Celebcoins Are Destroying Crypto
Celebcoins have emerged as the latest trend to captivate the mainstream crypto space, with high-profile influencers like Iggy Azalea, Lil Pump, and Andrew Tate launching their multi-million dollar coins. While this phenomenon may appear novel, it is a natural evolution of the celebrity NFT mania from 2021. This article delves into the rise of celebcoins, their similarities to NFTs, and the potential impact on the broader perception of the crypto industry.
This cycle of celebrity interest in crypto must begin with an understanding of recent memecoin mania. Driven by the ease of creation and low transaction fees on networks like Solana, memecoins, valueless tokens with a funny token name and ticker, have exploded in popularity since the beginning of the year and have become the main vehicle of speculation and gambling in the crypto market. Overnight some of these coins can reach tens of millions of dollars in market capitalization driven by pure user interest and lack of liquidity; tens of thousands of others are created and never gain any traction. The success of one memecoin over another is purely arbitrary, and finding a good pick involves understanding the psychology of a memecoin investor and getting extremely lucky.
Two coins, BODEN and MAGA, were created around the auras of presidential candidates Joe Biden and Donald Trump. Though neither token was officially endorsed or acknowledged by their respective figureheads, their valuation fluctuates based on the media appearances and general news surrounding them. Though these are not celebcoins, they set the foundation and understanding that individuals would irrationally trade tokens associated with an idea even if the coins had no real association with the meme they represented.
Celebcoins are memecoins created and heavily promoted by celebrity figures. This trend started with Caitlyn Jenner, who posted an announcement about her memecoin on X in a post many thought was a scam. The coin quickly reached a market capitalization of $35 million, making all the insiders millions of dollars before they dumped on new buyers. The trend continued with other minor celebrities, including rapper Rich the Kid and DJ Davido, creating tokens. This highlights the significant role of celebrities in creating and promoting celebcoins, raising concerns about the potential misuse of their influence for personal gain.
Thus far, the biggest celebcoin has been Iggy Azalea’s MOTHER, which has a market cap of nearly $100M at the time of writing. It was mired in controversy upon launch as it was deployed with the help of a known scammer, but since then, Azalea has been engaging with Crypto Twitter and attempting to prove her interest and care in the project’s long-term success. Though this has involved some bad takes, including her belief that Ethereum founder Vitalik Buterin keeps transaction fees and sets them high arbitrarily, the token has stayed relatively popular, and Azalea shows no signs of abandoning the project.
Though there are other celebcoins worth mentioning, they all follow the same pattern reminiscent of the NFT craze from 2021. Back then, celebrities would buy or be given popular NFTs like Bored Apes and promote them on social media and shows. The best example of this, and a clear top signal for the market, was when The Tonight Show’s Jimmy Fallon spoke at length about his Ape to millions of viewers. Other celebrities, including Snoop Dogg and Kevin Hart, created now-defunct collections down 90%+ from their all-time highs. Celebcoins are a natural extension of these prior projects with several improvements that make them better than NFTs. Namely, by being fungible, they allow anyone to buy in without committing to a minimum amount of capital and create liquid exchange markets that were impossible with NFTs. As we’ve seen with these coin’s near-instant multi-million market caps, this creates a much higher ceiling for these coins, as anyone can buy in with as little as a penny and get exposure to whatever a celebrity may say or do. These traits, combined with near-instant transaction speed and cheap cost on Solana, have exploded the celebcoin market beyond what NFTs could ever accomplish in terms of total users and volume.
While celebcoins may seem like a relatively isolated sector of the crypto market, their impact on the mainstream perception of the industry cannot be overstated. Just like with NFTs, regular individuals who may know nothing about crypto are having their first exposure through these coins, many of which will end up losing their investors most of their money. This can lead to a level of distrust with the whole market, and prevent real-world adoption from taking place. For example, MrBeast, the biggest content creator in the world with over 250 million YouTube subscribers and an astounding 3 billion views, was forced to remove NFT ticketing from a planned gaming tournament after participants were protesting and boycotting the event because of the use of NFT technology. Even though NFTs are net beneficial to their issuers and owners, most people associate them with scams or grifts because that’s the only way they’ve been exposed to the tech. Celebcoins takes this concept and brings it to all cryptocurrencies, which will be why some people choose not to invest in Bitcoin or other projects with legitimate use cases.
The concept of a celebcoin itself is not predatory or wrong; the way that most celebrities use them to make a quick profit off gullible fans and take advantage of their status is. While some coins like MOTHER may be an exception, they will ultimately be drowned out in mainstream media and the minds of the consumer by the countless, never-ending barrage of coins and celebrities that dump their memecoin and eventually abandon the project, blaming its failure on blockchain and crypto instead of accepting responsibility for their grift. If history repeats itself, or if buyers feel slighted by celebrities, crypto could once again take the brunt of the backlash, and unjustifiably so. Nothing beyond tighter crypto regulation can fix this issue, and by the time the rules to prevent these projects are in place, the damage will already be done.
By Lincoln Murr
