--:-- Aisha Roscoe: I'm Aisha Roscoe, and you're listening to the Sunday Story from Up First. So there are some things in this world that I just have a hard time getting my head around. And, you know, I've got to say, one of them is cryptocurrency. And the longer it's around, the weirder and more complicated it seems to get. It's all a bit daunting to me, but for some of my colleagues, explaining new trends in the economy is what they do.
--:-- Alexi Horowitz-Gazi: A few months ago, I came across a viral video that clarified something about the explosion of a type of cryptocurrency called meme coins. These are highly valuable and highly volatile tradable currencies that have cropped up on the Internet over the past decade. And anyone can make one.
--:-- Aisha Roscoe: Here's Alexi talking about the video he saw and the story of one particular meme coin.
--:-- Alexi Horowitz-Gazi: On the night of November 19th, 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.
--:-- Aisha Roscoe: 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 live streaming on the platform. Somebody else recorded the live stream, which is why in the video you can hear the kid and a couple other voices.
--:-- Alexi Horowitz-Gazi: Are we bonded yet or what's good?
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: At first, the kid seems surprised. Wait, what? Wait, I'm so confused. 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.
--:-- Aisha Roscoe: There's a murmur of surprise from other people watching the live stream. In the chat, a little burst of fire emojis starts popping off. And the price of Gen Z Quant then immediately collapses. The green line on the price chart turns red and takes a nosedive.
--:-- Alexi Horowitz-Gazi: And for a moment, the kid again seems shocked at what he's been able to do. Holy f***. Holy f***. 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.
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: 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, what the f***?
--:-- Aisha Roscoe: And I think maybe the most absurd part of all this is that the kid then goes on to pull this exact same move two more times with two other meme coins he created that very same evening, betting over $50,000 in total.
--:-- Alexi Horowitz-Gazi: No, no, no, no, no, no, no, no. Nah, bro.
--:-- Aisha Roscoe: And when you take a step back and just think about what's happening here, it's kind of wild, right? We're living at 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 one night.
--:-- Alexi Horowitz-Gazi: All from the comfort of his own home. And all before bedtime.
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: 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.
--:-- Aisha Roscoe: There are thousands of these meme coins being launched every single day now, involving everyone from literal children to social media sensations like Hawk Tua or Mudang the Pygmy Hippo to the President of the United States.
--:-- Alexi Horowitz-Gazi: It's the kind of thing that makes you wonder, how in the world did we get here?
--:-- Aisha Roscoe: Today on The Sunday Story, Planet Money host Alexi Horowitz-Ghazi and freelance reporter Nick Nevis explain just how we got here. Stay with us.
--:-- [Break music plays]
--:-- Aisha Roscoe: This message comes from Doctors Without Borders. People are living through a moment defined by unrelenting crises and need. Civilians are caught in the crossfire of violence and war. Malnutrition threatens the lives of children. Communities depend on life-saving humanitarian aid. Doctors Without Borders is meeting this moment of overwhelming need with action. But they can't do it alone. Help provide life-saving care around the world. Learn how to donate today at doctorswithoutborders.org slash NPR.
--:-- Alexi Horowitz-Gazi: This message comes from BetterHelp. President Fernando Madeira describes how BetterHelp online therapy has helped him.
--:-- Fernando Madeira: For me, sometimes I just need to go and talk to somebody that is not going to judge me, right? Is going to be there and going to listen to me. And I can't start just saying, look, I'm not feeling right today. And it feels natural. I love it.
--:-- Alexi Horowitz-Gazi: months only. Then full price plan options available. Taxes and fees extra. See Mint Mobile for details.
--:-- Aisha Roscoe: We're back with the Sunday story. Today, a deep dive into meme coins from our colleagues over at Planet Money. Here's NPR's Alexi Horowitz-Gazi with freelance reporter Nick Nevis.
--:-- Alexi Horowitz-Gazi: Hello, Alexi.
--:-- Aisha Roscoe: Hello. Yes. Over the past few months, you and I have been on a deep dive into the world of meme coins. We've been spelunking in the crypto mines. 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.
