This post originally appeared on Medium.
Explanation of the HODL meme phenomenon may lie in the military history.
Gnudarve. (2017). An analysis of the impact of the HODL meme on the price stability of Bitcoin. r/bitcoin pic.twitter.com/CbbrbyEvHp
— Brian Fabian Crain (@crainbf) December 2, 2017
Gnudarve made an insightful observation. Reading this comment I realized that I experienced this myself, too. I was puzzled. I could not explain why it is so powerful.
It took me time to realize that it is similar to an officer yelling at his soldiers “HOLD THE LINE!”
Contrary to what Hollywood may have us believe, pre-gunpowder battles were surprisingly bloodless. In fact, battles looked more like two masses of people trying to push each other back with relatively few people getting killed.
Until one side started running away.
If you were a soldier watching a mass of enemy charging to your lines, you had a very important choice to make: do I hold or do I run?
That is not an easy choice. Both can mean life or death. It depends on how your comrades are going to behave.
If the line breaks and you are the first one to run, you have a better chance of staying alive.
If it holds and you run, you will likely be executed.
That is not an easy choice. Your life depends on it. There is no clear answer. And you have to choose RIGHT NOW.
I imagine that it must have been reassuring to hear the officer screaming “HOLD THE LINE” and everybody responding in a cheer.
It rings a bell to what is going on when the price of a cryptocurrency starts dropping by 30% within a couple of hours. I am not implying that it is the same stress that the soldiers experienced. But the psychological mechanism is similar.
It is reassuring to see somebody posting an encouraging meme and a mass of people commenting underneath. You get the feeling that you know where others stand.
It may seem trivial, but it is not.
History is full of examples proving that a more disciplined army can beat a much larger force.
The Roman army is famous for that. They became an unstoppable military force after Marian reforms in 107 BC. Gaius Marius professionalized Roman army and introduced a new structure of units. One of the innovations was the creation of Centurions.
Centurion was a professional officer who both trained and led his soldiers in battle. They were known for brutal, but effective methods of demanding discipline. This gave the Roman army superpowers.
When these first line officers got killed, often the whole unit fell apart and fled. That is true both for the Roman army and many other armies that came after them.
Meme creators play a similar role to a Centurion. All the people up-voting, commenting, retweeting, liking etc. are like the soldiers uniting in a cheer.
It is a binary piece of information and memes are an efficient tool for passing it. It is a way of solving the Prisoner’s Dilemma at scale.
Romans and many other armies divided their raw and veteran units. The main reason was that veterans were less likely to break. The more experienced units a given army had, the stronger it was.
Armies and crypto communities are at some level the same thing: a group of people acting towards the same goal. Or using Kevin Simmler’s terminology, a superorganism.
In this context, it is not unreasonable to assume that memes and intensity of reactions could be an indicator of the maturity of a given community. I.e. is it a veteran unit or raw recruits.
This, in turn, leads to a conclusion that it could be a signal for predicting how resistant a coin is going to be during a crash.
This Reddit thread may not be just a joke after all:
“BTC dropping due to lack of quality 11k memes. Closest support line is at 9k Vegeta memes.”
PS If this post sparked your interest in military history, then boy I have a recommendation for you. Hardcore History podcast is phenomenal! Usually, I recommend to start with Wrath of Khans series, but in this context, you might want to check out The Celtic Holocaust.