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Every once in a while we wake up to the news that our favorite cryptocurrency has reached new heights or crashed big time – moments when all sleepiness goes away instantaneously. Without one central body having control, the market develops at its own pace; altering and evolving the landscape of the world’s emerging economy.
There are many variables shaping the crypto space. One aspect of a decentralized economic system is promotion without a marketing machine behind it. In this article we take a look at one constant, the one that helped Bitcoin find its place in this world and gain global popularity – social media.
The Journal of Management Information Systems even concluded that you may be able to predict bitcoin price fluctuations with social media signals. Follow along as we examine how social media affects crypto markets from the early beginnings up until now.
As a virtual word of mouth, social media had a huge role in the adoption of cryptocurrencies. One could argue that the rise of Bitcoin started with the forum Bitcointalk.org, where the first communities gathered around the same revolutionary idea. On this very same forum a programmer and early adopter, Laszlo Hanyecz bought the now legendary, pizzas for 10.000 bitcoins. One far-sighted forum participant even predicted that these pizzas would be worth millions one day, something that 11 years later proved to be the right.
Often, places like these are where people get insider information that can determine their course of action before it hits the mainstream news. Even journalists claim to use Reddit as a resource for their stories. Complementary, online communities are an incredible driving force and for some blockchain startups, they could mean all the difference between failure and success.
There are many cases of successful community-building in the blockchain space and we can relate one of them to the most recent NFT craze. The team behind Aavegotchi for example put a great effort into building their community on Discord by incentivizing their members and slowly growing the hype around the project. All that resulted in Aavegotchi NFT‘s being sold out within one minute after release.
Social media has an enormous impact on our daily lives, so it‘s no wonder that 57% of surveyed millennials in the USA used social media platforms as a news resource in 2020 – more than any other source.
The way that information spread has radically changed thanks to social media, and when a piece of news gets around, depending on its sentiment, it can cause a market to plummet or surge.
For example, the news that PayPal is starting to accept Bitcoin caused a price surge of 5% or when Bitfinex got hacked back in 2016 it caused the Bitcoin price to go down by 20%.
Although it is the news itself that causes the price change; social media does not only accelerate the speed in which the market reacts, but also a hub where people hang out, read news, discuss it, and thus react based on it.
There are two types of crypto supporters on social media: the silent majority (the people who are active occasionally) and the loud minority (the active users and influencers). The trend is that the silent majority determines whether the price will go up or down. Yet, sometimes individuals like celebrities or influencers can urge these silent watchers to act one way or another.
In February this year, we had a situation when the Dogecoin price went up by 37% in 24h after Elon Musk and Snoop Dogg tweeted about it, causing an all-time high of $0.084945.
Another case of how influencers started a social media rally was last year when a TikTok user James Galante invited his followers to buy Dogecoin and “all get rich“ by pumping the price to $1. The price never reached $1 but it did go up by 71% and had an enormous effect on the popularity of the coin.
The examples above have showcased how social media and cryptocurrencies intertwine into an inseparable duo but we have not yet touched the most fundamental question; can you imagine a world without social media and how that would undoubtedly have impacted the rise of Bitcoin and other cryptocurrencies?
There are certain benefits to a world without social media that almost everyone can agree on; the spread of misinformation, the accelerated pace at which we now live our real and virtual lives, not to mention the real (d)evolutionary consequences like short attention span and bad posture. However, without social media cryptocurrency adoption would be much slower or even entirely impossible. Perhaps Bitcoin would still have remained just a thought written on a whitepaper left for a small bunch of geeks to talk about in their enclosed circles. Maybe, Bitcoin would not have been much different than the stories of its predecessors DigiCash, B-Money, Bit Gold, and Hashcash. What do you think?
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