Influencers are tying themselves to cryptocurrencies and their exchanges amid a crypto boom.
Charli D'Amelio, Jake Paul, and MrBeast have endorsed crypto exchanges or currencies.
Cryptocurrency investment can be risky, potentially causing investors to lose what they put in.
On Wednesday, the D'Amelio family posted a picture on their Instagram thanking cryptocurrency app Gemini for "Charli's birthday gift."
As part of a partnership deal, the company gave the parents of Charli D'Amelio, who has over 114 million followers on TikTok, an undisclosed amount of Bitcoin, according to a Gemini spokesperson. The app regularly works with the "influencer community," the Gemini spokesperson said, "to help educate their followers about cryptocurrency and promote the Gemini brand."
The sponsored gift for the TikTok star's 17th birthday didn't appear to come as a surprise. On April 30, Marc, the patriarch of the D'Amelio clan, tweeted, "Charli wants a Bitcoin for her birthday," despite Charli not being old enough to trade on the Gemini app, according to its terms of service. When a Twitter user questioned if the teen actually wanted crypto as a birthday present, Marc responded that she's "been asking for a Bitcoin all day."
Cryptocurrencies, or virtual tokens that can be mined by computers completing complex algorithms, have a total market capitalization of $2.4 trillion. Their values and name recognition are largely growing, in part, thanks to online promotions. The price of these coins can fluctuate wildly, sometimes for no discernable reason, making huge losses possible.
Influencers from all corners of social media have capitalized on the growing industry around cryptocurrency, despite its volatility.
Creators are pushing what some label 'scam coins'
Influencers have leveraged their relationships with viewers to promote cryptocurrencies, and it's usually not entirely clear what financial incentives are at play in these promotions.
According to Insider Intelligence, Gen Z (people born between 1998 and 2016) will be the largest US consumer market by 2026, with 82 million people. Appealing to that demographic with influencers and the parasocial relationship that they build can allow crypto ventures to expand their reach.
22-year-old social media star Tana Mongeau recently posted a sponsored Instagram post promoting the "Tits Coin" ($TITS), a decentralized finance token that started in 2014 that gives 5% of its liquidity pool (a collection of coins stored to facilitate decentralized trading) to breast cancer research.
On March 31, Daniel Keem, host of YouTube's DramaAlert channel with 5.8 million subscribers, tweeted a brief promotion of SafeMoon, a new online currency that launched earlier that month. Throughout April, Keem tweeted about the coin nearly two dozen times, showing off its rise in price and helping the decentralized finance token to trend on social media. It rose from one ten-millionth of a cent to one ten-thousandth of a cent mid-month.
Others also started to support the coin on social media, including rapper Lil Yatchy and Backstreet Boys member Nick Carter.
Other influencers like Jake Paul, the controversial YouTuber and boxer who has 20 million subscribers, have backed Safemoon on Twitter. Paul has been a staunch supporter of cryptos like Dogecoin and Bitcoin, and told Forbes in February that crypto is "the future...I'm speaking with my friends constantly about it. We're just scratching the surface."
"These tokens have zero purpose, aside from making early speculators and themselves rich, as the token itself won't be used for anything," trader Michaël van de Poppe told Vice in May about Safemoon."It's the flip-side of everything that the cryptocurrency ecosystem tries to achieve."
Keem has also pushed other volatile cryptocurrencies like XRP and Bonfire. He tweeted that he is "not a financial advisor" and that you should "not take any financial advice" from him.
Jimmy Donaldson, known as the philanthropic YouTuber MrBeast who has over 60 million subscribers, is an investor in "Refinable," a non-fungible token (NFT) company that sells tokens to fund transactions and is even featured on the site's home page.
Other YouTubers started to endorse the coin, with the 116,000-subscriber channel My Financial Friend posting a video titled, "The Next 100x Altcoin?! Why I'm Buying The Refinable FINE Token Tomorrow!"
The launch of Refinable did not go as expected. The coin was supposed to launch at $.033 but the price skyrocketed almost immediately to $8 due to "severe congestion" on Binance's trading platform, BSC. Over the next few hours, the price dropped drastically, hitting a low of $1.82. Those that invested immediately responded to Chan, frustrated with losing money.
"People lost a lot of money and that's something that happens," My Financial Friend said in a follow-up video. "Everyone on YouTube and the media can say it will be great… but there is a high level of risk with these things."
Cryptocurrency prices have recently surged alongside social media promotions
Traditional celebrities and popular online figures played a significant role in getting the crypto hysteria rolling, using their audience in a similar vein as influencers do.
When Tesla CEO Elon Musk changed his Twitter bio to "#bitcoin" in January, the coin's price jumped $6,000 in one hour. In February, Tesla started accepting Bitcoin as payment for their cars while investing $1.5 billion into the coin.
Musk had a similar effect on Dogecoin, the cryptocurrency based on the meme of a Shiba Inu popular nearly a decade ago. Musk's first reference to doge came in December 2020 and since then he's mentioned it over a dozen times, calling it the "people's crypto." Soon, other content creators started to push Doge, like Mia Khalifa who shared she was buying Dogecoin in January. Since then, the value of a single Dogecoin has risen over 1,000% and created a string of copycat cryptos to capitalize on the trend.
Bitcoin, and other cryptos like Etherium, have a limited amount of pieces that can be created before the supply is gone. Alt options like Dogecoin can be mined forever without running out, making its value appealing to those willing to invest in an idea or meme that doesn't have as much intrinsic value.
This follows the wave of hysteria around the rise in the price of Gamestop stock earlier this year, which was caused by Reddit users.
Cryptocurrency investments are 'ultra-volatile'
Investing in cryptocurrency is a risk with potentially high rewards. Unlike gold, which has real-world value, crypto is only valuable to those that see interest in the technology or the potential adaption could bring.
"Gold is, no pun intended, the standard if you want to measure purchasing power over millennia," JP Thierot, CEO of Uphold, a digital money platform, previously told Insider. "What bitcoin would seem to possess is the potential to go up to multiples of a moonshot."
A report in March from Deutsche Bank labeled Bitcoin as "ultra-volatile," and that "in 2020, 28 million bitcoins changed hands (150% of total bitcoins in circulation), compared to 40 shares of Apple (270% of its total shares in circulation)." That same month, Federal Reserve Chair Jerome Powell said that crypto assets are "not backed by anything. They're more of an asset for speculation."
Read the original article on Insider