The downside to ‘social media underpinning growth’ of cryptos like Bitcoin, Dogecoin

Social media has a huge influence on the lives of most netizens, often dictating the way the world is perceived. The cryptocurrency industry is no exception. In fact, a new report by Finder.com has predicted that social media will underpin the industry’s growth going forward. And, there is good reason to believe so too.

The report, studying cryptocurrency usage in Australia, found that more than half of the country’s population got their crypto-news from social media. However, this is a phenomenon that can be seen worldwide, especially across the developed world. Additionally, a higher proportion of the younger generation makes up that population, just as they do in the case of cryptocurrencies.

Cult of personality

This correlation plays out in many ways, not many of which can be considered positive. Even though social media allows users to gather information and interact with communities, it can also lead to many gaining cult-figure status.

Dominant figures like Ethereum Co-founder Vitalik Buterin and Cardano Founder Charles Hoskinson regularly host AMA sessions and are relatively active on Twitter. While this has garnered them huge fan bases, it can also lead to blind trust.

This, in many ways, has spurred the issues of crypto-scams in the community. Twitter scams, especially, are a significant concern, with fraudsters convincingly impersonating these personalities to trick users with giveaway contests.

The industry’s biggest promoter?

A more interesting case in point is Elon Musk. His strong influence on social media has had a major impact on the larger crypto-market. Once the Tesla CEO took Dogecoin under his wing, the meme coin saw exponential growth based on everything but merit. Musk’s regular endorsement of DOGE on Twitter led to the alt climbing into the top 10. And not just novice investors, but celebrities like Naomi Osaka are also falling for the trick.

DOGE is not the only coin that Musk has his grip over, with the price movement of Bitcoin often being correlated with his public statements. Finder charted out how Elon Musk’s tweets coincided with Bitcoin’s prices, noting that a previous survey found that “56% of Australians incorrectly believe Elon Musk created Bitcoin.”

Source: Finder.com

Steer clear of the ‘just hype’ crowd

Such influence can spell trouble for both investors and cryptos as it makes the market more susceptible to manipulation. Along with losing out on their investments, people can also fall victim to the shilling of worthless coins.

It is no wonder then that some countries like China have banned influencers from marketing cryptocurrency or finance-related products on social media. This is an important step, especially since the space is already filled with alts that are profiting from just hype.

While social media acts as an entry point for many and is a great medium, it can be harmful when most investors are novices and lack knowledge. Moreover, the growth of cult personalities might spell doom going forward, especially if you don’t DYOR.