Why cryptocurrency ads are just the tip of the iceberg?
An old advertising adage says, “Sell the smell of meat, not steak.” Unfortunately, when it comes to cryptocurrencies, the flavor to steak ratio is incredible.
The digital token announcements that flood the London Underground promise “big” benefits. One of them, for example, promises to “change the lives” of those who missed the Dogecoin train. Another ad for a trading app offers anyone intimidated by cryptocurrency volatility to “sit back, relax” and let the algorithms do their thing.
Dangerous advertising
This trend is quite alarming. The crypto industry is converting the profits from lockdowns into daring marketing and slogans. Recently, the Paris subway was hung with crypto ads poking fun at the poor purchasing power of those who still tend to trust conventional savings accounts. In the United States, an advertisement for crypto-ATMs, which Spike Lee has become, offers “new money” against the background of frames of burning banknotes.
These ad campaigns have one thing in common: they provoke the so-called loss of profit syndrome (FOMO). This technology is rarely used, but aptly. A UK Financial Conduct Authority study released this month found that 58% of people trading high-risk assets succumbed to social media stories.
It looks like the advertising industry hasn’t cleaned up for a long time. The UK has already imposed bans on certain types of advertising and advertising campaigns that mislead the public. For example, ads targeted at retirees were blocked in March. However, the London Transport Agency told the Financial Times this week that it is not responsible for reviewing advertisements for compliance with regulations.
In any case, banning advertising for fraudulent or risky investments is not a panacea. The pandemic has changed the world. Many viral stories on the market offer simple answers to complex questions far beyond billboards.
Social networks
For example, social media will soon become a huge battleground for regulators. Google and Facebook imposed bans on massive amounts of crypto ads amid the last big Bitcoin cycle in 2018 but are now lifting those restrictions. It seems that big tech firms have taken inspiration from the massive proliferation of cryptocurrencies, regulation, and the development of their own cryptocurrency strategies. Self-regulation still reigns here.
The influence of social media influencers on investors is also growing. For example, some wealthy people advertise bitcoin as a defense against imminent economic disaster, even though there is little evidence for this theory.
Last week, Jack Dorsey, the boss of Bitcoin billionaires at Twitter Inc., wrote: “Hyperinflation will change everything. This is already happening. ” He also added: “Soon it will happen in the US, and then around the world.”
The tweet has sparked a strong reaction from bitcoin evangelists who urge subscribers to buy more cryptocurrency. But the 5% inflation rate in the US has nothing to do with Hyperinflation. What’s more, bitcoin has been failing as a portfolio hedging tool throughout its history.
Robert Schiller rightly defined cryptocurrencies as a pure example of a narrative economy: “It is a contagious story that can change the way people make economic decisions.”
Perhaps regulators need to focus on fraudulent and risky crypto advertising. In addition, society needs to improve financial and digital literacy, especially within a generation that feels like they are running out of time to find wealth.
« Inflation, inflation, inflation”: Euro jumped after the statements of the head of the ECB How to Scale up a Small Trading Account in Forex? »
