How Crypto Has Negatively Influenced Advertisement and Marketing in Content Creation?

With new coins appearing and disappearing daily, some coin creators have decided to use influencers for advertisement and marketing, but it is destroying reputations on both sides of the equation.

(image credit: ft.com)

Cryptocurrency trading has become ever so more mainstream and the newest rage during the pandemic. With its popularity multiplying by the day due to social media and its immense potential for high returns, many entrepreneurs are trying to find ways to make money off of the system while it’s still prevalent as an investment medium. Just like with standard investing and the stock market, many prominent investors offer courses and one on one training to help their clients master and control the market. As expected, this type of service is being offered through the crypto lens, with countless self-made millionaires offering to guide new investors through the risky and confusing crypto space. However, one key difference between these two different types of investments opens up a whole new ballgame for crypto gurus. In the stock market, creating your own mutual fund to push out onto the market is a doable process but relatively difficult and time-consuming. You would then need to convince potential investors to invest in your mutual fund by promising a satisfactory return on your investment. With crypto, anyone can create their own coin and push their coin on social media to get attention. Since the coin is a currency and not a share in the stock of a company, you are betting on the coin increasing in value when investors begin to buy them. This type of investment is risky but can bring an insane return. Mainstream coins like Bitcoin and Etheruem have succeeded with great returns, but smaller coins like XRP and Cardono and meme coins like Dogecoin have seen even more massive returns.

The plan seems almost foolproof. You create a coin that has a certain unique characteristic, and spread it all over social media. As people start to buy the currency, its value will increase, making you and other early investors a lot of money. According to CNBC, an investment of $1,000 into Ethereum at the beginning of the year would have been worth around $5,711 in May, making that a gain of 471%. Surprisingly many smaller coins can give you an even greater investment, especially as an early investor. However, the plan isn’t completely foolproof because investors have to account for volatility in the market, especially when volatility in the crypto space is even more unbalanced than the traditional stock market. This type of volatility is extremely dangerous for investors. The coin can be up 25% one month and down 50% the next with almost no warning. With very few government regulations in place and tweets from billionaires like Elon Musk affecting the market in such dramatic ways, many conservative investors are staying clear from most cryptocurrencies even though the return on investment is extremely high. Is there a way to get rid of the volatility and guarantee your return on your investment? In the stock market, the answer would be insider trading which is illegal and a felony. In the crypto space, the answer lies in pump-and-dump schemes.

The pump-and-dump is the process of inflating a cryptocurrency, usually newly created, by marketing it on social media. Once new investors buy the coin and raise its value, the makers of the coin and other early investors will sell all their coins making a quick buck but crashing the coin’s price. This scheme will generally happen in the first week, and the coin is usually unrecoverable after investors pull out from such an untrustworthy coin. Unfortunately, as most of the crypto space is unregulated by the government, perpetrators are hard to catch even though the scheme is illegal.

(image credit: empirica.io)

A significant moral problem to this scheme is the advertising and marketing aspect of it. Most crypto investors have heard about pump-and-dump schemes and are super wary of them. When the market for making new cryptocurrencies was just getting started in 2020, promoting it yourself online often worked. However, in 2021 nobody trusts random tweets, TikTok’s, or Instagram posts that go viral. This is why crypto scammers are being forced to spend money to have famous content creators in the cryptocurrency space, and also content creators from other genres, promote their coins. Most crypto content creators are smart enough in 2021 not to accept any amount of money to promote cryptocurrencies, as that would damage their reputation in the community permanently. However, other famous content creators in other fields have not caught on yet and are now facing the consequences.

(image credit: entreprenuer.com)

One category of entertainment that is facing some difficulties is gaming and eSports. One of the most prominent organizations in the world: FazeClan, has removed one of its members and suspended three others for promoting a pump-and-dump scheme that has ruined the portfolios of thousands and has also damaged the reputation of the organization. They helped promote a coin called “Save The Kids” ($KIDS), a coin designed to donate crypto to kids. The founders wanted to build a financial cryptocurrency while also helping children in need. However, this plan ended up being a fabrication as the pump-and-dump scheme worked wonderfully for the initial investors and left new investors with deep holes in their pockets. One of the four previous members of FazeClan, Kay, suffered the worst punishment as he was kicked out of the organization that he was a part of for the past eight years. Kay was previously caught performing similar pump-and-dump schemes while the other three members were first-time offenders. Kay released a statement saying, “I want you all to know that I had no ill intent promoting any crypto altcoins. I honestly & naively thought we all had a chance to win which just isn’t the case. I didn't vet any of this with my team at FaZe, and I now know I should have”. However, many influencers in the crypto space are not buying that story as this was a repeat offense (BankSocial). As the cryptocurrency market evolves, content creators will need to be more careful and selective with who they choose to partner and run ads for, as this situation will prove to be a reminder of the consequences that can occur from such actions.