Cryptocurrencies, tokens and memecoins

1. Two different questions: infrastructure and narrative

To understand a cryptoasset, separate two dimensions: how it works technically and what sustains its economic or cultural interest.

The distinction between a native coin and a token belongs to the first dimension. The label memecoin belongs mainly to the second: it describes a narrative associated with memes, communities and social attention. The categories are not mutually exclusive.

Example. Dogecoin can be described as a memecoin because of its cultural origins and as a native coin because of its infrastructure. SHIB is an example of a token associated with a meme narrative.

2. Native coins, tokens and memecoins

It is therefore incorrect to claim that all memecoins lack their own blockchain or consensus mechanism. Dogecoin has its own network and uses Proof of Work with the Scrypt algorithm.

The label token is also insufficient to infer meaningful utility, just as native coin is insufficient to infer economic safety.

3. What a token standard contributes

ERC-20 defines an interface for fungible tokens on Ethereum, including balances, transfers, supply and allowances. It supports interoperability between contracts and applications.

The standard does not guarantee that a project has a sustainable model or that its particular implementation is secure. A contract may include administrative permissions, transfer conditions or other rules that require examination.

Base-network security, contract security and market risks should be distinguished. A token inherits aspects of its underlying infrastructure but may add vulnerabilities of its own.

4. Attention, community and price formation

Memes are formats that are easy to recognise, share and modify. A community can turn them into a collective identity and a narrative of belonging.

When that narrative is attached to a tradable asset, attention may increase demand. But attention can also shift elsewhere. Liquidity, ownership concentration and participant incentives influence how that shift translates into price movements.

An active community does not by itself demonstrate stable demand or lasting utility. Popularity is a variable to analyse, rather than a guarantee.

5. Three mechanisms worth distinguishing

• Pump and dump: promotion and rising prices followed by sales that affect later entrants.
• Rug pull: withdrawal of resources or abandonment by actors with the ability to do so.
• Contract restrictions: rules or permissions that may prevent operations, change conditions or concentrate control.

These mechanisms differ and can occur together. They are not exclusive to assets with meme narratives, and analysing them requires examining facts and the specific implementation.

6. Questions for a technical and economic reading

1. Is it a native coin or a token, and on which network does it operate?
2. What can the contract administrator do?
3. Who controls the supply and liquidity?
4. What distinguishes genuine activity from a promotional campaign?
5. What hypothesis supports demand, and what evidence could refute it?

A block explorer provides transaction and contract data. It does not by itself certify a project’s solvency or the quality of a financial decision. Locked liquidity does not eliminate every risk either.

7. A more useful classification

The question “memecoin, token or cryptocurrency?” mixes narrative with infrastructure. A more precise description might be: “an ERC-20 token with a meme narrative, concentrated supply and these administrative permissions”.

This approach lets us analyse verifiable characteristics instead of substituting a label for analysis. It also avoids treating every asset in a category as though it shared the same security, utility or operation.

References

• Dogecoin: what miners do and how Proof of Work operates.
• Ethereum: ERC-20 token standard.
• Long, Wong and Cai: Bridging Culture and Finance, retained from the original note.
• Krause: Beyond the Hype: A Meme Coin Reality Check for Retail Investors, retained from the original note.

This revised edition corrects the technical classification in the February 2025 note. The original text remains available in the archive.