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Molly White

Newspapers’ estimates of the $TRUMP token’s fully diluted value fluctuated wildly from somewhere around $20 billion to around $70 billion, depending on which paper you read and when they published.

This variance perhaps should have been a sign to these reporters that the numbers aren’t real.

When Donald Trump launched a memecoin days before his inauguration, newspapers were quick to try to grab headlines with huge numbers. “The $TRUMP memecoin — a financial asset that didn’t exist on Friday afternoon — now accounts for about 89% of Donald Trump’s net worth,” wrote Axios, which dubbed him a “crypto billionaire”.1 “[T]he so-called fully diluted value of all the tokens as of Saturday at noon was $30 billion, a number achieved less than a day after the token went on the market,” wrote the New York Times.2 Newspapers’ estimates of fully diluted value fluctuated wildly from somewhere around $20 billion to around $70 billion, depending on which paper you read and when they published.
That the numbers fluctuated by about $50 billion within the span of only hours or days perhaps should have been a sign to these reporters that the numbers aren’t real. Fully diluted valuation is an estimate so flawed that even publishing it should be considered journalistic malpractice. It is calculated by taking the current going price for a crypto token on an exchange and multiplying it by the total number of tokens that may ever exist for that cryptocurrency. To use $TRUMP as an example, people are currently trading these coins for around $53 apiece. There are 200 million of them in circulation, which puts the token’s (already highly questionable, as I explain in a moment) “market cap” at around $10.7 billion. Eventually, over a period of three years (assuming Trump does not lose interest or change the parameters of the deal), 1 billion tokens are set to be released. It is this supply — three years from now — that is being multiplied by the current price of the tokens to achieve estimates in the several tens of billions for how much Trump’s “net worth” has increased, as though it can be safely assumed that not only will the price remain stable over the next three years, but that there is another more than $40 billion that is guaranteed to just materialize.
#crypto#cryptocurrency#DonaldTrump
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Molly White

This is not to downplay the extent to which Trump is grifting his devotees and crypto traders looking to make a buck on memecoin speculation. But it is important that we accurately report on his cons and don’t contribute to misleading crypto hype for the sake of large numbers.

#crypto#cryptocurrency#DonaldTrump
Public
Molly White

To understand crypto “valuations”, take the example of MollyCoin. If I conjure a billion MOLLY tokens out of thin air and sell one for $1, I’ve just created a “billion dollar” cryptocurrency.

The price of a cryptocurrency is, as with most things, whatever someone else is willing to pay for it. But how is price determined for brand new coins? If I decide to hop on the crypto bandwagon and create MollyCoin, and I write some code to create a billion $MOLLY tokens out of thin air, how much are they worth? In reality, approximately $0 — I’ve put no real money into the system, and they don’t represent any good or service that might be considered valuable. But if I can convince someone to buy one $MOLLY token from me for $1 on one of the many exchanges that will allow you to exchange any token under the sun, suddenly we have a price! And even though only one token has ever traded hands, because market cap is calculated by taking the price per token on an exchange and multiplying it by the number of tokens circulating,e MollyCoin now has a “market cap” of $1 billion. Most cryptocurrency trades don’t involve dollars on the other end, but rather other cryptocurrencies like bitcoin or ETH or Solana. A much more likely scenario than the one I just described is that I convince someone to give me .0003 ETH (around $1 at the time of writing) for my one $MOLLY token, and voila: $1 billion market cap (because market caps are almost always displayed in dollars) despite $MOLLY never having been traded against the dollar.
Now, imagine I created exactly the same number of $MOLLY tokens as there are ETH tokens. If I can convince someone to give me 1 ETH for 1 MOLLY, now MollyCoin has the same market cap as Ethereum (around $406 billion at the time of writing). Even if we assume that there is actually $406 billion worth of real, fiat currency floating around in the system to form the reported Ethereum market cap, we now have two tokens each ostensibly worth $406 billion, with no additional fiat being introduced. Each dollar that is backing some amount of ETH is also “backing” MollyCoin — it’s being counted twice. It should be clear in this contrived example that there is no way people could actually cash out all MOLLY and ETH tokens and somehow wind up with $812 billion in fiat. Crypto is not a magic money machine that creates real dollars out of thin air. Now, what happens if I convince someone to buy my highly illiquid crypto token with some other highly illiquid crypto token? MollyCoin’s dollar-denominated market cap is now not only arbitrarily based on however many of those tokens I could convince someone to give me for one MOLLY, but it’s also now based in the arbitrary dollar-denominated “value” of that token as well. And so on.
Now extrapolate all this that to the actual cryptocurrencies that exist today — how much actual value exists in the system, and how much is just double, triple, or n-times counting the same dollars? Of course, MollyCoin’s “total value” is all fake, and chances are probably quite low that I could find some sucker to buy the remaining 999,999,999 MOLLY from me for dollars (or ETH or anything else). But the press can still write that I’m an overnight billionaire, or that MollyCoin has a market cap of $1 billion. Furthermore, if I can convince CoinMarketCap to include MollyCoin alongside the million (and counting) cryptocurrencies they track, the total market cap of crypto shown on that site will have miraculously increased by $1 billion just like that.
#crypto#cryptocurrency
Peter Jakobs ⛵

@molly0xfff the weird thing about it:
as soon as you can find someone who thinks, the Mollycoin might be worth 10% more next week, you're in business.
Hope and more so greed fuel the system

Jan 20, 2025, 03:02 PM·Public·Web
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