MemeCoins คือการกลับมาของปรากฏการณ์ Wall Street Bets หรือไม่?

Original author: Unchained

Original translation: Peyton, SevenUp DAO Overseas Returnees Union

Nathaniel Popper just published a new book, The Trolls of Wall Street, which explores the Wall Street Bets phenomenon. Interestingly, his book came out at a time when the current meme coin mania in the cryptocurrency space is strikingly similar. In this episode, Popper explores the rise of online investing communities like Wall Street Bets and the broader social changes they reflect, particularly among young men. He also touches on the parallels between the culture of banter in these communities and the rise of figures like Donald Trump, and dives into the potential dangers and psychological impact of memes in modern investing.

Translators note: Wall Street Bets (WSB) is a sub-forum on Reddit that focuses on stocks, options trading, and financial market strategies. The forum is known for its bold investment approach and challenges to traditional financial markets, attracting many retail investors. WSB members often discuss high-risk, high-reward trades, such as buying high-volatility stocks and trading options. The WSB forum is often regarded as an anti-traditional financial investment culture because most of its community members are retail investors rather than traditional institutional investors or professional traders. It has attracted widespread attention for driving abnormal fluctuations in some stock prices, especially the sharp fluctuations in GameStop (GME) stock in early 2021.

Shift from investment based on traditional financial fundamentals to investment based on concepts

Laura Shin: You released a new book about Wall Street Bets this week, which is great timing, given the recent return of Roaring Kitty (@TheRoaringKitty) to social media and the memecoin frenzy we’ve seen on Solana. I know the Wall Street Bets phenomenon took a major place in the public consciousness a few years ago, but it’s clear from your book that the same forces that created it are still here.

Nathaniel Popper: Yes, those forces still exist today.

Laura Shin: Right. So, please talk about what you think is driving this and how it persists in our culture.

Nathaniel Popper: Well, you know, I was also covering cryptocurrency before. My last book was Digital Gold, which was about Bitcoin. In this book, I wanted to take a few steps back and look at the whole phenomenon of online money—this new world of cryptocurrencies, stock markets, options markets, and so on. The cryptocurrency market has been spreading in all directions, and I was interested in the sociological aspects of that—this world of investing and trading that is made up primarily of young people. I wanted to understand the roots of these phenomena. My past research on cryptocurrencies was very useful in this regard because I think that the idea of forming around memes and communities, and investing based on ideas and speculative potential rather than financial fundamentals, runs through the community. This investment style is very evident in young people investing in stocks and cryptocurrencies. I was very interested in how this world affects each other, with cryptocurrencies affecting the stock market, and the stock market affecting cryptocurrencies and options markets. People often look at these phenomena too narrowly, thinking that meme stocks, Bitcoin, and meme coins are separate entities. But I think this is a whole new world of online money that people are exploring, and people are creating new communities online.

Young male with cryptocurrency and online financial community

Laura Shin: One thing that struck me at the beginning of your book was how you placed this activity in the context of the changing roles of young males in American society. At first, I was taken aback and didn’t understand how you came to that conclusion, but as I read deeper into the book and listened to the founders’ stories, it all made more sense. Can you talk a little bit about that argument? Do you think these same demographic changes influenced the rise of cryptocurrencies?

Nathaniel Popper: I’m glad you asked this question. I think this is a little-known point. Broadly speaking, young men in America are facing challenges. We are facing a loneliness epidemic as a society, and people are spending more time online. In particular, young men are skeptical of established authorities and traditional sources of truth. This skepticism is particularly evident in the cryptocurrency space, where many feel alienated from mainstream culture and the financial world. They are searching for a sense of purpose and identity.

When writing about Bitcoin, I saw that many of the early adopters were young males who felt disconnected from the wider world and were seeking meaning, power, and influence. This desire for identity and significance often found its answer in cryptocurrency, and is sometimes even described in quasi-religious terms. Many people who join these online communities do so because they feel something is missing in their real lives.

