Influencers

The ‘Elon effect’ shows how opinion leaders shape the fintech market

Crypto “influencers” wield considerable influence over markets, particularly cryptocurrency markets — which hasn’t been positive for everyone over the last two years.

The power that influencers have in affecting public perception and therefore causing alterations in the value of a product, service, asset or currency has increased to the point where they can crash or uplift entire markets with their content and takes.

The Elon Effect

In 2021, Elon Musk could send the price of the famous memecoin Dogecoin (DOGE) up by 50% with just a single tweet. He still has a lot of power over the crypto markets, and several people in the cryptocurrency world and traditional finance have accused Musk of manipulating the cryptocurrency market with just a few tweets.

Other popular influencers could cause similar effects through social media posts or promotional videos. But why do they have so much power? Well, it’s all down to the power of influencer marketing; research shows that approximately 80% of consumers are more likely to buy products promoted by influencers instead of ads.

In the case of the crypto market, digital advertising has been partially irrelevant throughout the years due to multiple factors, the main one being that Google, Twitter and other social media platforms had banned crypto ads in the past. Therefore, promoting coins/tokens via influencers was the main marketing alternative for many cryptocurrency projects.

Let’s take FTX, for example — one of the top three crypto exchanges. It went from being an almost $40 billion crypto powerhouse to filing for bankruptcy. Its founder, Sam Bankman-Fried, has been seen posting strange, cryptic messages on Twitter following the FTX meltdown. Why? Who knows. But it’s leaving users, investors and even FTX employees confused.

With these ongoing shady and unclear messages, he is just adding more fuel to speculations and all sorts of theories — which only worsens the current scenario for the cryptocurrency industry.

Why we shouldn’t follow advice from influencers

The first, most important problem? Influencers’ advice and opinions are not always absolute or necessarily correct.

Even more, some of these influencers might not even have any familiarity or knowledge whatsoever about the product/asset/coin they’re promoting. Such was the case with reality TV star Kim Kardashian, who received $250,000 for promoting EthereumMax, a smart contract-enabled platform for building decentralized applications. Kardashian then had to pay $1.26 million in penalties, disgorgement and interest to the United States Securities and Exchange Commission.

“This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors,” SEC Chairman Gary Gensler said in a statement at the time.

This raises an obvious question that a lot of people do not seem to ask themselves: Should we really buy something from a TV reality star who has never had anything to do with cryptocurrencies?

Another problem with influencers that needs to be mentioned is that a lot of them can be found violating advertising rules and misleading investors with shady products/assets. In the case of India, crypto influencers are responsible for 92% of crypto ad violations.

The solution to these problems: Always DYOR — do your own research. It’s understandable that not everybody has the time to investigate a project or currency before investing in it, but it’s not reasonable to blindly follow advice from crypto influencers, either. Investors should take the time to personally check a potential investment instrument and find answers to the main questions that concern them.

The power opinion leaders have in today’s markets

Influencers have been heavily criticized for pumping or dumping cryptocurrencies in which they have a position in the market. For example, in 2017, the late John McAfee admitted to charging crypto projects more than $100,000 per tweet to promote their initial coin offerings, as well as taking a considerable percentage of their token supplies.

1/ Let’s review all the direct scams Bitboy has worked with in the past. Just in case you forgot here is the flyer with how much he charges.

I received this a while back by posing as a project interested in a promotion.
pic.twitter.com/FkC9HUDGsc

— ZachXBT (@zachxbt) January 3, 2022

Popular crypto influencer Ben Armstrong, aka BitBoy Crypto, also admitted to receiving payments from crypto projects to promote them on his YouTube channel for years — which led many of his viewers to suffer considerable losses.

Love or hate influencers, they need to be regulated

There are more examples that could be brought up here. But the main point is that promoting a cryptocurrency project or a coin almost feels like a synonym for “scam” in today’s crypto market.

Therefore, it seems sensible that countries and jurisdictions around the globe should lay out proper guidelines to regulate the level of influence that opinion leaders have. A good example of influencer regulation comes from Spain. The Mediterranean country established a set of rules that all influencers must follow before promoting cryptocurrencies. Otherwise, they face fines of up to 300,000 euros (just above $316,000).

