PEPE and the Psychology of Memes

What Do Crowd Behavior, Impulse Buying, and Tulip Bulbs Have to Do With a One Billion Dollar Meme Coin?

Article by Frank America | Edited by Trewkat and Hiro Kennelly | Cover Art by Chameleon

It’s a feeling. You’re buying a feeling. And what’s that worth?”— Ben Horowitz (a16z)

History of Purchase Psychology

The history of purchase psychology is both alarming and fascinating. Why a particular market audience gets obsessed with a particular object is an ethereal question about the nature of human consciousness and emergent organizational behavior. Take, for example, the Beanie Baby craze, which was brought on by forced market scarcity, a newly arrived marketplace called eBay, and the fact that auction sites tend to drive up prices. Then there was the Tickle-Me Elmo fiasco, where people actually got trampled by crowds trying to buy this arguably not cute toy in a box of plastic. At the time Elmos were selling for 10X the $37 retail price. Today you can get one brand new on eBay for $15.

Tickle Me Elmo retailing for $15, once $370

Definition of Meme and Memetics

Beyond physical objects, there is a similar trend on the internet around memetics and memes.

Definition of memetics

Definition of meme

Memes is defined as, “an image, video, piece of text, etc., typically humorous in nature.” Memetics is defined as, “the study of memes and their social and cultural effects.” 

Similarly, a meme can be defined as “an element of a culture or system of behavior passed from one individual to another.” From Rick-rolling to The Most Interesting Man, to Condescending Willy Wonka, memes have become part of the fabric of internet culture. Although the origins lie in the far corners of the internet on 4chan and Reddit, they’ve become pervasive, and now even live on chain.

Rickrolling started as Duckrolling on 4chan.

Since the advent of the blockchain, some memes have found a home as tokens, and currently the top two meme coins occupy a $15.6 billion market cap. What began as a joke  —  DOGE coin and its Ethereum-based follow up meme coin SHIB  —  became a collision between market forces and memetics.

The Rise of PEPE

PEPE coin is an Ethereum-based token launched on April 17, 2023. PEPE is based on the popular meme Pepe the Frog.

Pepe originated as a comic book character created by Matt Furie.

Pepe originated as an innocuous character in a comic book created by Matt Furie, and after making its way through 4chan, to Reddit, and finally Twitter and beyond, has since been popularized by celebrities such as Katy Perry, Nicky Minaj, and even Donald Trump. That last endorsement caused Pepe to be swept up  —  whether satirically, underhandedly, or purposefully  —  in an “alt right” movement, which landed the frog as a “symbol of hate” according to the Anti-Defamation League (ADL).

However, when asked about the “so-called alt-right angle” in an interview with The Atlantic, Pepe’s creator, Matt Furie, saw it differently, saying “My feelings are pretty neutral, this isn’t the first time that Pepe has been used in a negative, weird context. I think it’s just a reflection of the world at large.” Memes, it seems, and their memetic costumes, mutate and vary according to their posters.

“My feelings are pretty neutral, this isn’t the first time that Pepe has been used in a negative, weird context. I think it’s just a reflection of the world at large.”


That was all back in 2016, and the world of memetics had different plans for Pepe. As we’ve seen many times, once the internet grabs something it’s hard for it to let go. Now in 2023, PEPE is the fastest growing meme coin of all time. In the span of three weeks, PEPE gained a billion dollar market cap and was listed on Binance, KuKoin, and Coinbase. PEPE could be a flash in the pan, but either way, let’s try and figure out why these kinds of meteors happen.

PEPE was quickly listed on Binance and Kukoin

The Why of Meme Coins

It took DOGE 4 years to hit a $1B valuation in market cap, and it took SHIB 8 months. PEPE did it in three weeks. How are meme coins, which arguably possess absolutely no utility except humor, able to command so much capital? As the creator of the Pepe meme notes, this behavior around memes could be a reflection of where the world is at today. That makes sense since the crypto/web3 world is full of many who got explosively rich quickly, obtained outrageous amounts of “funny money”, and so decided to deploy it into humor and culture on the speculative possibility that they wouldn’t be the last one holding the bag … or that if they were, that it was worth a good laugh.

Top three meme coins by market cap as of May 11th, 2023 total over ~ 15 billion dollars.

Memes are a powerful tool that tap the desires and psychology of the human experience. As Ben Horowitz of a16z noted on a podcast with Marc Andreeson, “It’s a feeling. You’re buying a feeling. And what’s that worth?” Combine the history of the internet with the potential for making money and you have a new language that is stronger than a thousand words, or in this case, at the time of writing for the top three meme coins, that is worth 15 billion dollars. 

How does this much money come from a utility-less joke? Are there correlations between crowd behavior and mass purchase psychology? What catalyzes a random group of people to behave in a particular way and how does this type of behavior translate to the fenceless and timeless internet?

One insight may come from looking at crowd movements. Researchers at the University of Leeds conducted experiments on groups of people walking around a large hall where only some of the people were given instructions to take a particular route. 

They discovered two things: 

  1. The coordinated group of people caused the herd to form a well-defined path that the majority of participants didn’t even realize they were creating.

