Meme Coins Do Not Create Wealth, They Destroy It

Michael LebowitzAdvisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

The latest craze in cryptocurrency is the release of the $TRUMP and $MELANIA meme coins. Immediately upon issuance, the cryptocurrency coins surged in value, turning worthless 0s and 1s of computer code into tens of billions of dollars.

Many in the financial media, alongside crypto devotees, claim these meme coins, and others like Fart Coin, DOGE Coin, and the aptly named Sh*t Coin, create wealth. While they have made sizable profits for countless coin issuers and traders, the amount of dollars in the financial system remains unchanged. The coins do not create wealth; they transfer it from buyers to sellers.

More importantly, and not advertised by the pro-crypto bandwagon, our potential national wealth suffers as the valuations of most cryptocurrencies grow. Instead of focusing on the glamor of instant millionaires that meme coins create, I take a different direction: their impact on the economy and the citizens' aggregate wealth.

Before expanding on those thoughts, I share a quote from John Authers of Bloomberg concerning meme coins:

“The highly volatile tokens have no underlying assets to back up their value and no obvious practical purpose.”