Influencers have a great deal of power over the crypto market: With a single social media post, they can deter or catapult an entire crypto product or coin. And the bigger the influencer, the bigger their effect on the market. Therefore, they should be held accountable for their words and actions. If it takes official regulation to make this happen, so be it.

Vladimir Gorbunov is the founder and CEO of Choise.com. He previously worked as the CEO of Workle, an internet-based sales and servicing platform. He graduated from Finlandia University with an International Business Degree.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Potential US ban is a reminder that influencers should dump TikTok

With TikTok facing the prospect of removal from the United States, users should realize that traditional tech companies are far less reliable than the decentralized web.

With a recent proposal by a member of the United States Federal Communications Commission (FCC) to ban TikTok, influencers are scrambling. If the FCC makes good on the ban, TikTok creators could lose their fanbases and revenue streams overnight.

People are often skeptical about Web3, many of them influencers and digital content creators. Notably, many of those most reluctant to embrace Web3 are very successful on Web2. Since they’ve mastered monetization on popular Web2 platforms such as TikTok, Twitch and others, why bother learning the rules of a new game?

The current regulatory debate around restricting TikTok in the U.S. provides a salient example of the risks associated with Web2 platforms, and why embracing Web3 can both benefit and protect influencers and their fans. The value add of Web3 is twofold — autonomy and insurance. Let’s hope this TikTok proposal provides a wake-up call for influencers everywhere.

Cutting out the middleman

There is a common misconception (not helped by the name) that Web3 is here to replace Web2. Rather than thinking about Web3 as a “new web,” it’s best to think about Web3 as a new channel. Web2 isn’t going anywhere soon, and as a creator, it’s smart to monetize as many platforms as possible. Influencers should think of it this way: If TikTok was announced today, would you reject it out of hand just because you were already successful on YouTube? Of course not. It’s the same with Web3.

In a Web3 world, where digital content can be “tokenized” as NFTs, creators can set their own payment terms, and fans can actually own the digital item that they’re paying for, whether that be an artwork, a video, a piece of music, etc. NFTs can include royalty parameters, so creators and collectors can benefit directly from the proceeds of secondary market sales. That kind of recurring revenue stream doesn’t exist on traditional Web2 content platforms.

Protecting your content for the long term

For successful influencers, censorship and “de-platforming” represent a major threat to their revenue, but many creators see it as an abstract risk. They argue that the removal of bad content is necessary and big tech companies can be relied upon to make sensible decisions. And anyway, good, rule-abiding creators like themselves won’t run afoul of moderation, right? They also seem to believe that platforms like Twitch, TikTok and Instagram are so successful that they’ll be around forever. Sadly, none of these arguments hold up.

In fact, popular platforms don’t stick around forever (remember MySpace and Vine?), and rule-abiding content creators get censored all the time. With so much content on their platforms, companies are forced to rely on automated solutions that frequently get things wrong, with costly consequences for creators. Healthy online communities need rules, and moderation is necessary in order to enforce them. But, if you’re a creator with an archive of valuable content, there’s a chance that your content will be lost or become unavailable to your fans.

Web3 is different because it’s built on blockchains (or public ledgers) where data is added but never deleted or changed. Blockchains are decentralized by design, which means the data isn’t sitting on a server somewhere controlled by a big tech company; instead, a large network of nodes around the world maintains the accuracy of the network, making it transparent and virtually impossible to hack or corrupt.

An example of the resilience of Web3 platforms happened last year when the founder of Tezos-based NFT marketplace Hic et Nunc decided to abruptly shut down the project, leaving half a million NFTs in digital limbo. But, because Tezos is a public blockchain, and because the platform was built on Web3 open-source principles, the Hic et Nunc user community was able to relaunch it within hours, without serious disruption to sales. Imagine doing that with Instagram or TikTok.

Although a direct Web3 equivalent of TikTok doesn’t exist yet, it’s only a matter of time. And if you’re a digital content creator, there’s no need to wait. Web3 makes it possible, right now, to broaden your options for monetization and audience engagement through NFTs and other mechanisms. Creators should leverage as many platforms as possible. Web3 is what comes next — and it’s coming faster than you think.

Mark Soares is the founder and chief marketing officer of Blokhaus, a marketing and communications agency supporting global activities for the Tezos blockchain ecosystem. He was previously the general manager of marketing and communications at Nikon Inc., where he oversaw branding, product and content marketing, influencer activities, and more.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.