Because the official memecoin of the second Donald Trump presidency flirts with a market cap of $10 billion, and Melania Trump, the subsequent first woman, launches her personal, Balaji Srinivasan, the previous CTO of Coinbase, mentioned in a thread on X that this entire class of tokens may very well be equated to playing.
A memecoin is a zero-sum* lottery.
There isn’t any wealth creation. Each purchase order is just matched by a promote order. And after an preliminary spike, the worth finally crashes and the final patrons lose every thing.
* It’s truly adverse sum if the platform takes a reduce.
— Balaji (@balajis) January 19, 2025
“There isn’t any wealth creation. Each purchase order is just matched by a promote order. And after an preliminary spike, the worth finally crashes and the final patrons lose every thing,” he posted, calling memecoins a zero-sum – even adverse sum after alternate charges – lottery.
Balaji mentioned that memecoins must be approached in the identical means as playing in Las Vegas for leisure functions.
“Most can purchase belongings that retain their worth over the long term,” he continued. “It’s typically potential so as to add use circumstances to a memecoin, or to maintain it within the headlines to maintain its worth aloft indefinitely. And we’ve seen examples of that as effectively.”
In response to the put up, many requested Balaji if bitcoin was ever thought of a memecoin, to which he argued that it wasn’t due to its use circumstances and decade-plus endurance.
You might be free to contemplate any asset a memecoin, and I’m not offended by that, however I’m pleased to clarify why I feel Bitcoin is totally different.
1) Bitcoin is the bottom layer asset of a blockchain with ~800 Th/s in hashrate throughout a whole bunch of datacenters worldwide.
2) It hasn’t been… https://t.co/tazGAzGnjn pic.twitter.com/58AZxtsy9a
— Balaji (@balajis) January 19, 2025
“Bitcoin is the bottom layer asset of a blockchain with ~800 Th/s in hashrate throughout a whole bunch of datacenters worldwide,” he wrote. “It grew progressively over time, fairly than suddenly, and the mining issuance schedule limits how a lot could be offered by anyone get together.”
Market curiosity within the official Trump memecoin has sucked liquidity out of different memecoins, with CoinGecko knowledge reporting that the class has shrunk by 8% within the final 24 hours. Lots of the high memecoins like DOGE, SHIB, and BONK are down by over 10% on-day.
