The simple identifier of a pair of laser eyes, a badge of optimism that Bitcoin was headed for $100,000 and beyond, at its peak graced the avatars of congressmen, billionaires, sports stars, and of course hordes of crypto enthusiasts. base. .
The lasers aren’t glowing as brightly after the latest defeat in cryptoland, and some have gone completely dark, presumably in an effort to control reputation damage. The Winklevoss twins are now busy promoting their next act as musicians in a cover band called Mars Junction; Elon Musk insists that he never told anyone to buy. And celebrities who once flaunted their non-fungible tokens have now removed them.
The real changes will come further down the speculative food chain, as the fuel for viral economic narratives promoting cryptocurrency trading among impressionable young consumers eager to get rich faster than the rest of society runs out.
The business model of influencers is to accept real dollars in exchange for promoting virtual cash. At one point, YouTubers were offered $30,000 to promote crypto-linked investments. But those dollars are drying up as trading on exchanges declines and seed funding disappears. Even Coinbase Global Inc., with a market capitalization of more than $12 billion, has slashed affiliate marketing fees, according to Business Insider. Influencers who just a few months ago earned $40 for each new signup on the platform are now being offered $2 or $3.
Celebrities like Matt Damon and Larry David deserve to be criticized for promoting ads, but at least their affiliations were clear. Not all social media personalities are scammers. But those with less transparent ties to the products they were promoting, such as YouTuber Logan Paul, a cheerleader for his 23 million followers for the collapsed token Dink Doink, a project he told the New York Times in May had exited” absurdly wrong”, are clearly eroding the confidence of fans in general.
And as the obvious ignorance of some crypto shills trickles down to their fans, who are sure to tire of constant claims that crypto is an “inflation hedge” when it is just the opposite, more regulatory intervention, as well as voluntary crackdowns by TikTok and other social networks. Platforms are not likely to be far behind. The accounts of some reality TV stars have been shut down, with Snapchat suspending Jazz and Laurent Correia last year.
This is not about censorship, but about transparency. Jackson Palmer, co-creator of Dogecoin, has a general term to describe our world: Griftonomics. Applying it to cryptocurrencies, he says, reveals a network of “bought influencers.” A study by the Dutch financial markets regulator of 150 influencers covering more than 1 million followers found that only a small fraction, around 1%, did not make money from affiliate projects. many of which were not revealed.
The authorities obviously have a role to play in cleaning up the worst excesses. Advertising supervisors in the UK and France have done a decent job of stopping misleading advertising campaigns. Kim Kardashian and Floyd Mayweather were sued in January, accused of promoting a digital currency called EthereumMax to investors. Mayweather had already been fined by the US Securities and Exchange Commission in 2018 for promoting coins without disclosing a financial interest, while last year Kardashian was reprimanded by the UK Financial Conduct Authority for using her base of fans to promote “a speculative digital token created a month earlier.” by unknown developers.”
But there is also an urgent need for more financial and digital literacy. Young people are saddled with debt at an increasingly young age and feel the pressure acutely. There is also a sense that wealth is accumulated through luck (being born into the right generation or family, or endorsing the right token) rather than due to merit. That helps explain why Buy-Now-Pay-Later loans have flourished among those struggling to pay them off, and why a high percentage of people follow and listen to influencers.
There’s a role here for parents and educators, and maybe even specific apps with security measures to allow experimental spending with small amounts of cash. And it should also be possible for regulators to fight fire with fire: Misleading economic narratives about inflation hedges could be countered by qualified influencers, just as with other forms of misinformation.
But for now, people with laser eyes on their profile pictures have inadvertently placed an obvious health warning on their content. If you see those two red dots, stay away.
More from this writer and others at Bloomberg Opinion:
Crypto Not Too Big To Fail, Even With The Help Of FTX: Lionel Laurent
• The next big thing in AI is ‘fake’ data: Parmy Olson
Bitcoin can serve many masters in the war in Ukraine: Tim Culpan
This column does not necessarily reflect the opinion of the editorial board or of Bloomberg LP and its owners.
Lionel Laurent is a columnist for Bloomberg Opinion covering digital currencies, the European Union, and France. Previously, he was a reporter for Reuters and Forbes.
More stories like this are available at bloomberg.com/opinion