--:-- Alexi Horowitz-Gazi: 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 rush.
--:-- Aisha Roscoe: 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. 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.
--:-- Alexi Horowitz-Gazi: 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 frenzied speculation and outright fraud.
--:-- Aisha Roscoe: And this was the seedy state of crypto that inspired what is widely considered to be the first meme coin, Dogecoin. The story starts back in 2013 with a guy named Jackson Palmer.
--:-- Alexi Horowitz-Gazi: 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 seemed to be using crypto as a kind of cash grab.
--:-- Aisha Roscoe: Basically, some people were running what are known as pump-and-dump schemes. 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.
--:-- Alexi Horowitz-Gazi: 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.
--:-- Aisha Roscoe: I'd come home for the day and 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 cryptocurrency. So my tab names kind of almost spelt it out for me in a way. And I just thought Dogecoin, that's hilarious.
--:-- Alexi Horowitz-Gazi: 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.
--:-- Aisha Roscoe: Palmer and a friend coded up a new coin, and in doing so, they married the world of memes with the world of crypto. 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.
--:-- Alexi Horowitz-Gazi: 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.
--:-- Aisha Roscoe: 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 smell it from miles away.
--:-- Alexi Horowitz-Gazi: 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.
--:-- Aisha Roscoe: Yeah, tell me about it, right? The irony is definitely not lost on me. You know, I feel guilty enough for creating Dogecoin, which I'm sure that people have, you know, I know that people have lost money on in the past, and that pains me.
--:-- Alexi Horowitz-Gazi: 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.
--:-- Aisha Roscoe: You needed to be able to essentially copy and tweak Bitcoin's underlying code. And to understand how that barrier to entry started to change, we called up Zeke Fox.
--:-- 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.
--:-- Aisha Roscoe: What do you do when you're not digging into the smarmy back corners of the crypto world?
--:-- Zeke Fox: I've got three little kids, so I like to hang out with them. And I hope they never get into meme coins.
--:-- Alexi Horowitz-Gazi: Yeah, keep them quarantined.
--:-- Zeke Fox: 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.
--:-- Aisha Roscoe: But the second revolution was a technological leap. It came a few years later with the invention of a brand new blockchain called Ethereum.
--:-- Alexi Horowitz-Gazi: 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.
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: You could just create a new coin right on top of Ethereum's underlying infrastructure. And this new Ethereum blockchain helped set off a massive surge in new cryptocurrencies, starting around 2017 or so.
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: 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. It's Bitcoin for farmers.
--:-- Aisha Roscoe: Yeah. But people are basically trading them just on hype. And studies afterwards found that something like three quarters of all the ICO's initial coin offerings were scams or fraud.
--:-- Alexi Horowitz-Gazi: You can see that same quintessential pattern playing out again here. An era of utopian promises turning into a whirlwind of fraudful deceit.
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: 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.
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: This was the marriage of meme culture and the entire stock market.
--:-- Aisha Roscoe: The technological part was the rise of mainstream crypto exchanges like FTX and Coinbase.
--:-- Alexi Horowitz-Gazi: These platforms made it easier for retail investors to buy and sell cryptocurrencies. And that helped swell the market to new heights.
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: The rise of the meme coin was still to come.
--:-- Aisha Roscoe: Most crypto bros were still focused on mainstream cryptocurrencies like Bitcoin and Ether.
--:-- Alexi Horowitz-Gazi: 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.
--:-- Aisha Roscoe: Apes together strong. Planet of the speculative ape investments.
--:-- Alexi Horowitz-Gazi: Exactly.
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: 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.
--:-- Aisha Roscoe: In winter 2022, FTX collapses, and that's like the nadir of the crypto market. Crypto winter, some might call it.
--:-- Alexi Horowitz-Gazi: Yeah.
--:-- Aisha Roscoe: 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 are the winners and losers of this brazen new world?
--:-- Alexi Horowitz-Gazi: That's coming up after the break.
