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The world of cryptocurrency is an extremely complicated and confusing place for even the more experienced retail investors. High levels of volatility, rising and falling sentiment towards assets, and the countless variables that can impact the price of coins can all combine to deliver a thoroughly chaotic landscape to buy into. This harsh environment has paved the way for social media investing, with more users than ever depending on others to inform their decisions.
Cryptocurrency’s relationship with social media stretches back to the birth of Bitcoin and a new era for finance. Early articles charting the formative years of crypto regularly reference the active forums in which Bitcoin’s creator, Satoshi Nakamoto would frequent before mysteriously disappearing in late 2010.
(Image: Pulsar)
In late 2018, Pulsar discovered correlations between social media sentiment towards Bitcoin and the cryptocurrency’s value – indicating that networks weren’t just a place for investors to discuss their assets, but they’re also platforms for generating a buzz around certain coins.
As we can see from Google Trends data, the cryptocurrency bull markets of late 2017 and 2021 generated huge volumes of search interest online, showing that when prices are rising, individuals are more eager than ever to look for information surrounding cryptocurrencies.
With this in mind, it’s clear that social media will play an increasingly invaluable role in the future development of cryptocurrencies, and we’re even likely to see the worlds of crypto and social networking become deeply intertwined in the coming months and years. Let’s explore this symbiotic relationship further:
Facilitating the Necessity of Education
Although the world of cryptocurrency has generated plenty of hype upon its famous price rallies and the sprawling value of Bitcoin, the industry is still relatively unknown for many average internet users.
According to a recent Cardify study, just 16.9% of cryptocurrency investors believe that they ‘fully understand’ the value and potential of the ecosystem, while as much as 33.5% of the 750 investors surveyed either feel as though they have ‘zero knowledge’ of crypto or would only describe their comprehension levels as ‘emerging.’
(Image: Cardify)
“Cryptocurrency and the whole deal with blockchain technology is not exactly second-grade mathematics,” explained Jonathan Jadali to Forbes. Jadali is a cryptocurrency trader who educated himself on the industry at 18 years old. “The way it’s often presented doesn’t work for lots of people. When I started getting into it, I got all my education on YouTube—it’s not like cryptocurrency has made it onto any high school curricula yet.”
“There’s a ready market for crypto-related information and a growing list of people now are meeting that demand on social media,” Jadali added. “There is very little you cannot learn on YouTube and the countless crypto-focused Facebook groups.”
(Image: Exploding Topics)
As the data above shows, the number of individuals using blockchain wallets has grown significantly in the past 12 months as users rushed to embrace the late 2020 and early 2021 market bull run. However, this influx of new custom has led to more individuals attempting to seek out the information they need to make smarter decisions in the market.
To better facilitate these growing needs, some companies are aiming to create a far more comprehensive experience when it comes to combining social media and cryptocurrency investing:
Blending Social Media and Cryptocurrency
KuCoin, a leading cryptocurrency exchange, has begun testing its new integration in KuCoin S. Significantly, KuCoin S has been designed as a special space that integrates social media features into the exchange, allowing users to share their knowledge and experiences. It’s also possible for users to follow influencers within the exchange to gain trustworthy insights regarding trading.
“We believe that the integration of “social” and “trading” features will make crypto trading easier and more understandable for newcomers,” said Johnny Lyu, the CEO of KuCoin. “We intend to provide a one-stop-shop solution where users can browse crypto news, discuss latest trends and topics, learn from the experience of crypto influencers and smart brains and interact with them, get to know others’ investment strategies and portfolios, and then copy them with one click.
Elsewhere, October saw a $50 million fundraiser take place to build a platform that fully integrates social media into the decentralized world of cryptocurrency. The DeSo Foundation has been seeking funds to bring the same blockchain capabilities to the social media landscape.
“In the same way that Bitcoin’s decentralization has sparked transformation within the traditional financial system, DeSo will enable fairer models of content distribution, provide new ways for hundreds of millions of social media users to interact, and serve as a foundation for a decentralized social media ecosystem,” said Amadeo Pellicce, product manager at Blockchain.com. In DeSo, we can see that cryptocurrency can help to improve social media just as social media can improve crypto.
Looking to a Social Future
Due to the famous volatility experienced across cryptocurrency, the availability and flow of trustworthy information are more vital to individuals than through any other field of investing.
As more retail investors look to embrace crypto, access to education is more important than ever before. While platforms like Coinbase have been proactive in including incentive-driven tools to help users educate themselves about specific assets, the rapid flow of information that can be obtained from social networks offers us an insight into what the future looks like for investors.
Cryptocurrencies can rise and fall multiple percentage points in a matter of minutes, making social media-style news feeds the best possible place for investors to gain information on what’s happening and to take decisive action in protecting their portfolios.
With this in mind, it’s likely that we’ll see more hybrid social media-driven exchanges arrive across the crypto ecosystem, with decentralized blockchain technology helping to protect the flow of information to users.
Since the formation of Bitcoin in 2009, the world of cryptocurrency has been built as a socially-driven ecosystem, the future will invariably see this symbiotic relationship grow stronger – bringing the potential for more informed decisions for investors with it.
