Crypto shilling is when a person or group of persons promote a particular cryptocurrency to generate hype and spread buzz around it so as to influence people to think that the cryptocurrency project has great potential and want to invest in it. Sometimes, an existing investor of a project buys even more of the crypto after watching crypto shills talk about the project.
As more new and old investors are lured in to buy the crypto asset in anticipation of high potential profits, the project team gets to sell more of their crypto tokens and may even do so at a higher and higher price due to an increasing demand as more new investors enter.
However, such a scheme almost never ends well. Usually after the price of the shilled cryptocurrency reaches new spectacular heights, or after the project team sells all the crypto that they planned to, things may suddenly turn sour and the project rug pulls and the team runs away with all the money collected from the token sale. Other times, the project price suddenly falls drastically after a steady period of price increase, trapping crypto investors who had bought the token at a high price and may be forced to cut losses, thereby sending the price of the crypto crashing even further.
How Do You Spot Crypto Shilling?
Typically, high profile social media influencers or celebrities are hired to do such crypto shills due to their large number of followers. These shills are not necessarily crypto-related, they usually take the form of someone with a celebrity status personally endorsing a crypto project or token just because he likes the name or the social cause it represents. Fans buy in regardless of what the cryptocurrency is due to them liking the celebrity and are often not even keen to know what the project does.
Also, another tell-tale sign is when the crypto endorser has no cryptocurrency nor blockchain background and is from an entirely different industry.
Oftentimes, the crypto project itself that gets shilled is not blockchain related and does not have a proper use case. Worse still, some others make larger-than-life claims that the project can solve world hunger, without it having any fundamental function.
When a project uses influential figures that are not from the crypto world to endorse the project, one needs to beware that it could be crypto shilling.
Is Shilling Crypto Legal?
Shilling is illegal in traditional financial markets and such practices are heavily punished. However, in the digital assets space, the industry is still nascent and there is no clearly defined law to establish what can and cannot be done, much less define what kind of crypto promotions are acceptable and what are not. Thus, it is imperative for a crypto investor to learn how to do their own research to avoid falling for crypto shilling or worse still, outright scams.
Readers also need to understand that not all influencers are shillers and that not every project doing marketing or crypto promotion is crypto shilling. There are indeed many genuine crypto marketing campaigns around. When in doubt, one can do fact checks on the project itself to see if it has credible founders who have a good reputation and most importantly, check to see if the project has a well documented white paper. Do not FOMO and always seek investment advice from professional investors where possible. Public forums where there are more experienced investors sharing information can be good places to ask for advice.
For readers who are still not confident at telling the difference, we list down below three giveaway traits of crypto shilling that you can look out for to help you determine if what you are seeing is a crypto shill.
What Kind of Crypto Shilling Can You Look Out For?
While crypto shilling can come in all shapes and sizes, and sometimes it may be hard to distinguish between genuine product marketing campaigns and crypto shilling, there are a few typical traits worth recognizing to help us identify potential crypto shills.
The first group of people you need to steer clear of are the influencers. Not all influences are good influences, especially within the crypto space. When you see an influential figure who is not necessarily crypto-related promoting a cryptocurrency, let that be a red-flag. Many could be paid influencers who only encourage followers to invest in a project without necessarily offering transparency as to why they support the project, nor do they even show that they know anything about the project.
Watch out for implicit or covert advertising where a high profile celebrity says that he is personally endorsing a project. Due to the effect of the 2021 bull market, many celebrities and influencers of all sorts have taken to crypto shilling to earn extra big bucks.
At the same time, as crypto adoption has gained traction over the last two years, mainstream media outlets have become more receptive to cryptocurrency commercials. As a result, crypto projects have moved from advertising on social media platforms to advertising on more mainstream marketing channels like the Superbowl Advertisements to gain a wider viewership.
The Enthusiastic Businessman
Another type of crypto shilling comes from business people that many people may respect. While this sounds unlikely, they are rather common in the cryptocurrency scene. These enthusiastic businessmen are also exceptional marketers who may often use people’s perceived impression of their successful careers to promote sales of the crypto token they bought. These businessmen often use their role model effect on the general public to coax them to follow their lead to purchase the crypto asset. After the masses buy and push the price of the crypto higher, the enthusiastic businessmen may take the opportunity to sell out of the project stealthily and leave unbeknownst investors holding onto the baby.
The Zealous Founder or Team Member
The last main type of crypto shilling is from the project team itself. While it is natural that most founders will want their project to do well, there are, unfortunately, a lot of founding members who oversell their projects, over promise, and under deliver.
Many of these are project founders or team members who are not necessarily tech experts, which makes it suspicious since a cryptocurrency project would involve a certain level of technical knowledge. If these zealous founders or team members promise a sky high project price or if the token sales comes with a tasty price tag, especially if it does not come with a well documented whitepaper, it is a giveaway sign that this team is crypto shilling.
How To Avoid Falling Prey To a Shill With Margex
Very often, crypto shilling involves rather dubious crypto projects which are new. Hence, investors should approach new projects with caution, especially when they are not yet listed on major exchanges. We cannot repeat enough times that doing your own research and using your own critical thinking is important so that you do not get sucked into the FOMO mentality. Checking with professional investors who are more experienced can be a great help when you are confused. Otherwise, simply not investing in new and unknown projects can be a good way of avoiding falling into the pit as well. Only trading with proper exchanges that have a good due diligence process when identifying tokens to list is the safest way of not falling prey to crypto shilling.
At the Margex platform, vigorous due diligence is done on crypto projects to check on their founding team, tokenomics, utility and real community size before we decide to list them for our clients to trade. Margex makes sure that projects go through a tough screening process before they can be listed to protect our users against crypto shilling. Hence, the one best way readers can avoid falling prey to crypto shilling is to only invest or trade cryptos already listed on Margex. Margex offers a variety of cryptos available for trading and regularly lists more tokens so that our users will have plenty of choices to choose from.
However, Margex does not offer investment advice and users are advised not to trade more than what they can afford to lose as all forms of trading and investment carry risk of losing money. When in doubt, please check with your independent financial advisor.
When you are ready to start, simply open an account at Margex by clicking the link to our website: https://margex.com/
Click the top right-hand corner to register for an account. It takes only about 30 seconds to open an account at Margex.
After your account is set up, deposit funds to your account by clicking on the “Deposit” button (yellow box) as shown under the “Wallet” tab located on the top navigation bar. You may deposit in a variety of ways like Visa, Mastercard, or even in Bitcoin. Once funds are deposited, you may start trading immediately!
Approaching Crypto With Comprehension
Now that we have discussed what is shilling crypto and explained how to avoid being caught in one, we hope that you will be more vigilant to watch out for signs of crypto shilling when watching social media channels about crypto. Always do your own research and do not believe 100% in big team promises or massive profit potential without a substantiated rationale.
When you are unsure, ask for second or third opinions and always be ready to learn new things. This way, your crypto investment journey will be more fun and rewarding, not just in terms of monetary gains, but also because you are growing in knowledge.