The Trump administration disclosed the names of the cryptocurrencies it intends building into a strategic reserve of digital assets, surprising the market by the wide range of tokens Trump mentioned. The value of investment has not yet been determined.
The announcement lit a fire under the tokens, including the big daddy, Bitcoin, which jumped as much as 10%. That will come as great news to the Bitcoin faithful, because it has had a miserable 2025 so far.
But that was nothing compared to ADA, which soared an incredible 71%. The other surprise was XRP, while the much better known sol and ether (which runs on the Ethereum blockchain) were also included. Interestingly, they all dropped back after their post announcement boost a week ago now.
So who is who in this zoo? Here is a brief explainer for each of the tokens that brave investors might find interesting.
Bitcoin: We all know about Bitcoin, but what’s worth mentioning here is how different it is from all the others because it has a capped supply of 21 million coins. And of those, 19 million have already been “mined”; the end of the creation of new bitcoins is now within sight. That happens in 2040, and mining is slowing in the meantime.
The hard cap means it’s effectively an inflation hedge, because unlike traditional fiat currencies, it can’t be debased by excessive money printing or by excessive government lending.
I don’t know about you, but public debt is a subject that gives me the screaming heebie-jeebies. Global government debt in 2000 was about $20-trillion. In 2010, it rose to $51-trillion. It’s now just under $100-trillion, about 93% of global GDP. Lots of people have lots of problems with Bitcoin as a concept, but to me, having an alternative to the fiat world makes Bitcoin like a little personal, portable life raft; it’s independent, not controlled by any government, and isn’t weighed down by reckless debt policies.
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Ether: The big advantage of the Ethereum blockchain is smart contracts, which allow decentralised applications to run automatically without intermediaries. The result is that the token powers some fabulous innovations and DeFi (Decentralized Finance), as well as some, let’s say, less auspicious innovations like NFTs.
But it does have the largest developer community and it uses a new token-generation system called Proof-of-Stake (PoS), which is massively more energy-efficient than Bitcoin and the previous Ethereum system called Proof-of-Work.
The downside is its high comparative transaction fees, called gas fees. Citing this always makes me a bit queasy because when you talk about “high” fees, it’s almost like people don’t know the kind of fees that banks typically charge. Those are actually “high” fees. What you pay on Ethereum is chicken feed by comparison.
The crypto company of the Trump family, World Liberty Financial, has issued gazillions of digital tokens on the Ethereum blockchain that it has so far sold for over $500 million. The FT reports that Trump’s crypto project has made at least $350-million from the launch of his memecoin. The $TRUMP earnings were made up of $314mn from the sale of the tokens and $36mn from fees. Conflict of interest much?
Sol: On the subject of fees, Solana’s big advantage is its speed and cost. Ethereum can currently process only about 15-30 transactions per second (TPS) while Solana is currently running at 65,000. (It should be said Ethereum has a fix coming).
But the other great thing about Solana is that it is very cheap; it’s often less than $0.01 per transaction. This has obvious upsides but also, weirdly, some down sides. Its cheapness makes it ideal for high-frequency trading, gaming, and microtransactions and, as it happens, memecoins, including the ones launched by Trump and his wife Melania in January. So is it suspicious that Solana’s in the mix? You betcha. But it is the eighth-largest cryptocurrency, at around $70-billion, so it does sort of qualify on that basis. And I lost money on my investment in $Melania; thanks for asking.
XRP: If you thought sol has a faster transaction time and is cheaper than ether, then XRP goes one further; it’s blisteringly fast and costs are tiny (typically $0.0002 per transaction). That’s partly because of the simplicity of its design, which is very focused on cross-border payments and remittances.
As a result, many banks use it for cross-border payments – for example, American Express uses it in its partnership with Santander to power real-time, trackable cross-border payments for businesses. This means XRP is getting larger fast; it’s the fourth-largest crypto token now, with a total value of $130-billion.
It’s amazing how fast this has all happened: in November last year, daily turnover of XRP was around $1-billion per day. It’s now around $14-billion. Its big weakness is simultaneously its main strength: While XRP excels in cross-border payments, its use case beyond banking is limited, because unlike Ethereum and Solana, XRP does not support smart contracts natively. Amazingly, it does not appear that the Trump family has found a way of benefiting from the token – yet.
ADA: This token runs on a blockchain called Cardano, and is very like Ethereum and Solana in the sense that it runs smart contracts, allowing DApps and DeFi to be built. It claims to be a bit cheaper and more secure than Ethereum and Solana, but honestly I’m not sure why it was included in the list.
Clearly, the market wasn’t expecting its inclusion since it easily enjoyed the biggest gains from the announcement. There is $28-billion worth of ADA tokens in circulation, and it’s the ninth-largest cryptocurrency.
One loser here is Tether, the third-largest token, although of course investing dollars in a coin that tracks dollars would be a bit pointless. Happily, Elon Musk’s favourite coin, Doge, didn’t make the cut either.
You have to say, for the US government to be heading down this track is a bit curious. What it means is that the owner of the world’s largest reserve currency is betting against itself. But then again, the dollar is basically down about 2% since Trump took over against a basket of currencies, so maybe it’s a sensible bet.
Just kidding. đź’Ą
This article first appeared in Daily Maverick here.
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