How the memecoin game is played

Summary

Podcast Summary: "How the Memecoin Game is Played"

Introduction

In the February 10, 2025 episode of The Indicator from Planet Money, host Waylon Wong delves into the intriguing world of memecoins—cryptocurrencies inspired by internet memes and popular culture. Joining Waylon is NPR reporter and producer Nick Neves, who explores the surprising rise and volatile dynamics of memecoins through the story of Peanut the Squirrel and the subsequent emergence of Peanut Coin.

The Story of Peanut the Squirrel

Nick Neves opens the discussion by recounting the poignant tale of Peanut the Squirrel, an Instagram-famous squirrel owned by Mark Longo. Peanut became an internet sensation thanks to adorable photos of him wearing tiny cowboy hats and sharing waffles with Longo. However, Peanut's life took a tragic turn when New York state agents, citing a lack of proper licensing to care for wild animals, confiscated Peanut. During the seizure, Peanut bit an officer, leading to his euthanization to test for rabies.

Nick Neves [00:24]: “Mark didn’t have a license to take care of wild animals. And late last year, New York state agents raided his house and confiscated Peanut. And in the process, it bit one of the officers. And to test it for rabies, the officers killed Peanut the squirrel.”

The incident garnered widespread attention, with public figures like J.D. Vance and Elon Musk discussing Peanut on platforms such as Joe Rogan's show, amplifying Peanut's legacy beyond his untimely death.

The Birth of Peanut Coin

Amidst the media frenzy surrounding Peanut's demise, an unexpected development occurred: the creation of a cryptocurrency named Peanut Coin. Despite Mark Longo's disassociation from the coin, Peanut Coin surged in value within weeks, perplexing many observers, including Nick Neves himself.

Nick Neves [01:16]: “And at the same time, someone made a cryptocurrency named after Peanut the squirrel, and it exploded in value in just a few weeks. I couldn’t track down who made the coin. Mark says he had nothing to do with it. And I was so confused about meme coins, and I still am. How could a dead squirrel make millions of dollars?”

This phenomenon sparked curiosity about the mechanics and appeal of memecoins, prompting Waylon and Nick to investigate the rules of the memecoin game and identify its key players.

Understanding the Blockchain

To demystify memecoins, Waylon introduces blockchain technology— the foundational infrastructure of cryptocurrencies. Zeke Fox, an investigative reporter at Bloomberg, explains the blockchain metaphorically:

Zeke Fox [03:11]: “Think of a blockchain like a big spreadsheet in the sky. It’s got two columns. In column A, you’ve got people’s names. In column B, we’ve got a number like, you know, 1, 5, and 10. And so that’s if this is the Bitcoin blockchain, that’s how many bitcoins we have.”

Nick raises a fundamental question about the inherent value of cryptocurrencies:

Nick Neves [03:52]: “The big question with crypto, though, is why does it have any value? Like, why is a number in the spreadsheet in the sky worth any money?”

The Rise and Fall of Meme Coins

The conversation shifts to the evolution of memecoins, highlighting how technological advancements have lowered barriers to entry. Platforms like Pump Fun have simplified the creation of memecoins to a point-and-click process, resulting in thousands of new coins minted daily. Peanut Coin's meteoric rise, from 5 cents to over $2 in a few weeks, exemplifies this trend.

Waylon Wong [04:03]: “The first viral meme coin, Dogecoin, was made as a joke, in part to say, look, one new cryptocurrency shouldn’t have any more value than another one. But Dogecoin blew up anyways.”

However, the sustainability of memecoins is questionable. Pooh Coin, like many memecoins, often experiences a sharp price decline after an initial spike, a phenomenon attributed to "rugging"—where developers sell off their holdings, causing the price to crash.

Nick Neves [05:35]: “This is called rugging, like pulling the rug from under someone.”

Omid Malakan, a Columbia Business School professor, defends the decentralized nature of crypto, suggesting that the freedom inherent in blockchain technology allows for such speculative ventures.

