$Trump and Crypto
A Trump collectible coin, as available on Amazon
Why might a person want to buy crypto?
For some of us oldsters, the word “crypto,” short for cryptocurrency, provokes bewilderment. Crypto is money that isn’t money, that replaces money, is sort of money but, conspicuously, has no country’s name on it. It isn’t dollars, or pounds, or euros, or yen, or yuan, or anything else you can obtain as a difficult-to-counterfeit piece of paper. It’s money that isn’t issued or backed by a government. Which, to ancients like myself, makes it sound as if it isn’t really money at all.
Let’s stay with that for a moment. In what way is crypto different from something – let’s call them $Adams, after Adam Smith – which I could design in Microsoft Publisher, adorn with a picture of Adam Smith’s face (or mine, for that matter: my hairstyle is more flattering), and crank out on my Hewlett-Packard printer? Actually, even that analogy is too crude, because crypto doesn’t need paper. Perhaps the better comparison is that crypto is whatever numbers I decide to insert into Row 12 of an Excel spreadsheet. Congratulate me: I made a lot of money today. Cell C12 is looking especially promising.
Well, you’re thinking, there must be more to it than that, right? Crypto has to be something beyond a number which some idiot picks out of the air. And you’re right. A unit of crypto isn’t just a colorfully-decorated piece of copier paper, or somebody’s eight-digit birthday merged and centered. It has to do with a blockchain.
I can already hear the cries from my fellow residents at the assisted-living facility: what, in the name of our rapidly-diminishing sentience, is a blockchain? According to my main source of fiscal expertise, Wikipedia, “a blockchain is a decentralized, distributed, and often public, digital ledger consisting of records called blocks that are used to record transactions across many computers so that any involved block cannot be altered retroactively, without the alteration of all subsequent blocks.”
After puzzling for a while over that limpid prose, I believe I can translate: a blockchain is a row of numbers on a spreadsheet, but a spreadsheet which no one can edit, because it would have to be changed simultaneously on a gazillion different computers, each of which is rather crafty and well-protected (“encrypted”). One might say that a blockchain is a spreadsheet whose past is carved in granite.
Okay, well, at least that means someone can’t use the backspace key to make himself a millionaire. But what makes those rows of any value? As near as I can tell, the full and complete answer is, somebody agrees to buy them.
In some sense, of course, the only reason anything has value, or at least monetary value, is because somebody agrees to buy it. That is true of my vintage muscle car. It is true of my eight hours of labor. It is true of my house. Those things have value because they have a market. But, you may object, people buy my muscle car because they want to drive it, or at least admire it on their lawn. They buy my labor because they believe, foolishly, that it accomplishes something. They buy my house because they don’t like sleeping outdoors. Such things can be said to have intrinsic value: they’re of some sort of use. One can’t really say that about a row of numbers on a spreadsheet, even a granite spreadsheet.
But, as the economics students among you may have realized, that’s in a way true about all money, right? No vending machine accepts a quarter because of the artistic quality of the relief of George Washington. No Vegas Blackjack dealer accepts a $100 bill because he loves the story about Ben Franklin and the kite. Coins and paper currency are of value because we all agree to say they are. Somehow, long before we were born, an agreement was reached, and items not particularly valuable in themselves – bits of metal, pieces of paper – became valuable by agreement. There are exceptions to that rule – go try to buy a quart of milk with Confederate dollars – but for the most part, we have agreed to say that money is money, which has made all of our lives more manageable. I no longer have to drive my heifer to the market to exchange it for heads of lettuce. My neighbor takes paper, and possibly Venmo.
If that’s how things work, however, crypto is at a significant disadvantage, because it is not hallowed by tradition. (Neither is Venmo, but, well, it says it’s giving you dollars, and seems to do so. It’s more like the mail than like currency.) Crypto hasn’t been used since the dawn of civilization; it’s an upstart, and what’s its pedigree? Who came up with it? Who are these people, and why should I accept something they say is money? Why are they even bothering with those blockchains (which I still don’t really understand)? It’s not as if we don’t already have something to spend. Money exists. It is accepted. Crypto is not a brilliant innovation which saves me the bother of wrangling my heifer. That innovation came along a while back. Crypto just – well, what does it do, anyway? Why would anyone prefer it to what we’ve already got?
A key feature seems to be that it isn’t issued by a government: it isn’t issued by anything but cyberspace. And if you personally would prefer to live, not under a government, but as an untrammeled individual in cyberspace … In other words, crypto partakes of the libertarian ideal. The government doesn’t get to put its grubby fingers all over my transactions. That’s between me and some other guy who’s good at coding. Dollars? We don’t need no stinkin’ dollars.
