Article
Culture
Economics
Ethics
6 min read

The rights and wrongs of making money with meme coins

When does investing become speculating, or even addictive gambling?
A montage shows Trump with a raised fist against other images of him and the phrase 'fight fight fight'.
$Trump coin marketing image.
gettrumpmemes.com,

Donald Trump’s “liberation day” tariffs may have driven sharp swings in global financial markets, but his actions in markets a few months earlier were in some ways even more peculiar.

On the Friday before his inauguration as the 47th US President in January, the Republican surprised many with the launch of the $TRUMP memecoin, described by its website as “the only official Trump meme”. The cryptocurrency token, in which Trump’s family business owned a stake, initially soared in value to more than $14bn over that following weekend. 

Then, on the Sunday, Trump’s wife Melania launched her own memecoin, $MELANIA, which reached a value of $8.5bn. Even the pastor who spoke at the president’s inauguration subsequently launched his own memecoin. 

For those wondering what exactly a memecoin is, you are not alone. In short, they are a form of cryptocurrency - an asset class that itself has attracted plenty of questions about its substance and purpose - representing online viral moments. They have no fundamental value or business model and, according to the US securities regulator, “typically have limited or no use or functionality”. 

Donald and Melania Trump’s coins subsequently plunged in price, but still have a value of around $2.5bn and $214mn respectively, according to website CoinMarketCap. 

There are plenty of others in existence. PEPE, based on a comic frog, has a value of around $3.6bn; BONK, a cartoon dog, has a market cap of $1.5bn; and PNUT, a reference to a squirrel euthanised by authorities in New York and about which Trump was allegedly “fired up” (although doubt has since been cast on the president’s involvement in the matter), is still valued at around $174mn, despite having fallen sharply in price.  

Dogecoin, seen as the world’s first memecoin and originally created as a joke, boasts a market value of around $25bn. (There are other memecoins which may not be suitable for these pages). 

Some people’s willingness to buy an “asset” with no use or fundamental value may seem strange to more traditional investors. But it can be viewed as just one manifestation of the speculative investor behaviour evident since the onset of the coronavirus pandemic and, indeed, at times throughout history. 

The price of Bitcoin recently rose above $100,000, despite many investors still viewing it as having little or no value (in 2023 the UK’s Treasury select committee described cryptocurrencies as having “no intrinsic value, huge price volatility and no discernible social good”). In early 2021, shares in GameStop - a loss-making US video games retailer that some hedge funds were betting against - rocketed as much as 2,400 per cent, as retail investors piled in, many with the aim of inflicting pain on the hedge fund short sellers (in that respect at least, a highly successful strategy that became the subject of the film Dumb Money). The huge rise in AI and other tech stocks in recent years - until the recent tariff-driven volatility - has also been described as a bubble by some commentators. 

Whether or not such episodes can be compared to infamous bouts of speculative mania in history depends on your point of view (and often can only be judged with the benefit of hindsight) - be it the 17th century Dutch tulip bulb mania, shares in the South Sea Company in the 18th century or the dotcom boom and bust of the late 1990s and early 2000s. 

But it does give rise to the question of when investment should start to be described as speculation or even as gambling? And what are the rights and wrongs of any of those activities? 

There can be negative effects, for instance if the actions of speculators force businesses in the real economy to change their plans or divert time and resources... 

Gambling can be thought of as risking a stake on, for instance, the result of a game of chance or sport in the hope of a bigger payout. While often the result is purely down to chance, in some cases a strategy or an element of research (for instance of a horse or football team’s form) can be used. Investment, in contrast, tends to involve purported economic utility and assets believed to have some sort of underlying value, and holds the hope of future profit (although there are also plenty of bad investments or those that have gone to zero). While an investor must be prepared to lose their entire stake, in some cases such an event is relatively unlikely (for instance, if they buy a fund tracking the performance of a major stock exchange). Speculation is harder to define, but is generally seen as shorter term than investment, with more chance of a bigger gain or loss, and dependent on price fluctuations. Rightly or wrongly, the term has a more negative connotation than investment. 

