Mimetic Theory

Mimetic theory, developed by Rene Girard, offers an explanation for human behavior and culture. It explores how individuals develop desires for certain things and their tendency to imitate the desires of others. According to Girard, mimetic desire refers to the subconscious imitation of someone else’s desire in which we actively participate. For example, if someone around us expresses a strong desire for Nike Air Jordans, we may also develop a desire for them, despite any inherent interest in the shoes.

When applied to decentralized finance, mimetic theory can help us understand the rapid price fluctuations of assets like Bitcoin. Bitcoin is influenced by various groups with their own mimetic desires. Mainstream investors, for instance, are gradually recognizing the viability and profitability of Bitcoin. Additionally, early adopters who believe in the coin’s potential advise each other to “HODL” (hold on for dear life) even during market downturns. This collective behavior of imitating the actions and desires of others can lead to significant shifts in the price of Bitcoin and other cryptocurrencies.

What are examples of Mimetic Theory in Blockchain?

One example that illustrates the impact of mimetic desire in the blockchain industry is Elon Musk’s commentary on Bitcoin. Musk initially expressed support for the currency but later changed his stance, citing environmental concerns. As soon as he made this comment, the prices of Bitcoin dropped. Although Musk didn’t have direct control over Bitcoin prices, he served as a role model for those who aspired to achieve an entrepreneurial, high-technology lifestyle through methods he recommended. Musk faced criticism for his tweets and was accused of market manipulation and negatively impacting people’s lives.

Another example can be seen in the rise of decentralized finance (DeFi) protocols. As more individuals and institutions recognize the potential of DeFi to disrupt traditional financial systems, the desire to participate in DeFi platforms increases. This mimetic desire leads to a surge in investments and usage of DeFi protocols, causing the overall value locked in DeFi to skyrocket. Mimetic behavior plays a crucial role in the adoption and growth of new blockchain technologies and services.

What is the criticism of Mimetic Theory?

While mimetic theory provides valuable insights into human behavior, it is not without its critics. One fundamental criticism is that mimetic theory tends to overstate its claims by attempting to explain every aspect of human nature. It assumes that there are no other plausible explanations for the phenomena it highlights. For example, the theory assumes that all individuals make autonomous decisions based on how others assign value to certain objects. While it may be true that some individuals highly value Nike Air Jordans because those around them also do, the theory fails to consider those who do not place the same value on the sneakers because they are not interested in collecting branded footwear. In such cases, the mimetic theory overlooks the possibility that individual autonomy can override the collective culture’s valuation of an object.

What is the conclusion?

Mimetic theory provides a valuable framework for understanding human behavior and culture in the context of blockchain and decentralized technologies. It helps us recognize the influence of imitating the desires and actions of others, which can lead to significant shifts in the blockchain industry. However, it is important to acknowledge the limitations of mimetic theory and consider other factors that may influence individual decision-making. By understanding the role of mimetic desire, we can better analyze market trends, price fluctuations, and adoption patterns in the blockchain space.

Author: Gunnar Jaerv is the chief operating officer of First Digital Trust — Hong Kong’s technology-driven financial institution powering the digital asset industry and servicing financial technology innovators. Prior to joining First Digital Trust, Gunnar founded several tech startups, including Hong Kong-based Peak Digital and Elements Global Enterprises in Singapore.