Celebrities who promote cryptocurrency in the same way they would market Nike shoes and Tesla cars may lack an understanding of just how harmful this undifferentiated approach can be to ordinary people, including their fans. According to Allied Market Research, the worldwide crypto market was valued at $1.49 billion in 2020. However, the report goes on to estimate that the market will reach a value of $4.94 billion by 2030. This is an illustration of crypto’s potential for profit and immense value, but it does not account for the elevated risks involved with trading, buying and selling cryptocurrency.
Many celebrities have not only invested their wealth into crypto assets, but have also promoted and celebrated the crypto space. This sends a message to their loyal fans about the potential that crypto has for increasing their wealth. However, by actively promoting the crypto space, celebrities run the risk of coercing their followers into a space where they do not have equal networth to balance out potential losses.
Celebrities Who Promote Crypto
Hosts of celebrities have taken to their social media accounts to either actively promote cryptocurrency or tokens, or simply detail their own purchases within the market. Either of these options can be seen as morally ambiguous or unethical. Apart from the potential for ‘rigging’ the market, celebrities are also influencing their fans of broad age ranges to participate in the crypto space. The celebrities do so in full knowledge of the risks of the crypto market. Some celebrities that have promoted crypto include: Floyd Mayweather, Matt Damon, Reese Witherspoon,and Charli D’Amelio. However, other celebrities that have made massive purchases in the crypto market include the likes of Madonna, who has recently purchased an NFT from the Bored Ape Yacht Club for 180 ETH, which is approximately $570,000. Influencers have also participated in promoting crypto, with Logan Paul being a major activist for the crypto space.
Elon Musk
Elon Musk may have good intentions to promote direct democracy on earth – which is clear in his latest efforts to democratize Twitter and suspend censorship. But the comments of Mark Cuban, one of his many liberal enemies shows just how vulnerable he might be to the SEC. As Tucker Calrson said: Elon Musk is risking everything by standing for free speech. But in the cryptocurrency sphere, he is also a bit vulnerable: Since 2021, Elon Musk has been an avid supporter of the crypto space. He frequently takes to Twitter to express his thoughts on crypto and the blockchain as a whole. With this in mind, it is interesting to note that Elon himself has only invested in three different cryptocurrencies: Bitcoin, Ethereum and Dogecoin. In 2021, Musk announced that Tesla had bought approximately $1.5 billion worth of Bitcoin. In turn, this tweet helped Bitcoin skyrocket in worth. As a result, Musk has been accused of tampering with the market by expressing interest or discontempt with certain coins.
Whilst Musk has not engaged in any active promotions of the crypto space, his tweets have allowed the crypto market to target a significant demographic. Moreover, with his large following, Musk represents crypto in a favorable light, and in doing so, may influence his following to partake. Whilst Musk has the networth to cushion any risks and crashes that are inherent within the crypto space, his followers may not.
Kim Kardashian
Whilst Kim Kardashian is not a celebrity that fans would usually associate with crypto, she has previously posted an instagram story where the caption asked, ““Are you guys into crypto????” The caption went on further to inadvertently promote EthereumMax, and was concluded with a hashtag to indicate that it was an advertisement. Kardashian attempted to cover her bases by including in the post that she was by no means sharing ‘financial advice,’ but was simply sharing what her friends had told her about the EthereumMax token.
A class-action lawsuit has since been taken out against all celebrities involved in this campaign, including Kardashian and Floyd Mayweather. Investors have accused both EthereumMax and the celebrities of artificially inflating the price of EthereumMax, as a result of their posts. Investors further argue that the information within the celebrities’ posts were either dishonest, or purposefully misleading. As a result, Kardashian has positioned her followers to believe the information she spread about the token, and possibly influence them to purchase. This is further complicated by the fact that Kardashian charges a hefty fee for any and all of her sponsored posts, even for an Instagram story.
Tom Brady and Gisele Bündchen
Tom Brady is a celebrity that has promoted crypto on his own personal social media. Unlike other celebrities, who have been more subtle with their promotion, Brady has been active and vocal. Along with his wife, supermodel Gisele Bündchen, Brady participated in an advertisement for crypto exchange FTX. This advertisement was enormous in scale, and was estimated to be valued at $20 million.
Gwyneth Paltrow
Gwyneth Paltrow, who is an acclaimed actress and the creator of the company Goop, has participated in a $500,000 bitcoin giveaway. The actress promoted this to her enormous Twitter following. This giveaway was launched shortly after Paltrow had been involved with the crypto mining company TeraWulf. This company is working towards producing bitcoin, without creating a carbon footprint.
Paris Hilton
Paris Hilton is another celebrity that the average consumer would not expect to be an avid promoter of crypto. Hilton has, on numerous occasions, taken to her various social media platforms to express interest and enthusiasm in the crypto space. The celebrity has even gone so far as to promote crypto on talk shows. However, she more frequently interacts with crypto giants, like Bitcoin, and highlights her awareness and investment in it.
