection to Elon Musk.

[PJ]

Elon Musk is like the meme coin market mover in chief.

[Nick Navis]

Yes, because the people who are trading these are watching patterns and they're saying, hey, last time Elon Musk talked about something, the coin went up, so maybe it'll happen this time and then that kind of becomes a self fulfilling prophecy.

[PJ]

Now, regardless of which kind of meme coin creator we're talking about, the goal on Pump Fun is generally the same. Whether you are a 13 year old boy or a C list celebrity or a crypto insider, what you want is for your meme coin to blast off. You can think of the site as a kind of massive launchpad, like a giant Cape Canaveral, but a lot of it is filled with the skeletal remains of meme coins that have failed to launch.

[Nick Navis]

Something like 99% of coins are dead.

[PJ]

On arrival, which means they basically have zero buyers.

[Nick Navis]

Right? Like, I bet you a lot of them never sell a single token.

[PJ]

But if a coin creator can get enough key opinion leaders on board, they might get some initial price liftoff. Because this whole hoard of key opinion followers might hop on the rocket in the hopes that they can hop off before the price collapses.

[Zeke Fox]

And if they can get enough price liftoff, their coins will graduate from pump Fun to bigger platforms with whole new groups of potential buyers, like one platform aptly named Moonshot, to the biggest exchanges like Binance and Coinbase.

[PJ]

The hope for the truest meme coin believers is that their coin will somehow manage to breach escape velocity and make it all the way to the financial moon, maybe even Mars, to join the Doges and Pepe coins of yore.

[Zeke Fox]

But regardless of whether a coin dies on the launchpad or makes it to the moon, there's one group that makes money no matter what. Because Pump Fun gets a 1% cut of every trade made on the platform.

[Nick Navis]

Right. And Pump Fund, this platform in just a year or so, Dune analytics, which is a blockchain analysis company, says that it's made $400 million in fees.

[PJ]

So just like as in a casino on Pump Fund, the house also always wins. Yeah, but if you are somehow coming away from all of this with the impression that meme coin millionaires are being minted all the time, Zeke says that is exactly the fear of missing out that fuels this whole market.

[Nick Navis]

What everyone wants is that next one that's going to go up 10x100x1000x and they're the stories of people who really have made a million bucks because they bought dog whiff hat early. And when somebody hears that, it's pretty powerful, creates this sense of fomo. But Dune analytics studied blockchain data and found that only 3% of traders on Pump Fun ever made $1,000.

[PJ]

And keep in mind, meme coin trading is a zero sum game. Every dollar someone makes on a Meme coin mathematically has to come at the expense of someone else buying it. Which means that this tiny minority of winners, that 3% of traders, is making their fortunes off the vast majority of meme coin investors.

[Zeke Fox]

Which raises the enormous question, why do so many people continue to invest in a system that feels so clearly rigged against them? Why do people still invest in meme coins?

[PJ]

In your mind, is this. Is this all just a giant casino? Like, is this just like an ancient practice of sometimes irrational gambling, like, just updated and put onto the blockchain?

[Nick Navis]

I mean, I definitely would say this is just gambling. Everyone involved would agree with that, I think. But it's a really weird form of gambling. And oftentimes, by the time that you or I hear about any coin, you know, the insiders have probably accumulated a big supply at a low price and they're just waiting for losers like us to hear about it and buy some so that they can sell theirs and get real money.

[PJ]

In a way, a lot of what's going on here feels like a new twist on the classic pump and dump scheme.

[Zeke Fox]

But instead of people promising financial gains based on some underlying value, these days, many meme coin boosters are just promising that there will be enough other chumps out there to cash you out when the time comes.

[PJ]

Call it a chump and dump.

[Nick Navis]

Now, I think that most of the people who buy this like they're not being fooled by the coins. They just think that, hey, I am not the last person who's going to buy this coin. Someone else will come along later and buy this coin for more.

[PJ]

Has anyone made a Greater fool coin?

[Nick Navis]

I guarantee that they have.

[PJ]

And in fact, when we checked the Pump Fun registry, there turned out to be no less than 12 competing greater fool meme coins, half of them with the ticker sign Fool.

[Alexi Horowitz Ghazi]

So that was Alexi Horowitz Ghazi with Nick Nevis. If you enjoyed the story, there's a second part. It's called the Parable of Peanut, the Meme Coin. You can find it now on the Planet Money feed. We'll also just have a link in our show notes. Also, if you haven't just tried Planet Money as a podcast. I really think if you enjoy our show, which tries to make sense of a confusing world, you'll probably enjoy theirs, which is on a similar mission with a similar bent towards curiosity and fun. That Planet Money episode you just heard was produced by Willow Rubin. It was edited by Jess Jiang with help from Keith Roemer, fact checked by Cierra Juarez and engineered by Neil Rauch. Alex Goldmark is Planet Money's executive producer and we will have a new episode of Search Engine hosted by me next week. We'll see you then. This episode is brought to you in part by Canva. Ever endured a presentation so cluttered it felt like solving a puzzle just to follow along? Or struggled with slides crammed with tiny text, outdated transitions, and designs that belonged in a time capsule? Step up your slides with Canva presentations. Whether it's wowing a client or aligning your team, Canva makes it simple to create visually stunning presentations. No design experience required. Start with a professionally crafted template, drag and drop from a vast media library, and add captivating animations and charts that make an impact. Trusted by 95% of the Fortune 500, Canva empowers teams of all sizes to collaborate seamlessly, share, comment and edit in real time with intuitive features like version control and reactions, so creating together is effortless. You'll love the presentations you can easily design with Canva. Your audience will, too. Love your work with canva [e-mail].