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Shilling in crypto is an action that relates to the promotion of a new crypto coin or crypto token. We all know that crypto projects rely heavily on promotions from celebrities and influencers.
If you are an investor who is interested in start-ups, this blog post is for you.
Let’s learn more about crypto shilling and how it impacts people’s actions towards a new project.
Shill or Shilling Definition
Shilling in crypto happens when a person engages in the stealthy advertisement of a cryptocurrency. Crypto shilling aims to create hype around a new crypto coin or token through endorsements in public forums and social media. The endorsers shilling the new crypto pretends that they are not paid for these promotions.
When these celebrities or influencers successfully shill a project, many investors will put their money in it. Consequently, as the number of investors increase, the demand escalates as well. As a result, the price of that digital asset rises.
Crypto shilling focuses on pumping up the price using bold statements and promises. But, they don’t clearly explain how the cryptocurrency project works. Its primary objective is to draw attention and generate huge potential profits for those who purchased the token early.
Origin of the Term Shilling
This has a notorious connotation. The term existed even before cryptocurrencies came out. One good example is its application in casinos. In the case of casinos, a shill is their own employee. The casino allows their shill to win repeatedly so they can entice observers to believe that they can win also.
When the observers become players, their shill’s chances of winning become even higher.
Now, when applied to crypto, this happens when celebrities and businessmen can lure people into buying cryptocurrencies in bulk.
Shilling is highly connected to human psychology and tricking the human brain to get the responses that crypto marketers want.
Kinds of Crypto Shilling
These are the three kinds of personas that you should be aware of.
The Crypto Project’s Developers
It is normal for a business or invention’s own founder or team members to advertise their own product. The same goes for crypto projects. The developers advertise their own work to get attention and investment from people. However, if the team starts to oversell their crypto, that is a red flag.
The public needs to be aware of the difference between promotion and overselling. Listen to their words carefully. If they promise more and explain less, it is not a good sign. This can be further checked in their whitepaper and roadmap.
Celebrities or Influencers
We have recently witnessed an explosion in the number of influencers who promote various products on Tiktok, Instagram and other social media. Now, they also include promoting cryptocurrencies. The red flag to watch out for is their over enthusiastic persuasion for people to put in their money without providing a comprehensive explanation as to why they support that digital asset.
Another thing to consider is the influencer’s previous interactions or participation with crypto-related activities. If they show interest out-the-blue and suddenly promote a specific crypto, their motives may be quite questionable.
Businessmen or Early-Stage Investors
There are people who provide funding for cryptocurrency projects at its initial phases, such as crypto angel investors. These businessmen or early-stage investors also engage in advertising the digital asset.
Most of them are not fintech experts but they become crypto marketers because they are after making a big profit. For the most part, they shill the new digital asset so that its price increases.
Once the price reaches the ideal point, they sell all their coins or tokens. This results in earning big profits but it upsets the project’s price because it declines big-time.
Real-Life Shilling Example
In June 2021, Kim Kardashian posted an Instagram story promoting Ethereum Max or Emax. Aside from Kim Kardashian, Floyd ‘Money’ Mayweather also endorsed Emax. At a 2021 Miami Bitcoin Conference, Mayweather and his team even wore Ethereum Max t-shirts.
Kim Kardashian and Floyd Mayweather faced charges for misleading the public through their EMAX promotions.
Is it Illegal or Legal?
In most financial markets shilling is illegal. Nevertheless, regulations about cryptocurrency shilling are still under development. Both experienced and new investors need to to be cautious of crypto promoters since there is no published definition of the illegal aspects in crypto shilling.
Additionally, it is important to only heed advertisements from genuine promotions. There is a high risk that crypto start-ups who resort to crypto shilling turn into rug pull or pump and dump schemes in the long run.
While shilling has a largely notorious reputation, it can still be used for good. As long as the promoters are not out to deceive the public, shilling can make a huge impact to the progress of a crypto project.
Also, it is important to always stick with facts when dealing with the crypto world. The endorsers of a crypto project should be careful and conduct their own research about the crypto that they plan to endorse. Otherwise, it will heavily backfire on them.