We Finally Found the Perfect Use Case for Crypto, Alas
I have a new piece up at The UnPopulist about Donald Trump’s use of cryptocurrency as a medium for bribery, which is both flagrant and actually kind of ingenious.
Enter Trump, whose big innovation is to use cryptocurrency to collect bribes without requiring this level of secrecy. He figured out that he can do it out in the open in a way that seems to technically skirt the law, so it will never be investigated or prosecuted—at least while he remains in power.
A US president who also controls a large business is always subject to financial influence from his investors and business partners. But at least when Trump plans to build a new resort, it requires the construction of physical assets. Cryptocurrency, by contrast, is backed by nothing and has no inherent value, so when his business partners throw money into Trump’s crypto ventures, they are essentially just transferring wealth to him directly—and getting something in return.
Take Justin Sun, a relentlessly self-promoting Chinese cryptocurrency scammer. According to an exposé in Popular Information, Sun was accused by the Securities and Exchange Commission of secretly paying celebrities to promote his crypto and engaging in “wash trading, which involves buying and selling a token quickly to fraudulently manufacture artificial interest.” [Readers may recognize this as a form of the “pump and dump” scam.] But just after last year’s US presidential election, Sun began pouring $75 million into the cryptocurrency issued by the Trump family’s World Liberty Financial, an investment that directly benefited Donald Trump to the tune of $50 million. In February, with Trump in office, the SEC suddenly found the need to suspend its case against Sun.
All of this applies even more to the most ridiculous offshoot of cryptocurrency, the “memecoin.”
An NPR report sums up memecoins succinctly: “They are typically created for entertainment or speculative purposes and are driven mostly by hype. As speculation, they tend to enrich early investors who are able to dump their coins before their value crashes.” One of the most flagrant and salacious examples is the “Hawk Tuah rug pull.”
In essence, a memecoin is a way to turn fame into money directly. The celebrity doesn’t have to host a podcast or sell advertisements or endorse products. Coinholders give their money directly for nothing other than the ability to participate in celebrity vicariously—or perhaps for the hope of getting in and out early enough to rip off the other people who buy the coin.
In short, the memecoin is the product Trump has been waiting for his entire life.
If you have managed to avoid hearing about her yet, I am deeply sorry to have to draw your attention to the “Hawk Tuah” girl and the “Hawk Tuah rugpull,” a collection of words that I swear actually mean something. But she is small potatoes compared to the sheer scope of Trump’s grift, which culminated in a dinner for his memecoin buyers that one senator accurately described as an “orgy of corruption.”
The Crypto Future That Wasn’t
The folks at The UnPopulist wanted me to focus this piece tightly on Trump’s corruption and not use it as a broadside against cryptocurrency in general—so I’ll do that briefly here, instead.
Years ago, I spent some time covering what everyone thought were the exciting new emerging technologies of the future, circa 2016—like the hyperloop, which has revolutionized transportation, as we all know. The other Next Big Thing was cryptocurrency. But when all the hype cleared, none of the supposed productive uses for crypto panned out.
Bitcoin has never really functioned as digital money. Money is supposed to serve as a unit of exchange and a store of value. But it’s difficult to use Bitcoin to buy anything because its value fluctuates wildly. The party being paid faces the risk that they will get shortchanged if the value of Bitcoin drops between when they make the transaction and when they can exchange Bitcoin for regular currency or for other goods.
This is why nobody uses Bitcoin or other cryptocurrencies for paying ordinary bills or buying household items. We recently passed Bitcoin Pizza Day, celebrating the moment in 2010 when an early Bitcoin enthusiast actually ordered a pizza with Bitcoin—except that he didn’t. He paid Bitcoin to another enthusiast, who ordered the pizza for him using regular old dollars. Fifteen years later, there are a vanishingly small number of places where you can actually make a direct transaction of ordinary goods for Bitcoin, and Bitcoin Pizza Day is treated more as a publicity stunt.
Nor does cryptocurrency serve as a stable store of value, given its wild speculative swings. And while it is described by its enthusiasts as “decentralized finance,” can you think of an example of any venture it actually financed—other than its own speculative spiral?
We’ve had about 15 years to determine whether cryptocurrency has an actual productive use, or whether it is just a speculative bubble operating on the theory of the greater fool. I think that’s enough time to acknowledge the results.
If people want to risk their own money on digital fiat money, I guess that’s their own business. But what has really turned me against crypto is the way it has infected a certain influential demographic with a culture of scams and get-rich-quick schemes—especially in Silicon Valley, and even more so among young men, who are always a prolific source of greater fools. Precisely because these scams have flourished unchecked, they have raked in huge amounts of money that are now washing around in our politics.
It’s no wonder that our unscrupulous president has gotten in on the action. Trump is a bad person, but he is never a source of the evils in our culture, merely their reflector and magnifier.
Another note: I recently did a follow-up on my previous interview with the French magazine L’Express, this time a video that is mostly in French, but I appear for a couple of segments speaking English with French subtitles, describing the threats to la liberté from la Maison-Blanche.
That was a good report by L'Express. For anyone who doesn't know, to get English subtitles on a video, tap Settings > Captions > Auto Translate > English
Sacre bleu! Robert has gone international now.