But this gets tricky, of course, because when I actually go to the grocery store, they don’t take crypto. People have tried to persuade them to do so, notably in El Salvador, where Trump’s friend President Bukele tried to make bitcoin an official currency, but they did not succeed, because normal people don’t want the stuff. It turns out that grocery stores prefer to live under a government, which does come with certain advantages: your government is useful if someone tries to rob you, or if a tsunami floods your parking lot. While people love to complain about government, few of them, deep down, want to do without it. If the government didn’t build roads and put in stoplights, we couldn’t drive our muscle cars. If the government didn’t guarantee bank deposits, we might, like Wiley Coyote, suddenly look down and see that our savings were standing on air. I can’t really get away with saying, “I am the law.” Too many of my neighbors would beg to differ.
So, to return to my original question, why might a person want to buy crypto? Crypto enthusiasts say it “streamlines transactions,” i.e. makes money transfers quicker, but of course in the modern world, money transfers are already pretty darn fast. What other advantages does crypto have? At this point, the main answers seem to be, (a) if you want to speculate, and (b) if you want to break the law.
Concerning (a): It’s amazing what people will buy if they think it might make them rich. From tulips in seventeenth-century Holland to Beanie Babies in the 1990s U.S., people will buy almost anything if they believe its price is destined to go up. Such bubbles tend to pop, of course, as has already happened with crypto several times, most notoriously with FTX and Sam Bankman-Fried.
Concerning (b): Is crypto as intrinsically worthless as Beanie Babies? Not if you’re a criminal. If you want to dodge taxes, or launder drug money, or acquire children for sexual purposes, crypto is convenient, because it can be bought under pseudonyms, and has multiple clever ways to evade scrutiny. A rigorous government regulator could probably break through that thicket, but if the government does not choose to put in the effort … In a possibly related story, crypto may be convenient if you wish to bribe a politician.
In September 2024, Donald Trump and his sons founded World Liberty Financial, a cryptocurrency firm. This was already peculiar, because traditionally presidential candidates do not found new companies, but sell off their old ones, and place their assets into blind trusts. That’s what Jimmy Carter did with his peanut farm. He did not want people wondering whether the federal government would try to drive up the price of peanuts.
So far, World Liberty has offered four “products” (when it comes to crypto, I can’t hold back the air quotes): WLF1, a digital “coin” of which it has sold $550 million; $Trump and $Melania, two “meme-coins” (crypto products which – I’m not making this up – begin as Internet jokes: people buy them because they think they’re kind of funny); and a new “stablecoin,” USD1, each of which is supposed to maintain a stable value of one U.S. dollar. One might pause especially over that latter: what makes a USD1 different from, say, a dollar? As near as I can tell, the only real distinction is that you can buy it from Donald Trump. He thanks you for your business.
75% of World Liberty’s revenues go directly to the Trump family, and according to a recent article in Forbes magazine, World Liberty Financial has already increased the president’s personal net worth by about $1.2 billion, and has provided him with a pot of ready cash, which must come in handy, considering the half-billion dollars he owes in legal judgments (E. Jean Carroll and those thirty-four fraud convictions) and what must be some pretty hefty lawyers’ bills. According to Forbes, Trump’s crypto assets are worth more than Mar-a-Lago and Trump Tower combined. And no one even had to pour any concrete.
People have raised a couple of concerns about World Liberty Financial. One is that, because of all the scandals – Bankman-Fried, etc. – the U.S. government had been moving towards stricter regulation of crypto, but the Trump Administration now seems to be scuttling those efforts, which, since the Trump family has entered the crypto business, might seem, um, like a conflict of interest.
The other issue is, if I want to make the president of the United States extremely grateful to me, all I have to do is buy $Trump coins, or WLF1, or USD1, or perhaps $Melania coins, depending on how the First Couple is getting along that day. Such purchases would, apparently, be legal, or at least legal-ish, which will suffice in the current regulatory climate, in which the emoluments clause of the Constitution is treated as a dead letter. Those purchases would not have an amount limit, the way campaign contributions do. They would be open to any investor, foreign or domestic – the United Arab Emirates, Abu Dhabi, Qatar, Saudi Arabia, China and Pakistan have already anted up, and they’re just the ones I could find with a quick Google search. Trump crypto might be particularly attractive to a country which wants to avoid being tariffed. In the past, nations trading with the U.S. strove to obtain Most Favored Nation status. Now, there seem to be new paths to America’s favor.
When Trump first ran for office, some of his supporters said that unlike the rest of those politicians, he wouldn’t be for sale, because he was so rich he wouldn’t have to be. Since then, of course, we’ve learned two things: (1) He wasn’t nearly as rich as he claimed – in fact, his finances have often been extremely precarious; and (2) He is the sort of person who can never have enough. The more money you have, the more of a winner you are, and Donald Trump must always be a – must always be the – winner. Why might a person want to buy crypto? To assist him in that project.
Is the swamp drained yet?
~ STUDEBAKER (Studebaker@studebakerguy.bsky.com)
