As the official memecoin of Donald Trump’s second presidency flirts with a $10 billion market cap, and Melania Trump, the next first lady, launches her own, Balaji Srinivasan, the former CTO of Coinbase, said in a discussion thread on X that all this This category of tokens could be likened to gambling.
A memecoin is a zero-sum lottery*.
There is no creation of wealth. Each buy order is simply followed by a sell order. And after an initial increase, the price ends up collapsing and the last buyers lose everything.
*It’s actually a negative sum if the platform takes a cut.
– Balaji (@balajis) January 19, 2025
“There is no creation of wealth. Each buy order is simply followed by a sell order. And after an initial rise, the price ends up collapsing and the last buyers lose everything,” he posted, calling memecoins a zero-sum lottery – even negative after exchange fees –.
Balaji said memecoins should be approached in the same way as gambling in Las Vegas for entertainment purposes.
“Most should buy assets that retain their value over the long term,” he continued. “It is sometimes possible to add use cases to a memecoin, or keep it in the headlines to maintain its value indefinitely. And we’ve seen examples of that as well.
In response to this post, many asked Balaji if bitcoin had ever been considered a memecoin, to which he replied that it had not due to its use cases and lifespan more than a decade.
You are free to consider any asset a memecoin, and that doesn’t offend me, but I’m happy to explain why I think Bitcoin is different.
1) Bitcoin is the base asset of a blockchain with around 800 Th/s hashrate in hundreds of data centers around the world.
2) This was not the case… pic.twitter.com/58AZxtsy9a
– Balaji (@balajis) January 19, 2025
“Bitcoin is the base asset of a blockchain with approximately 800 Th/s hashrate in hundreds of data centers around the world,” he wrote. “It has increased gradually over time, rather than all at once, and the mining release schedule limits the amount that can be sold by a single party.”
Market interest in Trump’s official memecoin has drained liquidity from other memecoins, with data from CoinGecko reporting that the category declined 8% in the past 24 hours. Most top memecoins like DOGE, SHIB, and BONK are down more than 10% on the day.
READ MORE: Bitcoin Returns to $100,000, TRUMP Tanks 30% as Melania Memecoin Soars