--:-- [Break music plays]
--:-- Aisha Roscoe: This message comes from NetSuite. What does the future hold for business? Can someone invent a crystal ball? Until then, over 42,000 businesses have future-proofed their business with NetSuite by Oracle, the number one AI cloud ERP, bringing accounting, financial management, inventory, and HR into one platform.
--:-- Alexi Horowitz-Gazi: With real-time insights and forecasting, you're able to peer into the future and seize new opportunities. Download the CFO's Guide to AI and Machine Learning for free at netsuite.com slash story.
--:-- Aisha Roscoe: This message comes from Lisa. Lisa mattresses are meticulously designed and assembled in the USA for exceptional quality. And each mattress is designed with specific sleep positions and feel preferences in mind.
--:-- Alexi Horowitz-Gazi: Plus they back it all up with free shipping, easy returns, and a 100-night sleep trial. Visit lisa.com for 25% off mattresses, plus get an extra $50 off with promo code NPR.
--:-- Aisha Roscoe: That's L-E-E-S-A dot com, promo code NPR.
--:-- [Break music plays]
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: Dogecoin, you'll remember, was first invented as a cheeky response to the wave of sketchy Bitcoin copycats.
--:-- Aisha Roscoe: And you can think of the current memecoin moment as a sort of like doubling down on the joke.
--:-- Alexi Horowitz-Gazi: When crypto exchange FTX collapsed, bringing down the whole crypto market along with it, it was like the ultimate emperor's new clothes moment.
--:-- Aisha Roscoe: Even Sam Bakeman-Fried, the person who seemed to be the face of crypto going legit, turned out to a committed fraud to the tune of billions of dollars.
--:-- Alexi Horowitz-Gazi: 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.
--:-- Aisha Roscoe: And early last year, that sort of nihilistic feeling fused with yet another technological leap forward.
--:-- Alexi Horowitz-Gazi: Zeke Fox says, this time in the form of a new website.
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: And more than 5 million coins have been created in like the year that it's existed.
--:-- Aisha Roscoe: 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 20s in London.
--:-- Alexi Horowitz-Gazi: We reached out to Pump.Fun, but they didn't get back to us.
--:-- Aisha Roscoe: And the idea behind the platform was basically to demolish the barrier to entry for people making new meme coins.
--:-- Alexi Horowitz-Gazi: To create a place where people could launch and then promote their own coins as a sort of social media experience.
--:-- Aisha Roscoe: Let's go to Pump.Fun. Will you give us a little safari?
--:-- Zeke Fox: Yes, definitely.
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: I know, it seems like something that only a child could enjoy. Maybe a man-child.
--:-- Zeke Fox: I think there's a lot of kids on there. Some who've made a lot of money.
--:-- Aisha Roscoe: Pump.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.
--:-- Alexi Horowitz-Gazi: I'm looking at their most recent coins, and, you know, there's What if we all hold 27 seconds ago? Doge night 46 seconds ago. Leader of hats one hour ago.
--:-- Aisha Roscoe: What's the kind of meme coin leaderboard today? Like some of these ones just sort of become like classics and they keep trading.
--:-- Alexi Horowitz-Gazi: Like Dogecoin is still top dog. I'm sorry. Top doge.
--:-- Zeke Fox: That was completely inevitable.
--:-- Aisha Roscoe: Shiba Inu, which is like a Dogecoin ripoff, is very high up there. Pepe, Dog Whiff Hat has proven to have some staying power.
--:-- Alexi Horowitz-Gazi: But I think Fartcoin is the hottest meme coin right now. Fartcoin's going to the moon.
--:-- Zeke Fox: Yeah. I mean, Fartcoin to me, it's like, how is this even funny?
--:-- Aisha Roscoe: And so I was asking my favorite meme coin trader source about this. I was like, do you think it's funny?
--:-- Alexi Horowitz-Gazi: And he said, sometimes the fact that they're not funny is what's funny. It's like horseshoe meme theory.
--:-- Aisha Roscoe: Pump.fun is a place where the newest juvenile inside jokes of the internet can be transformed almost instantaneously into tradable financial instruments.