One writer who explored the ethics of these activities was Oswald von Nell-Breuning, a Jesuit theologian and economist who served as an adviser to the Pope and who was banned from publishing under the Nazis. 

While he found that “one general definition cannot capture all the nuances” of speculation, he identified two different types of speculative activity - one that was purely trying to make a profit from financial market trading, and one based on trying to create a viable business. (See this article in the Catholic Social Science Review for a fuller explanation of Nell-Breuning’s views on speculation). 

As the CSSR article shows, Nell-Breuning found that there can be positive effects from speculation - one might think of better liquidity and price discovery in a market, while, in commodity futures markets, speculators allow producers to hedge risk

But he also argued that there can be negative effects, for instance if the actions of speculators force businesses in the real economy to change their plans or divert time and resources away from production. 

And whereas gambling typically takes place within a circle of players who have chosen to take part, speculation, he wrote, can affect a greater portion of society - for instance, if it affects the price of shares or bonds they hold. 

The Bible - on which Nell-Breuning’s faith and analysis was based - does not take a prescriptive approach to such activities. But it does provide some interesting guidance.  

An entrepreneurial approach to business and investment is applauded, for instance when the writer of the book of Proverbs (traditionally believed to be King Solomon) praises the virtues of “an excellent wife”. These include investing in a field and using her earnings from business to plant a vineyard, and feeding her family from her gains. 

Jesus tells a story of a master who, before going on a journey, gives his property to his servants, each according to their ability. To one he gives five “talents” (a large unit of money), to a second two and to a third servant he gives one. 

The first servant trades with his talents and makes five more talents - a 100 per cent profit - and is applauded by the master on his return. The second servant also trades and similarly makes two more talents and is again applauded. 

But the third servant, being afraid and believing the master to be “a hard man”, hides the money in a hole in the ground. He is condemned as “wicked and slothful”, and told that he should at least have put the money in the bank. 

While Jesus’s story may primarily be about how we view God’s nature, how we use our God-given abilities and whether or not we can take risks in faith for Him, it is also hard not to see investment and indeed wise speculation as being virtuous activities here. Putting the money into a bank account is, in this story anyway, more of a fallback option. 

But the Bible also warns us against putting money above all else in our lives. The love of money is, famously, a root of all sorts of evil, while we are also told to be content with what we have, and that “wealth gained hastily will dwindle”. 

Nell-Breuning similarly warns that a “get-rich-quick” mindset, when this is placed above all else, can be harmful, and advises caution in situations where the lure of big profits can lead the speculator into market manipulation or fraud. 

After all, both gambling and crypto trading have the potential to become dangerous and damaging addictions needing treatment

Ultimately, Nell-Breuning struggled to come to a simple conclusion on the question of whether speculation, in and of itself, is morally wrong. It is, he wrote, a judgment call for those involved. 

When making such decisions ourselves, his - and the Bible’s - warnings may be worth bearing in mind. 

Article
Books
Culture
Education
Wisdom
5 min read

We need libraries: they expose our limitations

These physical monuments to our own ignorance instil knowledge and humility.
Children sit in a library listening to a story
Spellow library children's talk.
Children’s Commissioner for England.

On 19 July 2024, my wife, toddler, cat, and I moved back to our hometown of Liverpool. Ten days later, three children were killed and ten more were seriously injured following a mass stabbing at a children’s dance workshop in nearby Southport. 

In the aftermath, amid widespread misinformation about the killer’s background, riots erupted across the country. With unrest intensifying, on 3 August rioters set fire to Spellow Library, less than two miles away from our new home. The apparent reason for the fire? It contained Qur’ans. Imagine that: books in a library! (There’s an all-too-easy joke about far-right thugs not understanding what libraries are that I’ll try to resist making here.) 

Nothing the country witnessed in those riots matches the unspeakable horror that occurred within that dance studio in Southport. And yet, I found the library fire deeply unsettling. I hadn’t worked out why, until recently.  

