Social Media Influence on Cryptocurrencieson January 15th, 2018
by Nick Rojas
Cryptocurrency has been enjoying a great deal of attention in the media as of late, and not just traditional media either. In fact, much of the conversation surrounding cryptos takes place online, via social media platforms. Initially, the majority of useful information about cryptocurrencies could only be found on discussion sites and chat rooms dedicated specifically to the subject, but as cryptos have entered mainstream consciousness the discussion has spread to more popular channels. Today, it’s easy to find people talking about cryptocurrencies on Facebook, Twitter, and Slack.
Influence: A Two-Way Street
Cryptocurrency hasn’t just influenced the kind of content found on most social media platforms though—social media has also shaped the development of cryptocurrency itself. Take Bitcoin for example, which required considerable buzz to be generated before it could be considered a viable alternative to fiat currency. Simply put, it wasn’t enough for the blockchain technology that enabled Bitcoin to exist. There also had to be communities of people willing to use it.
From Forums to Facebook… and Beyond
Satoshi Nakamoto originally promoted Bitcoin using a variety of internet forums, such as the P2P Foundation. Forums also allowed for the first real-world Bitcoin transactions, providing proof-of-concept to the user base. Importantly, these forums also allowed the Bitcoin community to stay abreast of new technologies and ideas that could be used to strengthen the currency. This kind of community-oriented approach persists today in the many Facebook groups and Slack teams devoted to cryptocurrency.
The excitement surrounding cryptocurrency has also resulted in the development of several new platforms built expressly around the concept. Synereo creates apps that help social media users monetize their own digital content to earn AMPs—their own cryptocurrency. Other businesses are quickly adapting to incorporate cryptocurrencies into their existing models. Digital money platforms like Uphold now offer members the ability to convert their money between 30 different currencies—including Bitcoin.
Crypto Security in the Age of Social Media
One of the reasons new cryptocurrency platforms may be emerging so quickly is that popular social media channels have the potential to spread misinformation. The more people join the global discussion about cryptocurrencies, the more difficult it can become to verify information. As a result, it can become extremely hard to find authorities whose experience and intentions can be trusted.
It is even possible for some people to manipulate the value of a given cryptocurrency by spreading false information to lure in or scare away investors. Worse yet, automated traders known as “bots” can artificially inflate the price of a crypto by making purchases based on certain triggers and driving up the price. Once this occurs, real people often see the market going up, overpay for their own tokens, spread excitement via social media, and cause vast numbers to lose large amounts of money when the bots inevitably change course. The more common these “pump-and-dump” incidents become, the more important it will be for any prospective cryptocurrency traders to do their research and carefully vet their sources before exposing themselves to financial risk.
Understanding the potential for cryptocurrencies will be an important part of staying financially savvy in the coming years, but it will be equally important to understand their risks. While information on cryptos is more accessible than it has ever been before, it is also less consistent. Like any new technology, cryptos will likely continue to evolve in unexpected and unpredictable ways. Those eager to invest should take time to make sure they are listening to the right channels.
About the Author:
Nick Rojas is a business consultant and writer who lives in Los Angeles and Chicago. He has consulted small and medium-sized enterprises for over twenty years. He has contributed articles to Visual.ly, Entrepreneur, and TechCrunch. You can follow him on Twitter @NickARojas, or you can reach him at NickAndrewRojas@gmail.com.