  2. As more people joined, fewer ‘informed participants’ were required to influence the group. 

This research was originally conducted to gain correlative insight into the seemingly random yet fluid movement of birds in flight as well as the movements of flocking sheep.

“Scientists at the University of Leeds believe they may have found why humans flock like sheep and birds, subconsciously following a minority of individuals.” (PsychCentral)

How might this group psychology translate to the web? Another study in 2013 looked at behavior around up- and down-votes on internet forums. Muchnik et al. found that it was easy to manipulate repeated up-votes by placing the first one but could not do so for down-votes. This seems to lend itself to the idea that it’s easy for things to trend upward, and that positive momentum is more easily influenced than negative. This makes sense when we look at it through the lens of a rising meme coin. People see the ‘up-votes’, and want to join in.

Academic studies that looked at impulse buying  —  that is, when people spend more money than they plan  —  have found that impulse buying is more likely to occur in a physical store than in an e-commerce situation. The reasoning behind this is an impulse buyer wants the thing now. But when we look at this tendency against the landscape of digital assets, that purchase desire is satisfied instantly. In some ways meme coins are the perfect storm of the ‘follow the leaders’ herd mentality, crowd-led upvoting, and of instant purchase satisfaction.

It All Comes Back to Tulips

And yet this behavior isn’t new. Let’s rewind to Holland in the mid 1600s, to what is famously known as ‘The Tulip Craze’. It does seem a little crazy, but tulip bulbs became a high-demand market object. The Dutch had recently gained independence from Spain, and at port cities like Amsterdam a new merchant class emerged with a considerable amount of wealth. Involvement in affluent society meant owning a tulip garden, and as the story goes, the demand for tulip bulbs was frenzied. It now seems the so-called “tulip craze” may not have been as widespread as historically described, but a high-end market for tulip bulbs did emerge in the 17th century, and as a result many merchants began to trade for them.

A tulip grown from seed took 7–12 years, but the developed bulb could flower within a year. This bulb became a sort of “futures market of flowers” and resulted in high levels of speculation. Everyone was gunning for a cultivar (hybrid), which blossomed in multi-color, regardless of the fact that type of flower actually spawned from a diseased bulb. Eventually prices were driven so high no one could participate in the market and the bottom fell out. Many promises to pay were not kept.

The Semper Augustus was the highest valued Tulip bulb.

“As the tulip market grew, speculation exploded, with traders offering exorbitant prices for bulbs that had yet to flower.”

Cultivating Meme Coins

Now frame this up against memetic tokens like SHIB and PEPE. Using the analogy of seeds vs bulbs, we can liken the slow-build utility of an L1 blockchain to a seed. For example L1s like Bitcoin and Ethereum take years if not decades to fully mature. In contrast, these ‘bulbs’  —  meme tokens grown on an existing L1  —  can prosper far more quickly and as a result generate great speculation. The same thing is occurring now on the Bitcoin blockchain with BRC-20 tokens: a sort of mashup of an ERC-1155 and a bulk-trade ERC-20 token. No doubt, all those new merchants who arrived in 1600s Holland and brought an influx of wealth would love to say gm to today’s newly minted billionaires.

Perhaps the most applicable analogy is that the cultivar, that most coveted multi-colored tulip, which had to be speculated upon before it revealed its true colors, was a diseased strain. Perhaps these meme coins are the speculative futures market of a diseased strand of utility. Though our internet loves its DOGE coin  —  propped up by hucksters like Elon Musk name dropping on SNL before it hits an ATH and goes plummeting  — perhaps it’s really all just an influx of naively optimistic capital propped up by mass-market psychology, herd mentality, and depressed impulse consumerism, where we click, upvote, retweet, and buy in simply because other people seem to like it.

Author Bio

Frank America is an author, researcher, comedian, and musician. He has a background in English Literature, Philosophy, and Communications. Frank is Editor-in-Chief of The Rug News, and a Staff Writer at Bankless Publishing.

Editor Bios

Trewkat is a writer and editor at BanklessDAO. She’s interested in learning as much as possible about crypto and NFTs, with a particular focus on how best to communicate this knowledge to others.

Hiro Kennelly is a writer, editor, and coordinator at BanklessDAO, an Associate at Bankless Consulting, and is still a DAOpunk.

Designer Bio

Chameleon is a designer and creator in the web3 space.

BanklessDAO is an education and media engine dedicated to helping individuals achieve financial independence.

This post does not contain financial advice, only educational information. By reading this article, you agree and affirm the above, as well as that you are not being solicited to make a financial decision, and that you in no way are receiving any fiduciary projection, promise, or tacit inference of your ability to achieve financial gains.

Bankless Publishing is always accepting submissions for publication. We’d love to read your work, so please submit your article here!

More Like This

Crypto Twitter Talks 2023 Trends by tommasogualtieri.eth

Ultimate NFT Red Flag Check List by kalex1138.eth

The Evolution of Money by Frank America

Collect this post to permanently own it.
IndyPen CryptoMedia logo
Subscribe to IndyPen CryptoMedia and never miss a post.