Arthur Hayes Says ‘Memecoin Does Nothing Productive and is Intrinsically Worthless’

Arthur Hayes says that Memecoins tokens lack inherent utility beyond their memetic virality and is ´Intrinsically Worthless’, exemplifying this dynamic.

Furthermore, “Their value proposition rests solely on the ability to spread virally across the internet, relying on the hope that subsequent investors will drive up demand. Capital formation for memecoins is uniquely egalitarian, with the entire supply often released at launch, typically at a low initial market capitalization”.

Trading occurs primarily on decentralized exchanges (DEXs), where investors make high-risk bets on which meme will capture the collective consciousness of the crypto space, thereby generating buying pressure.

Arthur Hayes Provides ICOs Cure to Memecoin System

He observes a striking resemblance between the current crypto market’s initial coin offerings (ICOs) and the traditional finance (TradFi) initial public offering (IPO) system, characterizing both as potentially exploitative “rackets.” He argues that retail investors, in both contexts, ultimately bear the brunt of risk, acting as the primary bag holders. However, unlike TradFi, the decentralized nature of crypto offers alternative investment avenues.

From the perspective of a retail investor, the allure of memecoins lies in the potential for rapid, significant returns if one enters early.

Arthur Hayes says “We acknowledge Memecoin inherent lack of utility and the realistic possibility of total loss, but accept them as a calculated risk in pursuing financial gain”.

Critically, the absence of gatekeepers and pre-determined distribution schemes distinguishes memecoins from traditional offerings, preventing manipulation by established institutions or pre-determined pools of capital.

The intrinsic value of a memecoin, according to Hayes, is directly correlated to the virality of its associated meme. Understanding this requires only an appreciation of how memes function within social contexts, both online and offline.

In contrast to memecoins, Hayes examines what he terms “VC coins,” highlighting a stark difference in the underlying dynamics. He argues that traditional finance roles often require minimal specialized skills, attracting individuals more motivated by high earning potential than substantive expertise.

Furthermore, he contrasts this with professions demanding significant skill acquisition, such as medicine, law, or engineering, where compensation is often lower despite higher skill requirements. This disparity, he suggests, leads to a concentration of less skilled, yet highly compensated individuals within TradFi.

Hayes contends that social factors, not meritocratic principles, frequently determine access to TradFi. Family background, educational pedigree, and adherence to existing social hierarchies often outweigh raw intelligence or competence.