This online financial community is largely male-dominated. Traditional masculine values, which might be suppressed in the outside world, find space to thrive here. It is a proactive community where traditional masculine values are freely expressed. This does not fully explain all the problems with the development of cryptocurrencies or meme stocks, but it satisfies the basic impulses of these young men.

Laura Shin: I totally get what you mean. At first, I thought your book was just a narrative about what happened to Wall Street Bets. But, in the preface, you talk about the impact of demographic change on American men, which confused me at first. However, as I continued to read, especially in the forums where they discuss their lives, political beliefs, and opinions, it all started to make sense.

Nathaniel Popper: In recent years, it has been found that young men are falling behind their female peers in areas such as education and income. Although men still occupy many positions of power, this is changing among the younger generations. It is inevitable to connect this to the rise of young men in investing and cryptocurrencies. In this world of investing, young men are almost everywhere.

The connection between these cultural changes and the financial world is complex. While it’s not the only explanation, it’s hard not to see the connection when exploring the personal stories involved. Many people seek out this online world to fill a void in their real lives. For example, one of the main characters in my book is an alcoholic who finds a new world in these online communities.

Laura Shin: I dont think youre exaggerating. I was just surprised to see it tied into such broad societal changes. Theres definitely more to say about the reasons behind this, and well touch on other factors in a moment.

Robinhood’s Design and Controversy

Laura Shin: Nathaniel, you describe in your book the rise of Robinhood and how it has fueled this activity. Part of this stems from certain design choices that Robinhood made that may have caused more retail investors to lose money. Can you describe those choices in detail and talk about how you think that may have affected or already affected cryptocurrencies, especially given the popularity of cryptocurrencies on Robinhood right now?

Nathaniel Popper: Robinhood launched in late 2014, right in the middle of the 2013-2014 Bitcoin boom, when Bitcoin first broke $1,000. Many people who talked about Robinhood on the Wall Street Bets forum had either made or lost money in crypto, or had seen friends get rich in 2013 and didn’t want to miss out on the next big thing. This created an unprecedented level of FOMO as people saw regular people getting rich from the Bitcoin boom.

At the time, Robinhood was a very simple app that was initially only available on the iPhone. It stripped away all the charts, data, and analysis that traditional brokerages offer, leaving only a price chart and a big green Buy button. The designers wanted it to be like Tinder or Uber, where you could buy stocks with just a swipe. This was a far cry from the way brokerages worked before, which involved multiple steps, warnings, and fine print that made trading seem inaccessible.

Robinhood’s simplicity made investing more approachable. When you buy a stock, there are confetti effects and ding-dong sounds that give an extra dopamine hit. Many people talked about Robinhood eliminating trading fees, but the design choices were just as important. These changes made trading seem easy and approachable, quickly attracting a whole new generation of investors.

However, some have criticized Robinhood for making investing too easy. Traditionally, investing is supposed to be a rational decision that takes into account a company’s financial health, potential price volatility, and cash flow. Robinhood has set all of that aside and changed the philosophical approach to trading and investing. This new approach grew significantly starting in 2015 until the COVID-19 outbreak, and it ultimately feels like it has taken over the market.

The hidden dangers of memes in modern investing

Laura Shin: I wanted to ask you again about the role of memes in investing in your book. In crypto, we’ve seen meme coins become some of the best performers, yet critics often deride them as silly or fraudulent. Through your research on Wall Street Bets and the meme stocks they invest in, what do you think the value of memes is? How do retail investors understand meme stocks or meme coins differently than more “serious” investors might overlook?

Nathaniel Popper: This is a very complex and interesting question. There are a lot of dangers, investment losses, and sad stories hidden in meme-driven investment trends. Every stock and cryptocurrency has some level of meme factor. Investing has always involved understanding a company and the community it represents. Even if we don’t call it a “meme,” this psychological aspect of investing is always there.

I think the introduction of memes in investing started in the cryptocurrency world, highlighting how language connects us online. Social media is full of valuable communities, but traditionally we haven’t been able to directly benefit from them. Memes change this by monetizing the idea of community and identity.

