Donald Trump’s ridiculous ‘meme’ coin $Trump lays bare the rotten underbelly of cryptocurrency

Within hours of its launch on Friday, January 17, the price of Trump’s oh-so-inventively named meme coin $Trump had skyrocketed by as much as 600 per cent and reached a notional total market capitalisation of $US32 billion ($50 billion).

By Saturday, its market value was $US12 billion, while the first lady’s accompanying meme coin (called, you guessed it, $Melania) was valued more conservatively at $US1.7 billion.

According to the coin’s official website, an affiliate of the Trump Organisation owns 80 per cent of the coin. By the following Monday morning, the president’s share of the $Trump coin was worth tens of billions of dollars.

To put it in starker terms, over just three days, Trump’s personal wealth grew by as much as 89 per cent, making him among the 25 richest people in the world (on paper, at least).

Putting aside the glaring ethical questions of a world leader monetising their election so blatantly, there are a few other issues at play.

For starters, when the coin first launched, its legitimacy was questioned to the point that Trump himself had to come out and publicly confirm its authenticity on social media, which is never a great sign where investing your hard-earned money is concerned.

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Another issue is with the coin’s fine print, which informs prospective purchasers that its sole purpose is “to function as an expression of support for, and engagement with, the ideals and beliefs embodied by the symbol $Trump and the associated artwork, and are not intended to be, or to be the subject of, an investment opportunity, investment contract, or security of any type”.

Of course, nobody has to buy cryptocurrency or meme coins specifically. So why does it matter if some people choose to buy Trump’s coin and make some quick cash? With big risk comes big reward, right? Well, apparently not.

One of the biggest myths about cryptocurrency is that it allows the average Joe or Joanna to make more money, and often faster, than they would if they were investing in, say, the stock market.

The overriding mentality, particularly when it comes to meme coins, is that with big risk comes big reward, and that without the involvement of Wall Street, anyone can become a millionaire overnight.

While the fine print may have stipulated the coins are not an investment, it’s difficult to see how something that increases in value the more that people hand over capital can be called anything else.

And so, for all the optimism, the results of $Trump and $Melania are the perfect example of why investing in cryptocurrency remains so high-risk.

According to Solana, roughly half of the people who used the platform to purchase $Trump coins were first-time buyers of altcoins (cryptocurrencies excluding Bitcoin). The same number of people created a wallet (which allows for the purchasing and selling of coins) on the same day they bought the First Family’s coins, meaning their sole intention for being on the platform was to buy these specific coins at the instruction of the person with an 80 per cent stake in its success.

Of the wallets that held $Trump and/or $Melania coins, 80 per cent had less than $US1000 in assets. So, on the one hand, you might think that at least they’re investing small, right? But when you consider that one in four Americans have less than $US1000 in savings, it’s suddenly no longer a low-risk punt just for fun.

What’s more, it’s estimated that 77 per cent of coin buyers have made a profit of less than $100, while others have only broken even. Trump’s not the only person who did well, though. According to Axios, 60 investors have pocketed more than $US10 million.

The rich getting richer while everyone else barely sees a dent? Sounds like a get-rich-quick scheme to me.

Victoria Devine is an award-winning retired financial adviser, bestselling author and host of Australia’s No.1 finance podcast, She’s on the Money. She is also founder and co-director of Zella Money.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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