--:-- Alexi Horowitz-Gazi: 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.
--:-- Aisha Roscoe: Irreverent internet culture meets the market? Could anything possibly be more Planet Money than that?
--:-- Alexi Horowitz-Gazi: Should we make a coin and find out? Let's go right to the edge of making a coin and then hover on the edge.
--:-- Aisha Roscoe: What do you think? Should it be a cute animal?
--:-- Alexi Horowitz-Gazi: Yeah, I mean, our mascot is the squirrel from the t-shirt project.
--:-- Aisha Roscoe: Oh, where can I get this squirrel?
--:-- Alexi Horowitz-Gazi: I brought a picture of my cat, but we can use a squirrel.
--:-- Aisha Roscoe: Yeah, just type into Google, type in Planet Money Squirrel. It's got a martini?
--:-- Alexi Horowitz-Gazi: It's a squirrel with a martini glass.
--:-- Aisha Roscoe: Wow, this seems like it has a lot of meme coin potential. Definitely.
--:-- Alexi Horowitz-Gazi: So what should we call it? Well, there's either animal spirits or there's PM Squirrel Coin.
--:-- Aisha Roscoe: PM Squirrel Coin? Okay, so the ticker will be PMSC. Naturally.
--:-- Alexi Horowitz-Gazi: For the description, this is the Planet Money Squirrel. Does that sound good?
--:-- Aisha Roscoe: Oh, God. We're playing with fire. We could launch a coin that just gets out of our hands. Just so you know, you can never take it back.
--:-- Alexi Horowitz-Gazi: We did not, in fact, launch the Planet Money Squirrel Coin. Not today, Satan.
--:-- Aisha Roscoe: But it was a shockingly easy prospect.
--:-- Alexi Horowitz-Gazi: By filling out a few description details and uploading a copy and pasted image from the internet, you too can be the proud-slash-parified parent of a new meme coin.
--:-- Aisha Roscoe: But raising that coin to a monstrously profitable adulthood is not so easy.
--:-- Alexi Horowitz-Gazi: 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.
--:-- Aisha Roscoe: It's very easy to create the coin, but what's hard is attracting attention for it.
--:-- Alexi Horowitz-Gazi: Now, there are three basic ways people garner attention in this world. And it comes down to how much clout the person might have.
--:-- Aisha Roscoe: For the first group, for the people who are cloutless in crypto land, Pump.Fun offered a solution.
--:-- Alexi Horowitz-Gazi: It had a live stream 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.
--:-- Aisha Roscoe: So Pump.Fun had like a built-in feature where the creators of the tokens could live stream themselves to promote their coins.
--:-- Alexi Horowitz-Gazi: And this went downhill fast.
--:-- Aisha Roscoe: People were doing like really gross things to try to get attention.
--:-- Alexi Horowitz-Gazi: There was someone claiming that they had kidnapped the developer of the coin and would torture them.
--:-- Aisha Roscoe: Oh God.
--:-- Alexi Horowitz-Gazi: Somebody killed a chicken. Dark.
--:-- Aisha Roscoe: Somebody held a gun to a fish.
--:-- Alexi Horowitz-Gazi: A kid had his mom flash the live stream. One that was a little sillier.
--:-- Aisha Roscoe: This kid created a coin. He was live streaming. 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.
--:-- Alexi Horowitz-Gazi: That, of course, is the precocious and a little devious 13-year-old from the beginning of our story.
--:-- Aisha Roscoe: Thanks for the 20 bandos.
--:-- Alexi Horowitz-Gazi: Pump.fun eventually took down the livestream function from its website in response to all of this mayhem.
--:-- Aisha Roscoe: Sort of a classic case of, this is why we can't have nice things.
--:-- Alexi Horowitz-Gazi: So that's the first group. The people without much clout who have to find some way to grab attention for their meme coin.
--:-- Aisha Roscoe: Now, there's a second group of meme coin creators.
--:-- Alexi Horowitz-Gazi: And their big strategy is to already be famous.
