The hype surrounding influencers has also arrived on the crypto market. More and more people are advertising certain coins or exchanges on social media. Here, people’s greed is often exploited in order to achieve high profits for the influencers themselves. Because the fear of missing something is particularly pronounced among young people. The desire and dream of many people to get rich quickly and easily is simply used to enrich themselves. So in this report, we’re going to go over the pros and cons of crypto influencers bringing them to the industry. We also explain what you have to watch out for as a user in order not to be cheated out of your money.
How do influencers make Money?
First of all, you have to understand how influencers make money. There are several options here. On the one hand, they are paid directly by the platforms and receive a salary based on the clicks generated. On the other hand, they use advertising partnerships and affiliate links as a source of income. And this is where the first problem arises. Particularly dubious and risky advertising partners usually pay a lot of money. This means that influencers will soon be faced with a difficult choice. Do I accept an advertising deal that is risky for the community and can harm the fans, but will make me a lot of money? Am I making a moral choice for the fans and against the money? Influencers have to ask themselves all of this at some point.
This is even more pronounced in the crypto market. Because here it is not, as in most areas, about any consumer products, but about financial services or financial products. Consequently, almost every deal is about the money of the followers. Followers must always be aware of this principle. Because almost nobody in the world will advertise anything without making money.
BaFin warns of Crypto influencers
Recently, the regulatory authority BaFin also warned against crypto influencers. Thorsten Plötzsch, BaFin Executive Director, described the following to the German Press Agency: “Even if the proportion of private investors in crypto assets is currently still manageable, we have recently been receiving more and more information from consumers about dubious platforms, also from the crypto Area. Often the question is whether and how consumers can get back the money they have invested.” “Influencers who comment on financial products often do not really know them well enough themselves,” explained the Bafin executive director. As a result, the influencers often play with the fear of the fans in order to enrich themselves.
VLaunch – Biggest Influencer Scam?
Exactly this scenario occurred with VLaunch, a crypto launchpad. This served to buy mostly unknown coins inexpensively before the official release in order to then generate large profits. The product was launched by leading blockchain influencers MMCrypto and CryptoMo . MMCrypto alone has more than 1 million followers on Twitter. The project was also supported by influencers The Martini Guy (117,000 subscribers), Altcoin Buzz (335,000 subscribers) and Crypto Busy (205,000 subscribers). Thus, behind the project was a reach of several million fans.
Initially, the launchpad was still able to perform reasonably well and catapulted its own token VPAD to an ATH of $2.21 on December 30, 2021. Then came the great disillusionment. The influencers supported the project less and less and so the launchpad is slowly dying out. The price of its own token lost more than 97% and is currently $0.07.
Thus, after a good six months, the following can be determined as a conclusion. Some of the biggest crypto influencers took advantage of their community to get rich. Even “trustworthy” sources with several million followers do not shy away from these principles. This means that you shouldn’t believe almost anyone on social media.
NFT Ad Scam
Another bad example of influencer advertising happened earlier this year. One of the biggest influencers “ MonthaBlack ”, which has several million followers on various social media platforms, advertised an NFT competition. This was an NFT collection where the creators with anonymous profiles kept selling their own artworks back and forth to raise the price. This created the impression that the project would be subject to high demand. This principle is relatively common with OpenSea, because the fixed prices often rise due to a lot of traffic.
When MontanaBlack advertised the Squiggels project with a sweepstakes on February 3, there was a lot of criticism very quickly, because research found out that the NFTs are an exit scam. A few hours later, the project did not appear on OpenSea anymore and is no longer available for purchase.
The case is problematic for a number of reasons. First, because “MontanaBlack” is an entertainment influencer. As a result, the community addressed usually has relatively little knowledge of crypto in general and even less knowledge of NFTs. So if your favorite influencer advertises a specific project, the followers get the impression that it is a serious investment. As a result, despite the warnings that quickly emerged, many retail investors lost all their money.
