Crypto Terms: Letter M

What is Mimetic Theory?

Mimetic Theory MEANING:
Mimetic Theory - a theory that describes human behavior and culture, as well as how objects become desirable to humans when examined in the context of economics.
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Let's find out Mimetic Theory meaning, definition in crypto, what is Mimetic Theory, and all other detailed facts.

When examining human behavior and culture in the context of economics, Rene Girard's mimetic theory outlines how products become desirable to humans. According to this theory, mimetic desire is a subliminal replication of another person's desire in which we actively participate. To give you an example, a lot of people are crazy about buying an Apple iPhone despite its huge price just because it looks sleek and other people have it (or want to have it).

When applied to the world of decentralized finance, the mimetic theory explains why the price of an asset (e.g. Bitcoin) can vary so dramatically. Think about it, there are a lot of different groups with their own mimetic desires. Some mainstream investors believe that Bitcoin is viable and profitable while other early adopters advise each other to “HODL” the coin even when it’s falling in value. Thus, different mimetic desires make people act differently, which results in constant changes in asset prices.

An example of Mimetic Theory

A great illustration of the mimetic theory in the world of crypto was when Elon Musk changed his mind about Bitcoin. At first, he stated that he supports this currency, which was great for its popularity. However, as soon as he said that he changed his mind about it and he doesn’t support it anymore because of the environmental concerns, Bitcoin prices began to fall.

Despite the fact that Musk had no direct influence over Bitcoin values, he served as a mimetic model for individuals who aspired to live an entrepreneurial, high-tech lifestyle using the ways that Musk promoted. This backlashed at him later because he was accused of manipulating the market.

The Downside of Mimetic Theory

Girard's Mimetic theory has a basic flaw in that it exaggerates its claim by attempting to explain every facet of human nature and assuming that there are no acceptable alternative explanations for the occurrences he discusses. 

For instance, in the theory, it is assumed that EVERYONE makes independent decisions based on how others value specific goods. Let’s get back to the example of the Apple iPhone. Yes, there are a lot of individuals that choose it just because it is popular. 

However, not everyone does, there are a lot of people who don’t care about the popularity of Apple and would probably choose an equally good smartphone from another brand that costs much less. Therefore, the mimetic theory overlooks the possibility that individual liberty could triumph over a communal culture which values certain objects.