Bitcoin and dogecoin? Mona darling, let’s stick to sona

When asked to name three of his favourite things, Bollywood villain Ajit answers as follows: “Mona, sona, aur Mona ke saath sona.” In this, the delightfully lascivious Ajit has at least one in common with most Indians, Chinese, Egyptians or other ancient civilizations — gold. Our Lakshmi is frequently depicted with gold coins emanating from her palm, and over 6,000 years ago the Egyptians fashioned Tutankhamun’s death mask with pure gold to ease his transformation to divinity. Gold also happens to be a stellar performer this year, ripping ahead of the S&P 500, the Sensex or Nvidia.

There’s economic history too. For over a hundred years, the international monetary system operated on a strict and then a hybrid gold standard. This ended in 1971, when Richard Nixon ended the dollar’s convertibility into gold and the world moved to the current system of fiat currencies.

Regardless, gold continues to be a primary store of value, with most central banks holding a substantial portion of their reserves in gold. The US leads, with 78% of its reserves held in gold. As of Jan 2025, the Reserve Bank of India held 879 tons, valued at over $50 billion.

Enter bitcoin. Tech bros fascinated with math loved the elegance of a digital asset that is secure, finite and highly divisible, and unlike gold can be verified, transported and stored at minimal cost. But tech bros being tech bros aren’t happy with art for art’s sake, and latched onto the fantastical idea that bitcoin could be an alternative currency beyond the interference of central banks, serving both as a medium of exchange and store of value that might displace not just gold, but all fiat currencies. The idea gained traction following the global financial crisis and the indiscriminate printing of money. And now President Trump has announced the creation of a Strategic Bitcoin Reserve and a Digital Asset Stockpile.

The crypto bros hope other G20 sovereigns, India among them, will follow.

Ironically, Trump himself provides a cogent argument against crypto. “I am not a fan of bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” he said in a 2019 tweet. Truer words were never spoken by Trump. Words like “strategic” and “stockpile” are best associated with nuclear warheads. Why would the US undermine the dollar’s status as the planet’s reserve currency, an extraordinary privilege that allows it to borrow virtually without limit? Moreover, the US can weaponise its dollar by denying nation states access to the global financial system, as it has with Iran and Russia. Why compromise such power?

Volatility and tax consequences render cryptocurrencies useless both as a means of payment or as a safe-haven investment. Unlike gold, bitcoin trades up when animal spirits run high and down when investors run scared, increasing rather than dampening volatility in an investment portfolio. And bitcoin’s power-hungry mining process is terrible for the environment. Blockchain-based payment rails have been touted as tools for financial inclusion, but India has already made giant strides in this regard with UPI.

Meme coins are the most dangerous manifestations of cryptomania.

Like dogecoin whose creators meant it as an ironic joke, but what they didn’t count on was the big doge himself — Elon Musk — propelling it to cult status. It is a $30 billion charade, not even satisfying the most basic driver of economic value — scarcity. Regrettably, now President Trump has jumped on the bandwagon. Among his more controversial actions — even for the crypto bros — is the creation of $TRUMP and $MELANIA meme coins. Issued at $10, $TRUMP surged to $74.59 and an impressive market value of $15 billion, generating trading fees of over $50 million along the way. Trump entities retain 80% of $TRUMP coins while an entity controlled by the First Lady owns 65% of $MELANIA coins. The price has crashed 85% since, prompting many to question if this was a ‘rug pull’, where insiders profit massively while regular investors face significant losses. Others have suggested an even more devious agenda. Would Zelenskyy have met with a different reception in the Oval Office had the National Bank of Ukraine converted its gold holdings into $TRUMP?

I’m all for fun and games with collectibles: an Ajit Coin with an accompanying Mona Darling Coin might be amusing to own for fans like me. And regulation and clarity are always welcome when it comes to speculation in financial markets. But this is where a govt’s interest and engagement should end.

Mercifully, at least for now, the American Strategic Bitcoin Reserve and Digital Asset Stockpile are limited to law enforcement seizures related to criminal activities — which itself says a lot about the utility of crypto. Hopefully, it remains this way and President Trump reverts to his first love. A passion he shares with Ajit and graces the facade of his Trump Tower in New York, his Mar-a-Lago in Florida, and his redecorated Oval Office — gold.