Omid Malakan [06:08]: “This is just greater fool's theory on the blockchain. You can make money as long as there's someone who thinks they'll be able to sell it for more than you.”

Notable Examples: Trump Coin

The episode highlights Trump Coin as a prominent example of memecoin manipulation. Controlled by two LLCs associated with the Trump Organization, Trump Coin amassed a market cap of approximately $3.5 billion. Unlike traditional memecoins intended to be community-driven, Trump Coin was designed for rapid profitability, allowing insiders to sell their shares quickly, undermining the coin's long-term value and harming ordinary investors.

Nick Neves [07:16]: “The way the game is played is, well, if you happen to buy it on the open market before the meme went viral, then you deserve to make money off of its success.”

Zeke Fox criticizes such practices, emphasizing that genuine memecoins maintain integrity by being owned and controlled by the community rather than by a select few with vested interests.

Zeke Fox [07:48]: “Except for Trump and his associates, who get effectively free money. This is not how the good meme coins operate.”

Implications and Public Perception

The allure of memecoins persists despite their inherent risks. Participants often view them as collectibles, charitable donations, or speculative investments. For instance, Mark Longo launched JFP (Justice for Peanut) Coin to support his animal sanctuary, blending philanthropy with cryptocurrency.

However, Omid Malakan offers a critical perspective, linking the rise of memecoins to "financial nihilism"—a sentiment where individuals, especially younger generations, feel disenfranchised by traditional financial systems and thus turn to high-risk ventures like memecoins, meme stocks, and sports betting.

Zeke Fox [09:14]: “I think meme coins are sort of a symptom... financial nihilism. And the basic idea is that a lot of people, particularly young people, increasingly feel like the whole shebang is rigged against them.”

This mentality is driven by broader economic pressures, including expensive healthcare, housing, and daily necessities, prompting individuals to seek alternative avenues for financial gain, albeit with significant risks.

Conclusion

The episode concludes by reflecting on the volatile nature of memecoins and their broader implications on financial behavior and economic perceptions. While memecoins like Peanut Coin and Trump Coin capture public interest and investment, they also highlight the precarious balance between innovation and exploitation within the cryptocurrency landscape.

Waylon Wong [09:59]: “Nick, thank you for bringing us this story.”

The discussion underscores the necessity for greater awareness and understanding of the complexities surrounding memecoins, especially as they continue to influence both individual finances and the broader economic discourse.

---

This episode was produced by Julia Ritchie with engineering by Neil Tybalt. It was fact-checked by Sierra Juarez, edited by Kiki Cannon, and is a production of NPR.

Transcript

[Unknown Speaker]

Npr.

[Waylon Wong]

This is the Indicator from Planet Money. I'm Waylon Wong, and I'm here today with occasional NPR reporter and producer Nick Neves, who has a story about a squirrel and a meme coin.

[Nick Neves]

Hi, Waylon.

[Waylon Wong]

Hi.

[Nick Neves]

Okay, so you may remember Peanut the Squirrel. He was an Instagram famous squirrel owned by this guy Mark Longo. And Mark would dress him up in little cowboy hats and they would eat waffles together. It was very cute.

[Waylon Wong]

Were the waffles also small?

[Nick Neves]

Actually, the waffles were normal sized, but.

[Waylon Wong]

The cowboy hats were small.

[Nick Neves]

The cowboy hats were small.

[Waylon Wong]

Were just peanuts.

[Nick Neves]

Yes, but Mark didn't have a license to take care of wild animals. And late last year, New York state agents raided his house and confiscated Peanut. And in the process, it bit one of the officers. And to test it for rabies, the officers killed Peanut the squirrel.

[Waylon Wong]

Ugh. I do remember this. Now, a lot of people were talking about this, including J.D. vance.

[Omid Malakan]

So I know Don's fired up about.

[Waylon Wong]

Peanut the squirrel and Elon Musk talked about it on Joe Rogan's show.

[Zeke Fox]

Just go out there and vote for.

[Nick Neves]

Peanut man, if nothing else.