I’m a theology lecturer and work from home a lot. I’m often listening to music while replying to emails, planning lectures, or marking essays. Recently, however, I’ve been in a musical rut. My usual stuff feels stale and nothing new catches my attention. I mostly use streaming services, and this week it hit me: the platform is the problem.  

Streaming platforms operate through search engines: I search for an artist, song, or album, and start listening. In other words, I have to know what I want to listen to before listening to it. Platforms might suggest new music, but this is invariably based on what I already like. It very rarely exposes me to anything outside my comfort zone.  

In the build-up to the invasion of Iraq in 2003, then-U.S. Secretary of Defense Donald Rumsfeld was asked about the mythical WMDs that served as the war’s McGuffin. His answer has gone down in political infamy:  

“there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don't know we don't know.” 

When teaching students, I constantly stress the importance of ‘unknown unknowns’. Good education exposes us to things we don’t know that we don’t know. It gives us increasing awareness of our own ignorance. Streaming services greatly reduce the chances of finding music I don’t know that I don’t know. Instead, I listen to music I know I know, or music I know I don’t know.  

I used to love trawling through music shops, pouring over the vast sea of artists I hasn’t even heard of, imagining my favourite album was buried amid the reams of CD cases. It saddens me that I can’t remember the last time I did that. Music shops are physical monuments to my own ignorance. When I see all the artists, all the albums – even the genres! – I haven’t even heard of, I’m unavoidably confronted with my own ignorance.  

So, too, with libraries. How many times I’ve wandered the stacks of university libraries and thought “I didn’t even know there was a book about this topic!” when picking something off the shelves! And this is their value to students: they are physical monuments to their own ignorance. They instil a passion for knowledge, and a deeper sense of humility, as students are forced to grapple concretely with everything they don’t even know they don’t know

(Incidentally, this is what I’ll tell my wife next time I buy another book I invariably won’t read. I can already imagine her response: “But my love, we have plenty of physical monuments to your ignorance at home already.”) 

I found the destruction at Spellow Library so disquieting. It is a supremely, nihilistic act. It is to reject engaging with our ‘unknown unknowns.’ 

Like music streaming platforms, libraries are increasingly digital spaces. My primary experience of reading nowadays is to type something into a search bar. My reading – just like my music – is increasingly myopic; increasingly confined to the realm of ‘known unknowns’. But true humility is only fostered through engagement with the ‘unknown unknowns’ of our life. We need the physical monuments to our own ignorance. We ignore them – or, as the case may be, set fire to them – at our peril.  

There is a significant spiritual element to this, and this is why I found the destruction at Spellow Library so disquieting. It is a supremely, nihilistic act. It is to reject engaging with our ‘unknown unknowns’; a fearful unwillingness to be confronted by our own ignorance.  

In a famous graduation speech entitled “This is Water” writer David Foster Wallace encourages those present to think about the ‘water’ in which they swim. What is so ubiquitous in life that it goes unnoticed? We might call these ‘unknown knows’: things we simply take for granted. On a theological level, the physical nature of our existence is one such phenomena. That we exist somewhere and somewhen is not a given; both space and time are creatures, too.  

And this ought to make us reflect: why are we made to be physical if we might not have been? The Bible is clear that this physicality is a gift. So much so that God Himself chooses to dwell amongst us in physical form. The Christian story is that, in Jesus Christ, God becomes human. The Christian Gospels go to great pains to stress his physicality. He eats, He sleeps, He cries, He bleeds. He reads from physical scrolls when in the synagogue.  

That God-given physicality means I can surround myself with the depth and breadth of my own creaturely ignorance; with my ‘unknown unknowns’. To my shame, I don’t do this often enough, and my increasingly digital life makes this harder. I have become physically detached from my ‘unknown unknowns’.  

And so, now Spellow Library is reopen, I am going to make a concerted effort to visit and support society’s physical monuments to my creaturely ignorance. They may make me uncomfortable as I am overwhelmed by the extent of my limitations, but they may also just make me humbler. And that is the real gift of our God-given physicality.  

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