Are SOCKS the New Tulips?

How socks became digital and memes became coins.

Ikram Al Mouaswas
Feb 23 · 4 min read
Photo by Mathieu Stern on Unsplash

In February 1637, in what was the Dutch Republic at the time, a single tulip bulb could sell for the equivalent of $1,000,000 today — or a price of a mansion on the grand canal. Tulip mania, as it was called, was the world’s first recorded bubble.

Today, a pair of socks [ticker: SOCKS], out of a collection of 500, is selling for $92,000. In January, it sold for $12,000. In 2019, for $12. You read right, no zeros.

Could SOCKS be today’s tulips?

Socks are sold as digital tokens, Unisocks, on a decentralized finance protocol called Uniswap. The first similar digital asset to show such a meteoric rise, starting the trend, was Dogecoin in 2013. Today, memo coins and non-fungible tokens like SOCKS are following suit.

Confused? So was I. Why wouldn’t you be? These words did not exist a few years ago.

So let’s break this down. Here is another 101 [after my GameStop 101 here], assuming little to no knowledge on any of these topics.

DeFi applications allow individuals to transact financially — borrow, lend, etc. — without the use of traditional banks and exchanges. Only the 2 parties transacting are involved. They are referred to as ‘decentralized’ due to the lack of a ‘central bank’.

Decentralized finance platforms were used to create decentralized exchanges, or DEX. The exchanges [or most of them] are built using a blockchain platform called Ethereum, utilizing smart contracts. This allows each transaction to be recorded, verified, and secured amongst its two users.

Two DEX examples gaining significant traction;

  1. Uniswamp: likely the most popular today, built in 2018. You can trade hundreds of different tokens using Uniswap, without the use of a bank or a broker, trading directly with the other party. According to cointelegraph, in January 2021, Uniswap was averaging $1 billion of trading a day.
  2. OpenSea: another DEX, focused on non-fungible tokens [explained next]. They describe themselves as a platform to trade “collectibles, gaming items, domain names, digital art, and other assets backed by a blockchain.” They are also backed by Ethereum.

The simplest way to put it: NFTs, or non-fungible tokens, are digital collectibles.

In the non-digital world, there are physical collectibles like Pokémon cards, rare stamps or coins, artwork, or unique sneakers and running shoes. In the digital world, you use an NFT: a token representing something unique. NFTs can represent anything you decide to tag them to, even concert tickets.

So why go digital? Here are some advantages to owning a digital token representing a physical item, vs. a physical item itself:

  1. Verifiable: it is easier to verify the authenticity of a digital token than the authenticity of a physical item, e.g. the authenticity of a rare coin. Each token has a distinct code, can be immediately traced back to the original issuer or owner.
  2. Un-losable: not a technical term, I might have made it up. You cannot ‘lose’ a digital token, each token is stored on the platform, it cannot be removed and you cannot misplace it.
  3. Ownership: you own your token, no one can contest that. There is no risk that someone can claim this ‘card’ or ‘coin’ is theirs, or claim you had taken it away from them.
  4. Global: you can own an item available anywhere in the world immediately; you are not limited by geography [so long as your country allows for such trading] — you can buy or sell anywhere and to anyone.

Oh and why are they called non-fungible? Because each NFT is unique, they are not fungible. Unlike cryptocurrencies, which are fungible. Bitcoins, for example, are all ‘the same’ and can be exchanged with something of the same value, e.g. you can use ~$40,000 of Bitcoin to buy a Tesla. NFTs, on the other hand, are not mutually interchangeable.

It all started with Dogecoin — the pioneer of memes.

Dogecoin was the first meme coin. In 2013, this was started as a joke crypto, to poke fun at Bitcoin, and somehow gained popularity… and value: over $5.6 billion of market cap as of 2 weeks ago. It is called a meme coin because it is based on the Japanese Shiba Inu meme. It remains the top meme coin today and is still used as a cryptocurrency.

From there, DeFi’s liked this concept, and users decided to create DeFi based meme coins: meme tokens. They are tokens, sold on a DeFi, which represent a concept, a meme, or even a joke. One of the first more ‘reputable’ tokens was COMP. A COMP token represents a voting right, for a vote on how to set up the governance of a tech startup: Compound Financial.

Since then, there have been many ‘joke’ tokens such as $TACO, $SUSHI, YAM, and YOLO. Funny as they may sound, there is real money in those circles.

And to add one more piece of confusion, there is now a separate asset called MEME, or more accurately $MEME. It is a protocol where you can create [or ‘farm’] NFT collections, traded on a DeFi. It has been recently used as a slang term for all tokens, causing a bit of confusion.

Before you dismiss the asset by its acronym: MEME’s market cap is $40 billion today [February 19, 2021].

As Isaiah McCall aptly puts it in his article, NFTs are real cash. For now, they are here to stay.

I might publish some more articles on this new crypto asset we live in. We all need to get familiar with these terms, as they are not likely going away any time soon.

Yard Couch

Just Pals on a Couch in a Yard

Ikram Al Mouaswas

Written by

Consultant by pay, writer by passion. Love listening to podcasts, books, and people. All about philosophy and psychology of life, happiness and humans.

Yard Couch

For those seeking long-term success. Open, honest, with nothing left hiding behind the curtains. Share your story with a few pals on a couch in a yard. #Bitcoin

Ikram Al Mouaswas

Written by

Consultant by pay, writer by passion. Love listening to podcasts, books, and people. All about philosophy and psychology of life, happiness and humans.

Yard Couch

For those seeking long-term success. Open, honest, with nothing left hiding behind the curtains. Share your story with a few pals on a couch in a yard. #Bitcoin

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