--:-- Aisha Roscoe: And we've mostly seen kind of like C-listers do this.
--:-- Alexi Horowitz-Gazi: 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.
--:-- Aisha Roscoe: Caitlyn Jenner had one.
--:-- Alexi Horowitz-Gazi: There was the ill Hawk Tua coin which crashed just hours after it launched.
--:-- Aisha Roscoe: And perhaps the most famous or infamous of all the new meme coins was the one launched by President Donald J Trump
--:-- Alexi Horowitz-Gazi: But the third and final group of meme coin creators are the real power players.
--:-- Aisha Roscoe: These are the shadowy groups of well-resourced insiders who know how to play the game.
--:-- Alexi Horowitz-Gazi: Because there's this whole ecosystem of crypto influencers on places like Discord, X, TikTok, YouTube.
--:-- Aisha Roscoe: And if these influencers start talking about 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.
--:-- Alexi Horowitz-Gazi: This meme is so fire, it's going to burn the internet down. Guys, I think this meme coin could pull some crazy numbers.
--:-- Aisha Roscoe: And now today this coin is already about to hit 800k market cap and break through a mil.
--:-- Alexi Horowitz-Gazi: And in crypto, these influential people are called KOLs, which stands for Key Opinion Leader.
--:-- Aisha Roscoe: And those people are often paid to promote the coins.
--:-- Alexi Horowitz-Gazi: And some people will tell their followers, I'm getting paid to promote this coin. And other people will not.
--:-- Aisha Roscoe: Zeke says there is one key leader whose opinion seems to be valued above all others in the world of meme coins.
--:-- Alexi Horowitz-Gazi: A man who has taken the joke so far as to helm a controversial new government entity named after that original Doge meme.
--:-- Aisha Roscoe: What is really ideal is if Elon Musk will talk about whatever the coin is about.
--:-- Alexi Horowitz-Gazi: Like, one of the big reasons Dogecoin is still the most valuable meme coin is because Elon Musk started tweeting about it in 2019.
--:-- Aisha Roscoe: But it's not just Dogecoin. A lot of the most successful coins have had some connection to Elon Musk.
--:-- Alexi Horowitz-Gazi: Elon Musk is like the meme coin market mover in chief.
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: So maybe it'll happen this time. And then that kind of becomes a self-fulfilling prophecy.
--:-- Aisha Roscoe: Now, regardless of which kind of meme coin creator we're talking about, the goal on Pump.Fun is generally the same.
--:-- Alexi Horowitz-Gazi: 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.
--:-- Aisha Roscoe: You can think of the site as a kind of massive launch pad, like a giant Cape Canaveral.
--:-- Alexi Horowitz-Gazi: But a lot of it is filled with the skeletal remains of meme coins that have failed to launch.
--:-- Aisha Roscoe: Something like 99% of coins are dead on arrival.
--:-- Alexi Horowitz-Gazi: Which means they basically have zero buyers.
--:-- Aisha Roscoe: Right. Like, I bet you a lot of them never sell a single token.
--:-- Alexi Horowitz-Gazi: But if a coin creator can get enough key opinion leaders on board, they might get some initial price liftoff.
--:-- Aisha Roscoe: Because this whole horde of key opinion followers might hop on the rocket in the hopes that they can hop off before the price collapses.
--:-- Alexi Horowitz-Gazi: 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.
--:-- Aisha Roscoe: Like one platform aptly named Moonshot to the biggest exchanges like Binance and Coinbase.
--:-- Alexi Horowitz-Gazi: The hope for the truest meme coin believers is that their coin will somehow manage to reach escape velocity and make it all the way to the financial moon, maybe even Mars, to join the doges and pepe coins of yore.
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: Because Pump.Fun gets a 1% cut of every trade made on the platform.
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: So just like as in a casino, on Pump.Fund, the house also always wins?
--:-- Aisha Roscoe: Yeah.
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: What everyone wants is that next one that's going to go up 10x, 100x, 1,000x.
