When President Donald Trump launched his meme coin (also spelled memecoin), $TRUMP, on Friday, it soared in value from $8 to a high of nearly $75 by Sunday. As of this writing, it has dropped down to approximately $40, according to CoinMarketCap.
Still, Axios reports that the weekend surge before the inauguration resulted in Trump’s crypto holdings being worth $58 billion.
All of this may have you asking, “What exactly is a meme coin?” We turned to the experts at Coinbase for the answer.
In short, a meme coin is a type of cryptocurrency that is inspired by a colorful personality, a prominent pop culture moment, or a trend. “They are typically supported by enthusiastic online communities and are generally intended to be light-hearted and fun,” writes Coinbase.
Related: Donald Trump’s Meme Coin $TRUMP Surges to $10.7 Billion
The $TRUMP’s website, GetTrumpMemes.com, features similar messaging: “Celebrate Our Win & Have Fun!” reads one banner. And a disclaimer adds that the coin is “not intended to be, or to be the subject of, an investment opportunity, investment contract, or security of any type.”
Memecoins, like all cryptocurrencies, use blockchain to track their virtual assets, much like a bank’s balance sheet or ledger. Nearly all cryptocurrencies are not issued or controlled by any government or other central authority, says Coinbase, and warns that are very unpredictable and volatile. “Engaging with meme coins carries risk and is something you should only attempt armed with research and experience.”
Coinledger explains: “Unlike traditional currencies, cryptocurrencies aren’t backed by physical assets or government promises. Instead, their price is fully determined by supply and demand.”
Per Axios’s reporting, 200 million of the 1 billion total $TRUMP coins are being traded. The remaining coins will be able to be sold over the next three years, starting in April.
Trump’s meme coin is branded with an image of him president raising his fist with the words, “FIGHT FIGHT FIGHT.” First Lady Melania Trump launched a memecoin as well, MELANIA, which Axios reports very quickly achieved a market capitalization “north of $5 billion.” Her branding features an image of her smiling with her hands folded in front of her.
If this all still sounds baffling, it is because it is. Even Coinbase admits, “If you find distinguishing between meme coins, scams, and cryptocurrency confusing, you’re not alone. It’s critical to understand the risks to help you avoid unexpected volatility and losses.”
