Last year, U.S. President Donald Trump admitted on Twitter that he is not a huge fan of bitcoin (BTC) and other cryptocurrencies. "It's not money," he wrote in July, stating that their value is "highly volatile and based on nothing." Now, cryptocurrency traders have decided to respond in their own way to the 45th president of the United States.
The rules of the new TRUMP token
In recent days, a digital token called Trump 2020 with the TRUMP symbol was launched, courtesy of the FTX cryptocurrency exchange.
FTX says the new token will function as a futures contract, allowing traders to open long (Trump victory) or short (Trump defeat) positions. "TRUMP rises to $ 1 if Donald Trump wins the 2020 presidential election in the United States and drops to $ 0 if not," FTX says in a post on his website.
Theoretically, the price of the token should be roughly in line with the perceived odds of a Trump victory. The token, which was released about a week ago, is currently trading at $ 0.62 after Trump's acquittal, a figure that expresses a 62% chance of being re-elected.
Some online sites are opening bets on the upcoming elections that are shaping up to be historic: Trump should be the first incumbent president to face voters after an impeachment process (the president was acquitted on February 5 by the United States Senate).
But the new FTX contract could represent the crypto industry's first attempt to monetize the climate around polarized voters regarding Trump's prospects for 2020.
And in case of ambiguous election results?
FTX is owned by a parent company based in Antigua and Barbuda, according to the company's website, and is headed by Sam Bankman-Fried, a professional trader.
For traders leveraging the risks of crypto markets, FTX publishes a warning on the binary nature of the final payoff of the TRUMP token: price fluctuations could be even more volatile than bitcoin's well-known up-now, down-now (Bitcoin is soared 36% this year to around $ 9800, after the price nearly doubled in 2019).
"TRUMP's risk profile is different from BTC," according to the website. "He has significantly higher chances of making a big move (at $ 0 or $ 1)." Considering the possibility of irregular or ambiguous elections, the new TRUMP token comes with terms that outline an emergency plan if the results are unclear and Trump refused to leave office immediately.
In the event that it is impossible to determine the winner, "this contract will settle at $ 1 if Donald Trump will still be president on February 1, 2021 and $ 0 otherwise."