But it is not only from this point of view that the matter is reprehensible. Every transaction is saved by the blockchain and can be traced back if the wallet address can be assigned to someone. This is how “MontanaBlack” could be proven that he received €99,000 for a Twitter post for an NFT casino. The dimensions for the Squiggels ad should be similar.
This brings us back to the original question of the article. At what point is an influencer for sale? When do I put money above the welfare of the fans? And “MontanaBlack” is just one example of how an influencer can be bought from a certain point in time.
Fast money – Small influencers are often more susceptible to dubious advertising
While the case of MontanaBlack has made waves, the problem lies elsewhere. Because influencers like “MontanaBlack”, who have several million followers, have the privilege of being able to choose their advertising partners. Smaller influencers usually do not have this. All the more they are tempted to advertise for dubious sites, where they earn horrendous sums in comparison. Ultimately, every influencer has to ask himself the key question of whether he wants to make money in this way.
This phenomenon is even more pronounced in the crypto sector. Because providers of dubious products often pay a lot of money. For this reason alone, influencers have a certain task of protecting their community, which unfortunately they do not always do.
The block trainer – there is another way
Roman Reher aka Der Blocktrainer is the largest Bitcoin YouTuber in Germany with over 133,000 subscribers. Every day he entertains his fans with videos or live streams about current Bitcoin topics. He also linked to a high-risk offer in 2019. He criticized a stock exchange, but still advertised at the end of the video with an affiliate link for registration. Then 20 of his then 2,000 subscribers registered with the stock exchange, earning him more than 1,000 euros.
A short time later he apologized for his actions in the video “ The Dirt in Cryptospace ”. This behavior shows that there is another way. Although this money was quite lucrative with the 2,000 subscribers at the time, it probably would have hurt him anyway. Through his video and his honesty, Roman Reher was able to develop into the largest Bitcoin channel in Germany and today enjoys an excellent reputation in the community.
He currently offers informative content on several social media channels. Furthermore, he faces high-ranking people in disputes and discusses whether the Bitcoin vision can really become reality. He shows that even people like Dr. Bofinger usually have little idea about Bitcoin itself. He also refutes the FUD, which is set up by politicians and shows the opportunities of Bitcoin.
The industry currently needs precisely such people. In terms of adoption, prejudices that many people have about both crypto and bitcoin need to be seriously disproved. This is the only way the industry can continue to develop and offer added value for many people.
How do I recognize a reputable influencer?
As it turns out, the added value that influencers bring to the industry varies quite a bit. That is why it is all the more important to recognize whether an influencer is serious or only acts for their own benefit. There are several clues here. Basically, you always have to say to financial influencers that you should never invest on the advice of a specific person. You should keep your distance from things that you hardly know anything about and deal with the topic in detail for the first time.
As a financial influencer, it is mandatory for example in Germany to appear in person, i.e. to show yourself in front of the camera. Financial influencers must therefore be identifiable. Furthermore, they may not advertise investment advice, but only explain relevant background information in a simple and understandable way with professional knowledge. In addition, social media channels are subject to an imprint obligation. The precise information provided by the operator makes it possible to see whether a financial influencer is professional or not.
Conclusion – do influencers offer added value for the Crypto industry?
This question cannot be answered one hundred percent. Influencers are an important part of every industry and support the business model. However, scandals like Project VLaunch by some of the biggest crypto influencers are hurting the industry. Furthermore, cases like the MontanaBlack promotion, which generally has little to do with the crypto space, cast new innovations, in this case NFTs, in a bad light.
It is all the more important to have people like Roman Reher who accept and respond to constructive criticism. These influencers definitely offer added value for the crypto sector and help it to establish itself on the mass market. In conclusion, one can say that one should always be suspicious of influencers at first. Because even well-known and large influencers have already used their followers to enrich themselves.
It is important that an investment decision is always made personally. Always do your own research and never invest for someone else. Keeping this in mind, most influencers should not pose a threat to small investors and even offer informative added value.