The pace of change in recent years is nothing short of staggering. Billed as a Fourth Industrial Revolution, digital technology is behind some seismic shifts in how we communicate and even how we pay for things. Two products of this leap forward come in the shape of cryptocurrency and social media. And, just as connectivity is bring people around the world closer together, it is also the case that products and platforms are complementing one another.
The growth of crypto… and of social media
Let’s take the case of social media and its role in bringing cryptocurrencies to yet more people. Digital currencies first emerged in the 1980s. But only now, in the 21st century, have they truly taken off in the public consciousness. Bitcoin is just one cryptocurrency – but its one that a lot of people now know about. And that’s if only for the eye-watering value it has achieved.
Yet, Bitcoin only launched in 2009. By this point, social media was already starting to make its presence felt. As more people flocked to platforms such as Twitter, there was more chances to talk up these new digital currencies. It certainly helped when big personalities got involved too. But, broadly speaking, it provided a readily-available insight into investor confidence.
The impact of social media on crypto
One notable advocate of cryptocurrencies, and ardent social media user, is Tesla founder Elon Musk. For any forex traders looking to diversify their portfolio with crypto, it can be well worth paying attention to Musk’s opinion – if only because his opinions have already generated huge movement in the price of options such as Bitcoin, Ethereum, and Dogecoin.
As global trading platform FXCM points out in its analysis, “the CEO of EV king Tesla, is known for being vocal on social media around Cryptocurrencies and Doge in particular – often helping its price”. And when you have 80 million followers behind you, it’s no surprise that things start to happen off the back of any comment – no matter how minor.
In addition to this community element, there are also chances for newcomers to the market to learn about crypto trading on social media. On one hand, there’s the ability to ask questions of those more experienced than you. On the other, you can keep abreast of major news stories – events that have the potential, as with any market, to affect crypto prices.
Is the relationship between social media and cryptocurrency healthy?
Just as the role of social media in itself is described as toxic by some, there are questions over the relationship between its relationship with cryptocurrency. Is it right, for example, that just one person can hold so much apparent sway over an entire market? Does social media actually democratise crypto trading – or is the power still in the hands of an influential few?
The risk of the above is that crypto’s true value isn’t realised. Prices can be inflated to artificial heights – often connected heavily with emotions that can run high on social platforms. There’s also the danger that people aren’t considering the risks involved with cryptocurrencies. And it’s surely only reasonable that social media tries to strike a better balance with that in mind.
Ultimately, social media and – for the most part – cryptocurrencies remain free from regulation as things stand. That’s not to say that steps aren’t being taken – such as the start of the Online Safety Act 2021 in early 2022. Can it steady the relationship between social media and crypto? For as long as the power is in the hands of social media users themselves, it’ll be a challenge.
