Trump's Meme Coin. Why on Earth Would You Buy It?
Translated by GPT
Trump’s Meme Coin: Why Are People Buying It?
Recently, President Trump launched a meme coin bearing his name. At one point, its market capitalization exceeded 21 trillion won. There was even a poll on Polymarket about whether Trump’s account had been hacked. The fact that a meme coin with no inherent meaning is attracting capital exceeding the value of many companies is bewildering. Nevertheless, this is a natural economic logic and a sophisticated ‘gambling’ game reflecting people’s psychology.
I believe there are two main reasons people buy meme coins. One is simply for fun. The other is the expectation of making money. Given the current value of the capital generated, the latter is more rational. People’s expectation of making money triggers speculative behavior, thus making it a gamble. Since gambling is effectively banned in many countries, including Korea, capital is flowing into entities like meme coins that exist outside legal boundaries.
Meme coins are particularly attractive compared to traditional gambling systems. Investors can adjust variables related to meme coins. In traditional gambling and illegal private gambling dens, there is no guarantee of returns when large sums are won, and government-run gambling has theoretical limits on returns. In contrast, with meme coins, investors can increase their value through social media or influence, and all objective investments and holdings are publicly disclosed. Investors are given more rights and responsibilities, and the transparency of blockchain is added, making it more rational to purchase meme coins than traditional gambling.
Unlike the previous NFT trend, I believe the current meme coin trend will last quite a while. Meme coins are rapidly occupying the traditional gambling market, and the high level of trust, trading volume, and the clear consensus that they could fail have created a rational and transparent gambling platform.
“Then, do meme coins really have value?”
For any economic system to have value, the currency issued by economic entities must have scarcity and liquidity. There must be a perception that everyone has earned it through hard work for it to be recognized as currency and tradable assets. Therefore, the value of the existing economy is created by multiplying labor and production. All economic players are aware of this fact and consume for their survival or satisfaction. Someone’s consumption is someone else’s production, and as this repeats, liquidity increases. High liquidity is proof of recognized value and exchange, making it a trustworthy asset. Hence, currencies of countries worldwide, including the Korean won, hold such value.
On the other hand, NFTs do not guarantee scarcity or liquidity. The transaction costs are high, and anyone can replicate digital information, making it difficult to claim ownership. This is why they failed, and I believe they hold no value unless integrated with the real economy.
Meme coins, at least, guarantee high liquidity. Many people can easily participate, and transaction fees are low. They trigger gambling psychology, stimulating dopamine at every moment. In the same vein, just as the traditional gambling industry has survived without becoming mainstream, I anticipate that meme coins will be used to replace traditional gambling, even if they don’t become a mainstream market.
Lately, I’ve been rethinking the value of labor. It’s been 21 days since I quit my job, and I’m leaving about 80% of programming tasks to AI, excluding design. Does labor really hold significant meaning? If labor becomes universal, what truly scarce value will remain? I’ve concluded that it’s media (influence) for now. However, I don’t know how this will change in the future. Perhaps that’s why Trump is focusing on media.