Let’s talk about shilling
When in 2020–2021 the cryptocurrency market was booming, it became one of the fastest growing sectors consuming billions of dollars. Thanks to this, many people came across blockchain and cryptocurrencies for the first time. The knowledge behind it reduced fear and shattered the negative image of cryptocurrencies as a money laundering and scam tool. And the high profits of traders only fueled the desire to earn a quick profit. Therefore, so many people have decided to invest in cryptocurrencies without prior preparation and knowledge. Investors who became interested in cryptocurrencies at that time drew their knowledge from social media such as Twitter, Facebook and Instagram. Unfortunately, not all of this information was correct.
This phenomenon is called shilling. The word silling is the name of English coins in the 17th and 18th centuries. “To Shill” is also a term used in casinos and can be translated as “waste”. Shilling in a casino means that a player is playing by using the casino money to keep playing when there are not enough players left. Cryptocurrency shilling is about pumping the promotion of a specific cryptocurrency by a person or group of people who have a specific reputation and ranges. They create (usually for a fee) hype around a given token via social media. Posts not marked as advertisements, only advertisements and word of mouth marketing are used here. Shilling is aimed at encouraging recipients to massively invest in a given token and thus raise its price on the stock exchange.
In a situation where the interest in a given token increases, the price of the project automatically increases. Such advertising itself is not harmful. It becomes a harmful practice when a popular person advertises a new cryptocurrency and its creators run away with the funds they received from investors. Shilling can be recognized by the phrases “best cryptocurrency”, “Invest now before the price goes up”. Any influencer publications can be just such silling.
First, it is worth checking if the influencer advertising token knows anything about the project itself. Does he have insight into the project itself or what are the reasons for advertising it?
Second, when a professional investor or economist only promotes one cryptocurrency. It may turn out that specifically increasing the popularity of a particular token is aimed at achieving the right price on the stock exchange. Then this authority gets rid of its coins at the most convenient price. Selling a large amount of cryptocurrency can affect the market and cause the price to drop.
Thirdly, when the producer of a cryptographic project promotes it very strongly on social media, it distracts from other tokens. Again, popularity brings funds to finance the project. We recommend then checking all available documents: e.g. white paper or usability.
Due to the fact that the legislative processes regarding cryptocurrencies are still ongoing, shilling is not illegal. It is also difficult to determine at the beginning whether this type of promotion is already a scam. Many companies are already promoting their projects by employing famous people. Or famous people who believed in the project themselves. The most glaring example of shilling is the publication of information about Dodge Coin by Elon Musk. It is safe to say that this token-meme has gained popularity and a suitable position on the market thanks to Musk. His tweets pushed the coin, which was made for fun, to 74 cents.
It is important to check whether the person promoting the project is associated with the project in the long run before investing your funds. Moreover, they do not use pretentious ads or deceptive recommendations. However, he is fully transparent about the company’s documents and reporting.
