Is Trump’s issuance of currency a way to make money or to “get involved”?

Trump is really good at playing. Just two days before he was sworn in, on January 18, 2025, he suddenly played a big game and issued a meme coin. The token name is "$TRUMP". He posted on X: "Join my 'Trump Community'. Get your $TRUMP. Have fun!" The official website of Trump Coin stated that this is "the only official Trump Meme Coin".

$TRUMP became a big hit as soon as it was launched. Data shows that $TRUMP started trading at an opening price of $0.1824, and rose by more than 15,000% to about $30 within 12 hours, and rose to a maximum of $75.35. Currently, Trumpcoin fluctuates around $40.

Two days later, at around 5 a.m. on January 20, 2025 (a few hours before Trump was officially sworn in), Melania Trump, the wife of Trump, also announced the launch of the official Melania Meme "$MELANIA". A few hours after the launch of $MELANIA, the price exceeded $18, and is currently around $4.

The word meme was first proposed by British scientist Richard Dawkins in his book The Selfish Gene. Dawkins believes that meme is a replicator in culture and the basic unit of cultural evolution, similar to genes in biology, which spreads from person to person through imitation.

He emphasized that the success of a meme depends not on its benefits to the carrier, but on its ability to be copied, retained and imitated. A meme can be a good idea, a good melody, a good poem, or an empty spell. Anything that spreads through imitation, like genes propagating through the body or viruses spreading, is a meme.

In Internet culture, "Meme" usually refers to pictures, videos, texts or other forms of content that spread rapidly on the Internet. They usually have elements of humor, satire or parody, which can resonate and arouse people's imitation, and thus be widely shared and spread on social media and online platforms.

When memes entered the cryptocurrency field, memecoins began to appear. The earliest memecoin was Dogecoin (DOGE) which appeared in 2013. Dogecoin is based on one of the most famous Internet memes in the 2010s, the funny Shiba Inu picture.

Dogecoin was initially just a joke, but it was unexpectedly quickly accepted by the enthusiastic crypto community. Today, the market value of Dogecoin has reached 55.8 billion US dollars, ranking 7th among all cryptocurrencies and 1st among Meme coins. The market reaction to the newly launched $TRUMP was very intense. In just two days, it has risen more than 100 times, with a market value of more than 10 billion US dollars, ranking 4th among Meme coins.

This is the madness of Meme coin. No matter what the reason, as long as it is recognized and liked, someone will directly buy it with real money.

Trump's three tricks can be monetized

Even though some people have made ten or even a hundred times more in just two days, in fact, most Meme coins are “air coins”. “Air coins” themselves do not create any value, and the profits of the beneficiaries all come from the “buyers” who come later. In simple terms, it depends on who runs faster.

As early as 2023, several companies in the United States issued virtual currencies in the name of supporting Trump's campaign, deceiving many of Trump's fanatical supporters. One of them used Trump's cartoon image, a token called TRUMPARMY, which has now returned to zero.

Will it be different this time when President Trump personally comes to support the event? It is hard to say whether he is here to make money or to change the world. Speculators in the market are completely attracted by Trump's influence, which is also a typical feature of Meme coin.

It is very simple to issue a token now. If you don't consider the labor cost, the technical cost may only be a few hundred dollars. The market value of $TRUMP can quickly reach billions of dollars. It is no exaggeration to say that this is a profitable business. However, it may not be so easy for Trump and his team to cash out.

Generally speaking, when a team issues coins in the blockchain field, the team usually holds about 30% of the coins. At the same time, the team's coins will also declare a lock-up period, because this can reduce the market's selling pressure, increase investor confidence, and encourage everyone to hold for the long term.

It should be noted that the opening price of Trumpcoin was only $0.1824. Many people bought millions of Trumpcoins at this price and later sold them at high prices, making huge profits. The profits from the sale of these coins have nothing to do with the issuing team. However, the issuing team still holds a huge amount of Trumpcoins.