[Waylon Wong]

Yeah.

[Nick Neves]

And at the same time, someone made a cryptocurrency named after Peanut the squirrel, and it exploded in value in just a few weeks. I couldn't track time down who made the coin. Mark says he had nothing to do with it. And I was so confused about meme coins, and I still am. How could a dead squirrel make millions of dollars?

[Waylon Wong]

Whether or not we understand them, these quote unquote meme coins are having a moment. You may have heard of Hoctua Coin, Trump Coin. A lot has changed since the early days of crypto.

[Nick Neves]

Today on the show, what are the rules of the meme coin game and who's winning?

[Omid Malakan]

Support for npr. And the following message come from Indeed. When it comes to hiring, the best way to search for a candidate isn't to search at all. Don't search. Match with Indeed. Get a $75 sponsored job credit at Indeed.com indicator terms and conditions apply. This message comes from Schwab. At Schwab, how you invest is your choice, not theirs. That's why when it comes to managing your wealth, Schwab gives you more choices. You can invest and trade on your own. Plus get advice and more comprehensive wealth solutions to help meet your unique needs. With award winning service, low costs and transparent advice, you can manage your wealth your way at Schwab. Visit schwab.com to learn more.

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[Waylon Wong]

First things first. To understand Peanut's afterlife as a meme coin, we first need to understand. And please don't roll your eyes. The blockchain.

[Unknown Speaker]

Think. Think of a blockchain like a big spreadsheet in the sky.

[Waylon Wong]

This is Zeke Fox. He's an investigative reporter at Bloomberg who writes about crypto. And you might remember him from our previous episode on zombie NFTs. But back to blockchain.

[Unknown Speaker]

It's got two columns. In column A, you've got people's names.

[Waylon Wong]

So let's say it's got Waylon, Nick, and Zeke.

[Unknown Speaker]

In column B, we've got a number like, you know, 1, 5, and 10. And so that's if this is the bitcoin blockchain, that's how many bitcoins we have.

[Waylon Wong]

So that's sort of all there is to it. Do you feel like a master of the universe, Nick?

[Nick Neves]

Right, yeah. No. The big question with crypto, though, is why does it have any value? Like, why is a number in the spreadsheet in the sky worth any money?

[Waylon Wong]

The first viral meme coin, Dogecoin, was made as a joke, in part to say, look, one new cryptocurrency shouldn't have any more value than another one.

[Nick Neves]

But Dogecoin blew up anyways. Zeke said a friend of his who bought Dogecoin low sold it for a few thousand bucks and helped fund a trip to Disney.

[Unknown Speaker]

He taunted me and said, I am frickin Nostradamus.

[Waylon Wong]

I guess the lesson here is things really are worth whatever people are willing to pay for them, right?

[Nick Neves]

Yeah. But anyways, that was early days. The thing that's changed since then is that it used to be kind of hard to make a new coin.

[Unknown Speaker]

The latest, like, meme coin craze was really enabled by this new trading platform, platform called Pump Fun. That made creating a meme coin like a point and click experience.

[Waylon Wong]

Thousands of new coins are minted every day. You could make a coin right now named after a cute deceased animal, and people could buy it.

[Nick Neves]

I aped $10,000 into peanut the Squirrel. Yes, Peanut. As Peanut's death made the rounds in the media, the coin got more and more buying coin, which already made many crypto millionaires. But in just a few weeks, the coin went from around 5 cents to over $2.

[Waylon Wong]

Yeah, but peanut coin, like most Meme coins has dropped in price since that early spike. A typical pattern for these coins is that once the price goes up, developers will sell their coins and crash the price for everybody. This is called rugging, like pulling the.

[Zeke Fox]

Rug from under someone.

[Nick Neves]

This is Omid Malakan. He's a professor at Columbia Business School, and he really believes in the spreadsheet in the sky. He holds Bitcoin and thinks crypto represents the future of finance. He's certainly, though, got a take on meme coins.

[Zeke Fox]

The dogecoin. I tell people that's just gambling. You don't say, I'm going to invest in playing roulette or the lottery.

