When President Donald Trump launched its own meme coin (also spelled memecoin), $TRUMP, on Friday, its value increased from $8 to a value of nearly $75 on Sunday. As of this writing, it has fallen to approximately $40, according to CoinMarketCap.
still, Axios reports that the pre-inauguration weekend surge resulted in Trump's crypto holdings worth $58 billion.
All of this might lead you to ask, “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 usually supported by enthusiastic online communities and are generally intended to be smooth and fun,” Coinbase writes.
Related: Donald Trump's meme currency, TRUMP, rises to $10.7 billion
$TRUMP website, GetTrumpMemes.comcontains similar messages: “Celebrate our victory and have fun!” reads a banner. And a disclaimer adds that the coin “is not intended to be or be the subject of an investment opportunity, investment contract or security of any kind.”
Memecoins, like all cryptocurrencies, use the blockchain to track their virtual assets, much like a bank's balance sheet or ledger. Almost all cryptocurrencies are not issued or controlled by any government or other central authority, Coinbase says, and warns that they are highly unpredictable and volatile. “Engaging in meme coins carries risk and is something you should only attempt armed with research and experience.”
Coinledger explains: “Unlike traditional currencies, cryptocurrencies are not backed by physical assets or government pledges. Instead, their price is determined entirely by supply and demand.”
According to Axios reporting, 200 million of the 1 billion total TRUMP coins are being traded. The remaining coins will be available for sale over the next three years, starting in April.
Trump's meme coin is branded with an image of his president raising his fist with the words, “Fight FIGHT FIGHT.” First Lady Melania Trump also launched a memecoin, MELANIA, which Axios reports quickly reached 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 strange, that's because it is. Even Coinbase admits: “If the difference between meme coins, scams, and cryptocurrency is confusing, you're not alone. It's critical to understand the risks to help you avoid the unexpected instability and loss”.