This time, for Trump's $TRUMP, the team holds 80% of the coins. Although there is a three-year lock-up period during which the coins are gradually unlocked, it is actually clear that this is a highly controlled token.

A high degree of control means a high degree of price control, which also means that if the Trump team wants to cash in, there are many ways to do it.

The first method is that the exchange directly crashes the market. The locked tokens are gradually unlocked, and if the Trump team wants to cash out, they can trade on the exchange at any time. However, because the team holds a huge proportion of the tokens, the exchange cashing out will cause huge selling pressure, which will directly crash the token price. This is not only detrimental to the reputation of $TRUMP, but also detrimental to the actual interests of the team.

The second method is primary market trading. The Trump team does not trade on exchanges, but chooses primary market trading similar to stocks. Instead of selling Trump coins to individuals, they sell them to various private or public funds. In simple terms, they cash out but do not exit the market themselves, sell the coins to intermediaries, and exchange them for legal currency through intermediaries.

The third method is staking on the DeFi chain. This method of cashing out is more covert, not easily noticed by the public, and will not significantly affect the price of the currency. DeFi is the abbreviation of "Decentralized Finance", which refers to an emerging financial ecosystem that aims to use blockchain technology, especially smart contracts, to create a financial service network without traditional financial intermediaries (such as banks, exchanges, and brokers).

The financial gameplay on the DeFi chain allows anyone to pledge certain tokens and lend other tokens. For example, a common operation is to pledge mainstream cryptocurrencies such as BTC and ETH, and then lend USDT. The borrower needs to pay interest on the USDT he borrows, but at the same time he can use it to invest in other projects, or exchange it for legal currency, and then invest or consume.

If $TRUMP continues to rise in the future and remains strong in a few years, the Trump team does not even need to sell the $TRUMP they hold directly if they want to cash out. They only need to put the coin on the DeFi chain as collateral, and they can easily borrow USDT and then exchange it back for US dollars.

According to the pledge requirements of the DeFi contract, if the price of $TRUMP falls, the team must increase the amount of pledged coins to ensure the security of the contract. However, the Trump team holds 80% of the coins, so increasing the pledge is not a problem at all. If they want to reap more at the end, they will be forced to close their positions if they no longer replenish the pledged margin. In other words, they will not want the pledged coins, and will not return the borrowed USDT, which is also legal in the DeFi world. The final result is that the Trump team gave up $TRUMP and exchanged it for US dollars.

Of course, in addition to this, the Trump Coin team can also make a profit by charging transaction fees. For each Trump Coin transaction, the team will charge a certain fee.

In fact, the Trump family launched the DeFi project World Liberty Financial (WLFI) in September last year. Trump's second son Eric Trump and eldest son Donald Trump Jr. play important roles in the project, and Trump himself serves as the "chief cryptocurrency advocate."

Of course, the above analysis assumes that Trump's purpose is to reap the benefits and earn dollars. It is unknown whether Trump's team and senior military advisor Musk have other purposes. Trump has reached the pinnacle of power for the second time, and Musk, as the world's richest man, is not short of money. If they want to change the rules of the world, Trump's next four years will be a great opportunity.

Could Trumpcoin change the world?

However, we can also look at it from another perspective. Trump is "getting involved" and taking the lead in taking the lead.

Unlike his attitude during his last term, Trump has shown a friendly attitude towards the cryptocurrency market during this presidential campaign and has made ten promises, including establishing a strategic reserve of Bitcoin. Paul Atkins, the SEC chairman he nominated, is also known for his friendly attitude towards cryptocurrency and advocates reducing regulation to support market innovation. Musk, who is in charge of the government efficiency department, is a staunch supporter of cryptocurrency.

In addition, other members of Trump's team are also potential supporters of cryptocurrencies. More than 60% of the nominated cabinet members publicly stated that they own Bitcoin and directly or indirectly support the development of cryptocurrencies. In September 2024, Trump said in a public speech in New York that cryptocurrency is the steel industry 100 years ago. It is still in its infancy. One day it may surpass gold, and he will embrace future industries such as cryptocurrency and artificial intelligence to build the United States into the world's cryptocurrency capital.

