Influencer Marketing and the Rise of Cryptocurrency
Although the technology behind cryptocurrency was developed in the late 80s and 90s, it wasn’t until 2020—when institutional investors supported it publicly—that it achieved a new level of legitimacy. It was also only last year that major corporations became more open to investing in cryptocurrency and accepting crypto payments.
This year, we’ve seen the price of Bitcoin, arguably the most recognized cryptocurrency, reach $50,000. Only eight years ago, the price of one Bitcoin was just $200. News outlets are devoting more footage to cryptocurrency and, as a result, it’s becoming accepted as a mainstream form of currency.
As the interest in cryptocurrency continues to grow, so do the opportunities for crypto companies to gain new customers. In an area of investing that’s known to be very technical and rife with regulations, crypto influencers may be the key to making new prospects feel more comfortable about investing in virtual currency.
An Opportunity to Capture the Crypto-Curious
Between October and November 2020, Gemini Trust Company (a cryptocurrency exchange) surveyed 3,000 U.S. adults with $40,000 or more in household income. According to the survey results, only 14% of the U.S. population owns cryptocurrency, and those who do tend to be male, white, and between the ages of 25 and 54.
But the research also highlighted a segment of the population who are labeled “crypto-curious.” These individuals don’t currently own cryptocurrency but are interested in learning about it or investing in it soon. The crypto-curious—who represent about 63% of the U.S. adult population—are more evenly split between men and women and tend to be older than current cryptocurrency owners.
Of the respondents who identified as crypto-curious, 60% admitted that they were not very knowledgeable about cryptocurrency. But even those who currently own cryptocurrency were open to becoming more informed. Overall, 77% of the adult U.S. population wants to learn more about how to invest in cryptocurrency.
How Does Social Media Feed into Cryptocurrency’s Popularity?
A few years ago, both Google and Facebook banned crypto advertising in response to scams and fraudulent activity that took place on those social media channels. Both platforms have now lifted the bans, but cryptocurrency companies must comply with tough new standards and policies before they can begin running ads again.
While the advertising ban was in effect, cryptocurrency companies had to find an alternative way to promote their products, so they began to use crypto influencers on social media channels like YouTube and Twitter. Given that both current crypto owners and the crypto-curious want to increase their knowledge, social media posts that offer extensive information and instruction are likely a better use of marketing resources than ads that are strictly promotional.
But cryptocurrency is more than just another financial investment. While people do look to social media to get information about products and services, they also spend time on specific platforms that align with their interests and cater to their desire for community. There’s a unique culture surrounding cryptocurrency, and the people who are drawn to it tend to view it as part of their identity.
A community that promotes an investing philosophy that’s accessible and outside the status quo is especially appealing to those who believe that traditional investing is only for the very rich or well-connected. Crypto influencers who can earn the loyalty of these new crypto-curious demographic segments may be well poised to convert their fans and followers to cryptocurrency customers of the brands who sponsor them.
What Should Cryptocurrency Companies Be Aware of When Using Crypto Influencers?
Because cryptocurrency has reached new highs this year, novice investors are likely motivated by the desire to make money quickly. Some crypto influencers have taken advantage of their followers’ eagerness to cash in on this growing industry by promising to reveal tips on secret platforms for a fee. The Federal Trade Commission reported record losses in recent months due to cryptocurrency investment scams, so cryptocurrency companies should vet their influencers carefully to avoid potential litigation.
Cryptocurrency companies should monitor their crypto influencers’ social media feeds to ensure they’re not promoting paid services or making promises of financial success. The business relationship between a cryptocurrency company and crypto influencer should be disclosed on every social media post and influencers must plainly state that they are not in a position to offer financial advice.
Crypto influencers who are driven by a desire to make cryptocurrency investing easier to understand will earn the respect and trust of the crypto curious who are hungry for information. And cryptocurrency companies that are affiliated with knowledgeable, experienced, thoughtful, and honest influencers will be better able to turn prospects into customers.