Floyd Mayweather
Like Kim Kardashian, Mayweather has received tremendous backlash, and been subject to a lawsuit, as a result of his promotion of EthereumMax. This is not, however, the celebrity’s first run in with controversy over his promotion of crypto. Mayweather has previously been charged with wrongfully omitting that he was participating in a paid promotion for tokens. This means the celebrity has been accruing wealth for promoting the crypto space, encouraging his fans to participate, and not disclosing that his interest was subsidized by payment.
What Experts Say about Crypto
Cryptocurrencies are notoriously risky, and this has been amplified by the existence of notable drops in token worth. Despite this, 2021, has been cited as a ‘breakthrough’ year for crypto. With the promotion of crypto coming from celebrities, as well as growing media coverage, consumers are becoming more and more interested in the crypto market. As a result, it is vital that consumers become active in researching the volatility and insecurity of the crypto space.
Is Crypto a Bubble?
Different experts have different opinions on the crypto market, however, there are key areas for concern that unify many experts. One particular concern is that crypto operates as a bubble. In late 2017, the Bitcoin price skyrocketed to almost $20,000. Many keen investors and consumers joined the crypto space during this time of Bitcoin prosperity, especially since this price was significantly higher than the $3,000 from the beginning of the year. The price then crashed to the initial $3,000 the following year. This has led many investors to become increasingly skeptical of the crypto market, and perceive it as a bubble. Experts note that a crash like this could happen at any moment. Warren Buffett has even publicly announced that, “in terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending.” In addition to Buffet, James Ledbetter, an expert in the space, has narrowed in on whether Bitcoin is a safe and viable investment opportunity for the average consumer. Ledbetter argues that every investor and consumer needs to be financially prepared for a crash.
The Safety of Crypto Wallets
Whilst crypto enthusiasts have celebrated 2021 as a crypto year, it has been estimated that scammers stole approximately $14 billion in crypto. This is almost double the estimated amount from 2020. The cybercrime in the crypto market has led many investors to become increasingly wary of the safety of crypto wallets. Some wallets, like MetaMask, have implemented lengthy safety procedures for users. This includes a 12 word password series that users have to store in secure spaces.
Experts argue that popular tokens like Bitcoin, and the wallets used to store these tokens, are not innately unsafe or welcoming for scams. The popular scams appear more often in the form of phishing attacks. These emails usually detail some type of blackmail. Moreover, experts state that hacking into a crypto network is an extremely expensive and unrealistic endeavor. This is compounded by the fact that the crypto market is no more viable for scams than other markets.
Additionally, whilst some users expect a high level of anonymity in the crypto space, expert Anthony Pompliano reminds users that there is a consistent ledger of all transactions that take place within the blockchain.
We are also told that North Koreans stole more than $600 million from cryptocurrency wallets. Whether this is unfounded propaganda against their regime or fact, it is rather concerning.
Other Concerns
Like any market, there are multiple other areas of concern within the crypto space. Experts have debated the accessibility of transferring tokens into fiat. In recent years, it has been time consuming to convert any token into fiat money, and these conversions have been subject to transaction fees. As a result, experts have frequently suggested that users and investors should only convert their tokens in bulk, rather than in multiple, small batches. However, experts are saying that users will soon see an easier conversion process. In addition to this, investors can expect to see more viable ways of spending crypto tokens.
Another area of concern for many experts is the regulation of the crypto market. Institutions like the US government are considering ways to regulate the market in a seemingly unobtrusive way.
But Do Celebrities Have A Moral Obligation?
If you consider that those in the film industry are partly to blame for the violent culture we have in the U.S. during a time when America’s car jackings threaten to overtake that of South Africa, it is clear that celebrities do shy away from their moral obligation. Their actions in crypt promotion may be even more harmful as the world is on the cusp of a major potential recession and stagflation.
Whilst news is constantly being published about the successes of the crypto market, global consumers need to be equally aware of the potential for risk within the market. Investors have highlighted many concerns with tokens and other crypto assets. Many worry that the crypto market allows room for fraud, as well as a variety of other scams within the space. Other than its potential for fraud, risk is built into the crypto market. Tokens are known to fluctuate in worth, and there have been incidents of substantial drops in worth. When there is a notable dive, people that have ample shares, or have purchased large volumes of tokens, will see their investment take a massive hit. A dive can serve as a potential investment opportunity, however for many, it means that their accrued wealth will be depleted.
Final take:
When celebrities promote or express their interest in the crypto market, they are essentially inviting or influencing their followers to participate or invest in the market too. This is especially true for celebrities that are paid to promote crypto tokens, and in doing so, provide specific persuasive information. The more overriding issue, however, is that these celebrities present an image of cryptocurrency: that it is a viable investment, and will result in longstanding wealth. This is, more often than not, the opposite of the truth. More and more investors are stressing that consumers should not invest more than what they are willing to lose. If consumers invest on a whim based on their favorite celebrity, they could stand to lose out on their savings.