Back to $TRUMP itself, although the Trump team holds 80% of the locked coins, manipulating the price is not the only option to increase and maintain the price of the coin. Trump can attract more people to participate by revitalizing the entire cryptocurrency market. As the tide rises, so will the price of his $TRUMP.

The key is whether Trump can fulfill those verbal promises and provide more space for the cryptocurrency market at the legislative level. For example, the Financial Innovation and Technology for the 21st Century Act (FIT21), which is hailed as the most important cryptocurrency bill to date, mainly includes providing consumer protection on transparency and disclosure of promoters and spokespersons, prohibiting institutions from preventing people from using cryptocurrencies, requiring the Treasury Department to study stablecoins, etc.

Although the US House of Representatives passed the FIT21 bill with 279 votes in favor and 136 votes against on May 22, 2024, the Senate has yet to vote. With Trump taking office, the progress of this bill will definitely be accelerated. Once this bill is passed, more compliant trading platforms and cryptocurrency listed companies will be born.

It should be said that Trump's election will bring the most friendly regulatory environment in the history of the entire cryptocurrency industry. If Trump wants to make America great again, one of the paths he can choose is to "revolutionize the dollar" and let Americans fully embrace cryptocurrency. In fact, this does not require Trump to launch a "revolution" from "top to bottom", because in reality, there are already people who are working on this from "bottom to top". He only needs to follow the trend and create more relaxed market conditions for them.

In fact, in the blockchain field, some people have been committed to promoting the tokenization of real-world assets, namely RWA (Real World Assets). RWA refers to the digitalization and tokenization of real-world assets in the blockchain or Web3 ecosystem. These assets include but are not limited to real estate, bonds, stocks, artworks, precious metals, intellectual property, etc.

The core concept of RWA is to bring traditional financial assets into the decentralized finance (DeFi) ecosystem through blockchain technology, thereby achieving more efficient, transparent and secure asset management and transactions. From another perspective, these innovations are "de-fiatization".

If we measure the wealth of Trump, Musk and others with fiat currency, they have already achieved financial freedom and no longer need to increase their wealth through fiat currency. Since the US dollar is also inflating, and it is inflating in an opaque environment, and the characteristics of blockchain cryptocurrency meet the requirements of openness and transparency, why not fully embrace cryptocurrency and promote Bitcoin or USDT pricing?

It can even be said that as long as it is open and transparent enough and allows Americans to choose their own currency, it is not a bad choice for them to choose $TRUMP as the new legal tender. All the Trump team needs to do is to relax regulations, not only on cryptocurrencies, but also on the entire economy.

Imagine what a world that uses bitcoin, usdt or other cryptocurrencies for transactions would look like? This would not only ensure the prosperity of the real economy and cryptocurrencies, but also stabilize the coins issued by themselves from collapsing. Both the team and themselves would benefit. The price of $TRUMP, to some extent, is the degree of recognition of Trump's governance by global investors.

Moreover, even if Trump cannot be re-elected, in order to help the Republican Party gain votes in the future, Trump's $TRUMP can still "kill all sides". As long as Trump's economy is doing well, the real economy is prosperous, and cryptocurrencies are rising, and $TRUMP does not collapse, they hold 80% of the locked coins, which can be used to "airdrop" to ordinary Americans later. As long as a little "airdrop" trick is used, I am afraid that even the most loyal Democratic "fans" will not remain calm.

This is essentially equivalent to handing out money directly, and this money does not come from fiscal tax transfers, but from Trump supporters in the cryptocurrency community.

The key is that Trump must be able to maintain the price of $TRUMP in the next few years, which is valuable. Therefore, if he simply cuts leeks and runs away for short-term benefits, he will damage his reputation, which is not in the long-term interests of him and the entire team. And vigorously relaxing regulations and allowing more people to participate is a win-win situation for the real economy, virtual currency and everyone in Trump's team.

• (This article is only the author's personal opinion and does not represent the position of this newspaper)