--:-- Aisha Roscoe: And there are the stories of people who really have made a million bucks because they bought Dogwhiff Hat early.
--:-- Alexi Horowitz-Gazi: And when somebody hears that, it's pretty powerful. Creates this sense of FOMO.
--:-- Aisha Roscoe: But Dune Analytics studied blockchain data and found that only 3% of traders on Pump.Fun ever made $1,000.
--:-- Alexi Horowitz-Gazi: And keep in mind, meme coin trading is a zero-sum game.
--:-- Aisha Roscoe: Every dollar someone makes on a meme coin mathematically has to come at the expense of someone else buying it.
--:-- Alexi Horowitz-Gazi: Which means that this tiny minority of winners, that 3% of traders, is making their fortunes off the vast majority of meme coin investors.
--:-- Aisha Roscoe: Which raises the enormous question. Why do so many people continue to invest in a system that feels so clearly rigged against them?
--:-- Alexi Horowitz-Gazi: Why do people still invest in meme coins?
--:-- Aisha Roscoe: In your mind, 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?
--:-- Alexi Horowitz-Gazi: I mean, I definitely would say this is just gambling.
--:-- Aisha Roscoe: Everyone involved would agree with that, I think.
--:-- Alexi Horowitz-Gazi: But it's a really weird form of gambling.
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: In a way, a lot of what's going on here feels like a new twist on the classic pump-and-dump scheme.
--:-- Aisha Roscoe: 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.
--:-- Alexi Horowitz-Gazi: Call it a chumpin' dump.
--:-- Aisha Roscoe: No, I think that most of the people who buy this, like, they're not being fooled by the coins.
--:-- Alexi Horowitz-Gazi: They just think that, hey, I am not the last person who's going to buy this coin.
--:-- Aisha Roscoe: Someone else will come along later and buy this coin for more.
--:-- Alexi Horowitz-Gazi: Has anyone made a greater fool coin? I guarantee that they have.
--:-- Aisha Roscoe: And in fact, when we checked the Pump.Fun registry, there turned out to be no less than 12 competing Greater Fool meme coins.
--:-- Alexi Horowitz-Gazi: Half of them with the ticker sign FOOL.
--:-- Aisha Roscoe: Justine Yan produced this episode of The Sunday Story.
--:-- Alexi Horowitz-Gazi: The original Planet Money episode was produced by Willa Rubin and edited by Jess Jang with help from Keith Romer.
--:-- Aisha Roscoe: Fact-checking by Sierra Juarez and engineering by Neil Rauch.
--:-- Alexi Horowitz-Gazi: The Sunday Story team also includes Andrew Mambo, Jennifer Schmidt, and Liana Simstrom.
--:-- Aisha Roscoe: Our executive producer is Irene Noguchi.
--:-- Alexi Horowitz-Gazi: I'm Aisha Roscoe. Up first, we'll be back tomorrow with all the news you need to start your week.
--:-- Aisha Roscoe: Until then, have a great rest of your weekend.
--:-- [Closing music plays]
--:-- Aisha Roscoe: This message comes from NPR sponsor Rosetta Stone, an expert in language learning for 30 years.
--:-- Alexi Horowitz-Gazi: Right now, NPR listeners can get Rosetta Stone's lifetime membership to 25 different languages for 50% off.
--:-- Aisha Roscoe: Learn more at rosettastone.com slash NPR.
--:-- Alexi Horowitz-Gazi: This message comes from the Hartford.
--:-- Aisha Roscoe: Every day, they create unique risk solutions for unique businesses.
--:-- Alexi Horowitz-Gazi: They understand the challenges businesses face today and are ready to anticipate the risks of tomorrow.
--:-- Aisha Roscoe: Their teams know the ins and outs of specific industries, so the Hartford can help provide insurance solutions for midsize and large businesses.
--:-- Alexi Horowitz-Gazi: If a business needs it, chances are they've got it and get it.
--:-- Aisha Roscoe: Connect with your underwriter at the Hartford or visit thehartford.com.
--:-- Alexi Horowitz-Gazi: This message comes from Lisa.