[Nick Neves]

And just like regular gambling, the house can be stacked against you in order to pull out the rug and make money. Other people need to think the meme coin is going to keep going up.

[Waylon Wong]

Right? This is just greater fool's theory on the blockchain. You can make money as long as there's someone who thinks they'll be able to sell it for more than you.

[Unknown Speaker]

One way to make something appear to be going up is to do what's known as wash trading.

[Nick Neves]

Zeke says in this case, someone might control multiple crypto wallets, and you trade.

[Unknown Speaker]

It back and forth at increasing prices, and other people see, oh, wow, it's going up, and you start attracting some real buyers because the coin appears hot.

[Waylon Wong]

Of course, in a traditional regulated market, this is super illegal.

[Nick Neves]

But Omid says part of what makes crypto good is that anyone can do anything on it. He doesn't mind that people trade meme coins.

[Zeke Fox]

Meme coins became popular in the last couple years because they were fair, supposedly, and they were for the people and of the people and owned by the people. Nobody controls them and certainly nobody holds a substantial percentage of the supply. Then comes Trump coin, of which over 80% of the supply is controlled by Trump and his partners, who issued this thing.

[Waylon Wong]

Two LLCs associated with the Trump Organization control the coin. It totally blew up.

[Nick Neves]

Okay, but here's the important thing to note. Those companies only released a small fraction of the coins for the public to purchase. When a coin is released like this, it's usually held for a number of years, but Trump Token can start selling in three months. Omid says insiders are going to want to sell their share as fast as.

[Zeke Fox]

They can, because if you get something for free and you can make billions of dollars selling it, you're probably not going to hold it for the long term.

[Nick Neves]

So it will be bad for the price, which means it'll be bad for everyone. Who's holding it? Except for.

[Zeke Fox]

Except for Trump and his associates, who get effectively free money. This is not how the good meme coins operate. The way the game is played is, well, if you happen to buy it on the open market before the meme went viral, then you deserve to make money off of its success.

[Waylon Wong]

Like early purchases of the Peanut coin, for example. They got lucky. Omid says people should be allowed to gamble. But a coin made by someone who's already got clout, who made a meme in order to make money.

[Zeke Fox]

It's funny to hear myself say this, but that, to me, fails the integrity test of a good meme coin.

[Waylon Wong]

Right now, as of this recording, Trump Coin's market cap is around $3.5 billion.

[Nick Neves]

But this raises a lot of questions, like, if a lot of these coins are rigged or extremely risky, why are people still making and buying them? On one hand, you can think of them kind of as souvenirs or collectibles.

[Waylon Wong]

And as charitable donations. Right?

[Nick Neves]

Right. Yeah, they can be. In fact, Mark Longo, Peanut the squirrel's owner, actually launched his own meme coin, JFP justice for Peanut. He says it's to raise money for his animal sanctuary. Omid, though, has another explanation for what's behind meme coins.

[Zeke Fox]

I think meme coins are sort of a symptom, which is the term of art we use in academia and in other places is financial nihilism. And the basic idea is that a lot of people, particularly young people, increasingly feel like the whole shebang is rigged against them.

[Nick Neves]

Health care is expensive, housing is expensive.

[Waylon Wong]

Eggs are expensive.

[Nick Neves]

Yeah. You know, we're all living in the.

[Zeke Fox]

Same world, and they increasingly feel like they have to take risks, that they have to do crazy things with their money. But if you're doing things like meme coins or meme stocks or sports betting, there's a significant chance you'll just lose everything.

[Waylon Wong]

Nick, thank you for bringing us this story.

[Nick Neves]

Thanks for having me.

[Waylon Wong]

I'll see you at Waffle Wednesday.

[Nick Neves]

See you there.

[Waylon Wong]

This episode was produced by Julia Ritchie with engineering by Neil Tybalt. It was fact checked by Sierra Juarez. Kiki Cannon is our editor, and the indigator is a production of npr.

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[Omid Malakan]

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