$Trump is already worth billions. What to know about the meme coin.

Dubbed $TRUMP and $MELANIA, the tokens are a type of cryptocurrency that doesn’t serve any economic purpose and whose value is based largely on the popularity of internet memes. The market cap of the $TRUMP token stood at about $9 billion as of 7:30 p.m. ET on Tuesday; $MELANIA hovered around $810 million.

Trump commented on his meme coin for the first time Tuesday afternoon when asked by a reporter whether he plans to continue selling products that benefit him personally.

“Well I don’t know if it benefitted. I don’t know where it is. I don’t know much about it other than I launched it," he said. “I heard it was very successful. I haven’t checked it. Where is it today?"

The tokens drew swift criticism from ethics watchdog groups that said they create significant conflicts of interest for the president. Here’s what you should know about the new meme coins:

1. It’s relatively easy to create a meme coin.

Meme coins are created based on funny or viral internet memes—a joke, an image or a turn of phrase that is often associated with animals or celebrities. Because of their fun and lighthearted nature, the tokens typically serve no purpose other than to bring a few chuckles to an internet community keen on sharing the joke.

In the case of the president’s token, the meme is a picture of him holding his fist in the air with the words “fight, fight, fight" in the background, a phrase he mouthed after being shot in the upper right ear during a rally in Butler, Pa., last summer. The first lady’s meme is an image of her smiling while clasping her hands in a prayer.

Trump or any other coin issuer benefits twice when meme coins are sold to the public. They get the proceeds of coin sales and have an ownership stake whose value rises when the price of the coin increases. They can then sell more coins to gain further profits.

These days, anyone can create a meme coin within minutes thanks to the proliferation of websites that specialize in one-stop token creation. Users simply need to plug in the desired names, tickers and descriptions of their tokens and pay a fee before launching their very own meme coins.

The cost of creating a meme coin varies depending on the blockchain used. On Solana, the network used by the Trumps, low transaction costs and fast speeds have made it a breeding ground for all kinds of meme coins. Millions of tokens have been created on the network, though most have failed to gain traction. The mania over meme coins all started with a Shiba Inu. Dogecoin is the original meme coin that set the internet ablaze. Its popularity exploded after Elon Musk, the Tesla chief and Trump ally, obsessively tweeted about it. Today, it trades at around 37 cents, putting its market cap at $55 billion. That is down from a peak of more than $80 billion in May 2021.

2. Meme coins are easily accessible to buy or sell on crypto exchanges.

Once created, meme coins can trade on various exchanges. People can buy and sell them on centralized exchanges such as Coinbase Global and Binance, once they are approved for listing, or on decentralized exchanges like Uniswap that don’t require approval from a centralized entity.

Regardless of where they trade, a key feature of meme coins is their extreme volatility. Their prices swing wildly based on the hype surrounding the underlying memes. Most meme coins can’t be used to buy anything in the real world; their value is assigned by fellow internet users.

A prime example: The $TRUMP coin crashed more than 45% on Sunday afternoon following the launch of the $MELANIA token, before recovering some ground.

3. The new meme coins quickly drew criticism on social media.

Critics warn the tokens erode any boundaries between the president’s political and business interests. Foreign governments or businesses seeking to influence Washington could be inclined to buy the tokens to curry favor with Trump, they caution.

The biggest point of contention: 80% of the $TRUMP token’s supply is owned by Fight Fight Fight and CIC Digital, an affiliate of the Trump Organization that was recently registered in Delaware. Some 200 million of the 1 billion $TRUMP tokens have been released, and the rest will be sold over three years, according to the website associated with the token.

Based on the $TRUMP token’s current price of around $44, Trump’s stake in the project is worth about $35 billion, a staggering sum that could vanish just as quickly as it grew in the wild market for meme coins. The Wall Street Journal recently pegged Trump’s net worth at between $7.5 billion and $10 billion, including debt.

4. The big question: Could Trump pocket $35 billion?

In short, no. Trump’s meme-coin gains are unrealized profits that exist only on paper. If he were to flood the market with the remaining tokens, it is unlikely he would find enough buyers at the current price. As he unloaded his position, the price would very likely go down, as would the value of his holdings.

One of the primary criticisms of meme coins is their susceptibility to pump-and-dump schemes in which large holders cause sharp price declines by selling more tokens than the market can absorb. The sudden drop in price often leaves investors with worthless tokens, an act that is known in crypto parlance as a rug pull. Those who abscond with investor money can face serious legal consequences and reputational damage.

Skeptics say the meme-coin frenzy is yet another sign of a frothy market that has become obsessed with get-rich-quick schemes. Without a business model, most meme coins lose momentum and become inactive over time. The staying power of Trump’s meme coin will offer an unprecedented test of the market.

Write to Vicky Ge Huang at vicky.huang@wsj.com