Balaji Dismisses Memecoins as ‘Zero-Sum Lottery’ Amid the Market Frenzy Triggered by TRUMP Token.

Balaji Criticizes Memecoins as ‘Zero-Sum Lottery’ Amid TRUMP Token Surge

Balaji Srinivasan, former CTO of Coinbase and general partner at venture capital firm Andreessen Horowitz, recently took to X to express his concerns over the rise of memecoins, describing them as nothing more than gambling tools rather than legitimate wealth-building assets. His comments came as TRUMP, the official memecoin for the second Donald Trump presidency, nears a market cap of $10 billion and Melania Trump, the incoming first lady, launches her own memecoin.

“There’s no wealth creation,” Balaji tweeted, explaining that memecoins function like a “zero-sum” game. “Every buy order is simply matched by a sell order. After an initial spike, the price inevitably crashes, and the last buyers lose everything,” he continued, branding them as a “negative-sum lottery,” especially after accounting for exchange fees.

Balaji argued that memecoins should be treated like gambling in Las Vegas, only for entertainment purposes. “Most people should focus on buying assets that hold value over the long term,” he advised, while acknowledging that some memecoins could succeed if they create additional use cases or manage to stay in the spotlight.

Responding to questions about whether Bitcoin could be considered a memecoin, Balaji defended Bitcoin by pointing to its long-term stability and utility. “Bitcoin is the base layer of a blockchain with approximately 800 Th/s in hashrate spread across hundreds of datacenters worldwide,” he explained. “It grew steadily over time and has a mining schedule that restricts how much can be sold by any single party.”

Meanwhile, the surge in interest surrounding TRUMP has drawn liquidity away from other memecoins, with CoinGecko reporting an 8% drop in the memecoin category in the past 24 hours. Established tokens like DOGE, SHIB, and BONK have each dropped by over 10% during this period, reflecting the volatility in the market driven by speculative trading in tokens like TRUMP and MELANIA. Balaji’s comments highlight the risks that investors face in this speculative sector.