When It Comes to Crypto, There Is Power in Numbers

Social media has grown to become a central part of our everyday lives. It affects industries and businesses profoundly, none more so than the ever-evolving cryptocurrency world. Today, many cryptocurrencies rely solely on their ability to attract publicity from social media (and other platforms) to gain value.

How did this tricky relationship between publicity and cryptocurrency price come to be? Let’s look at how this strange connection started and what the future may hold for these digital assets.

The Crypto World’s Modest Beginnings

The roots of the connection between cryptocurrencies and online publicity were formed from the beginning. When Bitcoin first appeared to the world, early adopters and developers discussed its use and future potential on online forums and chat rooms. It was there that information around cryptocurrencies first started to spread. Even Satoshi Nakamoto, the inventor of Bitcoin, released his whitepaper on cryptocurrency through these platforms.

Similarly, the first transaction using a cryptocurrency happened in a chat room when a gentleman named Laszlo Hanyecz posted in a forum asking for someone to deliver two Papa John’s pizzas to where he lived. He paid with 10,000 Bitcoin (yes, you read that right: 10,000 Bitcoin. Based on today’s price, those pizzas cost over $468,638,000). The rest, as they say, is history. This seemingly unimportant transaction for pizza paved the way for much larger events in the crypto world and helped solidify the link between cryptocurrency price and the attention it receives.

How the Link Between Publicity and Cryptocurrencies Works

The crypto industry has certainly come a long way from its chat room days, with the now thousands of digital currencies being discussed openly on mainstream social media platforms, like Facebook, Instagram, and YouTube. Individuals have flocked to these unofficial news platforms, in large part because more traditional media sites have failed to cover the revolutionary technology adequately. Further, this has led to people relying on information from influencers, celebrities, and individual crypto experts to better understand and stay up to date on the latest crypto news. This combination has created a strong correlation between the publicity a crypto receives and the asset’s price.

Another way to understand this relationship is using simple supply and demand, with the demand side coming from the amount of publicity a cryptocurrency receives. An example would be the recent meteoric rise of Dogecoin, which saw its price more than quadruple within 24 hours, after a series of tweets from Elon Musk mentioned the popular “meme coin.” This trend has only picked up in popularity, with multiple coins seeing massive price appreciation after gaining traction and attention from popular YouTubers, business execs, and even Hollywood celebrities.

Overall, this sort of short-term popularity contest between cryptocurrencies has led many day traders and opportunistic investors to try to capitalize on the sudden breakouts in price, creating a strong snowball effect, which further fuels the relationship between publicity and cryptocurrency price.

Publicity Is About to Gain Some Competition

Cryptos have made massive progress in the last few years, gaining adoption and acceptance in the mainstream world. Gone are the days of wondering if blockchain technology and cryptocurrencies are here to stay, with the focus now being on exactly how disruptive this technology will be and which cryptos will be the most innovative.

A crypto’s success is undoubtedly still strongly tied to the amount of publicity it can garner; however, with their rise in popularity, the industry has also gained the attention of major governments worldwide. Just recently (on December 8th, 2021, to be exact), a hearing was held with the House Financial Services Committee to discuss digital assets and the future of finance. Many members showed a surprising level of understanding regarding the crypto world, with consensus between government officials and executives from top crypto companies on the need for regulation within the industry.

With the conclusion of this meeting, it appears some competition is stirring. What will influence a crypto’s price the most: publicity or regulation? The most likely answer is a little of both. As governments continue to explore regulatory practices in this largely unruled industry, this is certain to cause some major price swings.

Final Thoughts

From Bitcoin’s humble beginnings to the seemingly endless number of cryptos today, publicity and popularity have been the most influential factor on any individual crypto’s price. Seemingly, the more tweets and reposts surrounding a crypto, the higher its price will go. Yet, the current status quo may be due for a change as governments and regulators begin to explore the idea of regulation in what the SEC Chairman, Gary Gensler, has described as the “wild-west” of finance. Despite this possible disruption, a complete shift away from the publicity-based pricing model is unlikely as the popularity of crypto and blockchain technology continues to grow.

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Zachary Hartley

Investor / Skillshare Instructor and Crypto Enthusiast / Calgary Mayoral Candidate

Zac Hartley is an angel investor, day trader, and crypto enthusiast focused on exploring unique investment opportunities. He shares crypto, personal finance, and stock-oriented content on his YouTube channel, Zac Hartley: Stocks, Crypto, Finance, and across online learning platforms Skillshare and UDemy. Based in Canada, Zac has been featured on local and provincial news outlets and Dragons’ Den, Shark Tank’s Canadian sister show.