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.