Memes touch on a fundamental element that has always existed in investing: you invest in a company not just because of its balance sheet, but because of what it represents. Memes condense this idea into a purer form and turn it into an asset. However, the more you rely on memes rather than underlying financial substance, the more speculative and dangerous the investment becomes.

A significant problem is that communities promoting meme coins often elevate the reputation of those who stand to gain the most, thereby ignoring those who lose money. This is particularly evident in actions like Elon Musk’s with Dogecoin, Bitcoin, and even his own stock. Social media amplifies the voices of those who are making money and obscures the losses experienced by others. This imbalance creates a significant danger because we often ignore those who ultimately lose money in these speculative situations.

Trump’s Relationship with the Crypto Community

Laura Shin: You do have some similar stories in your book. I have to ask about Trump because a lot of what you talk about in the book is now in the news again. Trump embraced Bitcoin and cryptocurrencies during his campaign, which is in stark contrast to his previous presidency when he said that Bitcoin is a fraud on the dollar. Now, a portion of the crypto community is supporting Trump because he started to win over crypto voters. Can you draw some parallels between the Wall Street Bets group turning to Trump and the crypto communitys current turn to Trump?

Nathaniel Popper: It seems to me that a large part of this new online investing world is essentially trolling. That’s why the word “troll” is in the title of the book. I don’t use the word in an entirely pejorative sense. It’s about people who essentially see themselves as trolls. It’s worth stopping to think about what a troll is: it’s a universe where everything looks like a joke. When Trump announced his candidacy, it looked like a joke, and most people treated it that way. Yet beneath the surface of that joke, he tapped into something deep inside a lot of the American electorate. He was willing to say things that no one else would dare to say, and people wanted to hear that.

This serious-yet-joking stance has been present in Bitcoin, Trump, and GameStop since the beginning. It’s easy to get lost in the surface comedy and miss what really moves people. This is true for Bitcoin, Trump, and GameStop. People always write them off as jokes, but they keep coming back because there’s something deeper behind them.

Even when these things are successful, they are often ignored. Bitcoin was successful in 2013 and 2014, reaching $1,000, but when the price dropped, people thought they could ignore it. The same thing happened with Trump after January 6, 2021, and with GameStop. People thought they could ignore these phenomena after the initial frenzy, but years later, they are still relevant. There is something deeper that resonates with people, and that is the nature of trolls.

Whether Trump admits it or not, he shares a lot of commonality with the mentality of the Wall Street Bets community. They see him as one of their own, a man who can take his opponents by surprise while smiling. This simultaneous sense of humor and serious intent has deeply influenced our culture.

Laura Shin: Yes, your book is a great reflection of what’s happening right now.

Nathaniel Popper: Think of the guy behind Janet Yellen holding the Buy Bitcoin sign. It was just a joke, but nothing has gotten more attention for Bitcoin than it. In the internets attention economy, the bigger the joke, the more attention it gets, and the more real it is.

Laura Shin: That’s why we see meme coins going up in value. It has to do with the way the internet works, people make money through advertising, and advertising relies on attention.

Nathaniel Popper: Someone used to make money from advertising, but advertising doesn’t necessarily make someone lose money. However, with meme coins like Dogecoin, there are more losers than we can see.

Laura Shin: Yes, absolutely. Ive spoken to some people who bought Dogecoin at the top.

Nathaniel Popper: Even Elon Musk promoted it on Saturday Night Live until he admitted it was just a joke. Trolls are always willing to eventually admit they werent serious.

Laura Shin: Yes, but he probably made a lot of money from it. Anyway, Nathaniel, its been a great conversation. Your book is coming out at a very appropriate time, as these events are back in the headlines.

Nathaniel Popper: This history of the internet is very cyclical and cyclical. Bitcoin is a classic example of where we see this cycle continue over and over again.

Laura Shin: Yes, we are entering a bull cycle again, so we will see how these events play out this year. Thank you so much for joining us on Unchained.

Nathaniel Popper: Thanks for having me, Laura.

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This article is sourced from the internet: Are MemeCoins the Return of the Wall Street Bets Phenomenon?

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