Balaji slams memecoins, calling them ‘zero-sum lottery’ as $TRUMP token sends market into a frenzy

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, former chief technology officer at Coinbase, said in a thread in X that all this category of tokens could be equated to games of chance.

“There is no wealth creation. Each purchase order is simply accompanied by a sell order. And after an initial spike, the price eventually crashes and the last buyers lose everything,” he posted, calling memecoins a zero-sum lottery, even negative-sum 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 keep its value high indefinitely. And we have seen examples of that too.”

In response to the post, many asked Balaji if Bitcoin was ever considered a memecoin, to which he argued that it was not because of its use cases and staying power for over a decade.

“Bitcoin is the base layer asset of a blockchain with ~800 Th/s hashrate in hundreds of data centers around the world,” he wrote. “It grew gradually over time, rather than all at once, and the mining issuance schedule limits how much any one party can sell.”

Market interest in Trump’s official memecoin has sucked liquidity out of other memecoins, with data from CoinGecko reporting that the category has declined by 8% in the last 24 hours. Many major memecoins like DOGE, SHIB, and BONK are down more than 10% on the day.

READ MORE: Bitcoin Retreats to $100,000, TRUMP Crashes 30% as Melania Memecoin Soars