This in-group competition, more than anything else, is why the term hipster is primarily a pejorative -- an insult that belongs to the family of poseur, faker, phony, scenester, and hanger-on. The challenge does not clarify whether the challenger rejects values in common with the hipster -- of style, savoir vivre, cool, etc. It just asserts that its target adopts them with the wrong motives. He does not earn them.
The increased use of hipster as a pejorative led to our present situation, in which a whole vaguely defined population is being maligned and dismissed. But in his fascinating 2012 book, Sincerity, R. Jay Magill Jr. breaks down the hipster conundrum more charitably. While hipsters “wished for a more authentic kind of life than the one in which they were raised,” he wrote, “they were also aware, nursed on the teat of postmodern theory, that their ideals were unnatural constructs, and therefore hokey and embarrassing.”
In other words, it wasn’t so much that hipsters loved irony. It was that hipsters found themselves forced into a fundamentally ironic position. They had the same abiding desire for real things as hipsters in the past did, but they also had a strong sense of futility in ever possessing them. So basically they got stuck. If they really went for sincerity, they fail. If they were seen as insufficiently sincere, they fail. The countercultural seed is there, as it’s been for previous generations. It just couldn’t take root like it used to.