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Three days before taking the oath of office, President Donald Trump launched<\/a> his own crypto asset: $TRUMP<\/a>. By the eve of his inauguration, Trump\u2019s share of the so-called memecoin was worth $58 billion<\/a>, making him, on paper, one of the richest people on the planet. Although the price of the Trump memecoin has fallen from its peak, the dangers of the president\u2019s anything-goes approach to crypto has never been more apparent.<\/p>\n
Trump could use this crypto scheme to extract cash from not only his most loyal supporters but also anyone who might want to curry favor with<\/a> his administration in the coming months. Even many people in the crypto industry, which helped get Trump elected<\/a>, have already spoken out about how scammy and predatory<\/a> Trump\u2019s memecoin project is. Trump and friends own a vast majority of the new memecoin supply, which means when they decide to sell their holdings, the price will fall, leaving Trump much richer (in actual money) and Trump memecoin investors poorer. It has the makings of a classic pump and dump scenario<\/a>.<\/p>\n
\u201cI wouldn\u2019t call this a scam,\u201d said Omid Malekan<\/a>, an associate professor at Columbia Business School. \u201cBecause to me, anytime someone calls something a scam, there’s an element of deception. There\u2019s no deception here.\u201d<\/p>\n
Indeed, this is all happening in plain sight. The Trump memecoin\u2019s official website<\/a>, featuring the slogan \u201cCelebrate Our Win & Have Fun,\u201d includes a schedule of when more \u201cTrump Memes\u201d will be released. There is also some fine print clarifying that CIC Digital LLC and Fight Fight Fight LLC, both Trump-affiliated organizations, own 80 percent of the memecoin supply. There\u2019s a link to a terms of service, which is over 5,000 words long. So it\u2019s clear that lawyers were involved in setting all this up.<\/p>\n
Such a brazen scheme sends a grim message to the country: In Trump\u2019s crypto-first America, ethics are no barrier to the pursuit of wealth. The theme carries echoes of previous crypto-based swindles, including Sam Bankman-Fried\u2019s Ponzi scheme<\/a>, where singular ambition reaped rewards before consequences. The recklessness of Trump\u2019s latest cash grab is surely a sign of things to come, too, as the president rolls back regulations on crypto that protect investors and keep traditional banking somewhat sheltered from the chaos of the crypto industry. It won\u2019t be long before the crypto market crashes again<\/a>, and this time, it could bring the entire economy down with it.<\/p>\n
If all this excitement is making you think about buying some memecoins, please don\u2019t. A memecoin is a type of digital asset that\u2019s built on a cryptocurrency\u2019s blockchain, but it is not a full featured cryptocurrency, like bitcoin<\/a>. Memecoins are typically associated with a joke or a mascot, and while they can be bought and sold, memecoins don\u2019t power a crypto ecosystem in the way that ethereum<\/a> does. They are all but make-believe, which makes the idea of Trump\u2019s new memecoin being worth tens of billions of dollars that much more absurd. <\/p>\n
Unfortunately, Malekan added, a lot of Trump supporters buying the memecoins are new to the crypto world. That means they might not understand the risks involved in crypto investments or how the industry even works. Around the same time of Trump\u2019s launch, crypto wallet and trading platform apps, like Moonshot and Coinbase, rose to the top of Apple\u2019s App Store<\/a> rankings. Most seasoned crypto investors use these apps regularly, so there\u2019s reason to believe the new downloads are from newcomers. It\u2019s also telling that Trump is allowing people to buy his cryptocurrency with a debit card, when memecoins are usually traded for other cryptocurrencies, according to Molly White, a crypto researcher and author of the Citation Needed newsletter<\/a>. <\/p>\n
True believers would say that Trump is bringing more people into the crypto tent. If a Trump supporter hasn\u2019t tried buying crypto for any reason, Trump\u2019s making it easy for them to get their money in the game. But that also means that potentially millions more Americans are betting on an asset that\u2019s inherently very risky and volatile. Bitcoin, by all measures the gold standard of cryptocurrency, is incredibly volatile<\/a>, and value can fluctuate by thousands of dollars in span of just a few hours. And while the Biden administration took steps to reign in crypto\u2019s explosive growth<\/a>, all signs point to future chaos as Trump prepares to roll back regulations<\/a> that protect investors.<\/p>\n
It will take some time for that to unfold, but the Trump memecoin grift is well underway in the meantime. First lady Melania Trump now has her own memecoin, $MELANIA<\/a>, which also surged by about 50 percent then plummeted in value. Even the pastor who delivered the benediction at Trump\u2019s inauguration, Lorenzo Sewell, launched a memecoin called $LORENZO in an attempt to cash in. It lost 93 percent of its value<\/a> in less than a day.<\/p>\n
And by the way, if it\u2019s not already clear by now, memecoins are useless. They are not an actual cryptocurrency, like bitcoin, but rather something known as a crypto token, which is built on top of an existing cryptocurrency\u2019s blockchain. Anyone can launch a memecoin<\/a>, and it can be a way to raise money for a project or to help someone out. Buying and selling memecoins is also a hobby, kind of like collecting baseball cards, but you can\u2019t actually hold the memecoins in your hand or even look at them since they\u2019re just a string of random digits stored in a digital wallet. <\/p>\n
In the best of worlds, memecoins are fun. The very first memecoin \u2014 dogecoin \u2014 started out as a joke<\/a>. A couple software engineers created this digital currency back in 2013 to make fun of the lofty, world-saving ambitions of bitcoin. They named it after a Shiba Inu dog named Kabosu that had become the \u201cdoge\u201d meme<\/a> a couple years earlier. Dogecoin currently has a market cap of around $53 billion<\/a>, according to CoinGecko. But Dogecoin is also an actual cryptocurrency that you can use to buy and sell stuff. <\/p>\n
A version of this story was also published in the Vox Technology newsletter. <\/em>Sign up here<\/a><\/em><\/strong> so you don\u2019t miss the next one!<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"