NFTs and Crypto: Is the Relationship Between Blockchain Tech and Social Media Growing Ever Closer?
Social media has played a large role in the blockchain’s steady rise. Click here to find out why the relationship between the two is growing ever closer.
7 juillet 2022
21 septembre 2022
Since its inception, the internet has changed the world dramatically. Whether it is the outburst of social media or the steady growth of cryptocurrency, the way we integrate and trade has been turned on its head. It’s only natural, then, that the two most prominent concepts spawned from the web are intrinsically woven together.
From the very beginning of crypto’s creation, social media has been a constant tool, plugging releases, trends, valuations, news and, more recently, the rise of NFTs. Over time, the relationship between the two has been growing closer, and as we move into the Web3 stage of the internet, we can expect that relationship to become even more interlinked.
So Why Is The Relationship Between Social Media And Blockchain Tech So Close?
Social media was the backdrop to the very first cryptocurrency transaction. In 2010, a user of a small online forum paid 10,000 Bitcoins in exchange for two Papa John pizzas, which is coincidentally worth millions more today. While the forum was small, it was still a social platform which was directly implicated in the buying and selling of Bitcoin itself, utilised as a method for the transaction as well as a documentation of its occurrence. Onwards from there, the rise of cryptocurrency has been documented constantly across social media platforms such as Facebook, Twitter and Instagram.
In terms of outreach, crypto would have to look no further than social media platforms like these to spark interest. After all, two-thirds of American adults get their news from social media. As long as cryptocurrency is trading, it is likely to be trending on social media, which introduces more and more investors to the concept. These investors will be able to track anything from the price of Ethereum to Dogecoin, and other fluctuations and changes that may appear in the market.
It also creates an online community for discussions and trading information. Forums like Reddit and Discord are especially crypto-friendly, and they both give investors a way to connect and discuss outside of the anonymity of the blockchain. Therefore, social media has become a tool to track the market and anticipate scenarios that may lead to a fluctuation of its value. It is essential to recognise social media as both a news source and an influencer for the news itself. This is where the nature of the growing relationship can get called into question.
How Does Social Media Influence The Market?
While social media’s primary purpose is to connect users, the value of cryptocurrencies has been known to fluctuate according to what users are posting on forums. For instance, if good news about a cryptocurrency is trending on Twitter, then the value of that cryptocurrency will be expected to rise, as more people will be aware of the positive news and endeavour to become involved. Vice versa, if bad news was trending, then that coin's value would be set to plummet, as more investors would look to sell before the value gets too low.
Of course, this in itself is almost paradoxical. The more people sell, the lower the valuation will be, meaning the news on social media can almost be premedicated to happen in real-time, as it directly influences how bad or good a situation will get.
Of course, this is inevitable with the interconnected world we live in. Being a spawn of the internet, crypto cannot expect anything else. But this relationship can become rather damaging when considering the effects on the market itself. News of a hack, for example, can cause a massive spiral of valuation for a cryptocurrency, even if the hack itself was relatively inconsequential. Similarly, a single influencer’s opinion can damage a coin’s credibility or reputation. Just last year, billionaire businessman Elon Musk took to Twitter to announce that Tesla would not be accepting Bitcoin as a currency due to its lack of sustainability. In the aftermath of this single tweet, Bitcoin fell by 10% in valuation.
So Why Is The Relationship Between Social Media And Cryptocurrency Ultimately A Good Thing?
Despite all of this, it is still fair to say that the relationship between social media and crypto is ultimately a positive one. This is most easily conveyed through the introduction of NFTs (non-fungible-tokens), which have seen their rise aided by social media. In this instance, creators of NFTs can use social media as a common ground between themselves and potential buyers.
Through Facebook, Instagram or Twitter, creators can use an account to amass many followers, allowing them to build interest, set up an auction and connect users to the token itself. While social media itself does not enable the sale of an NFT, it has become a virtual bridge between the buyer and the seller, helping to determine a token’s value through the interest that it gets.
The ripple effect of this is being felt throughout the crypto world, with certain platforms ensuring they take advantage of the trend to create NFTs of their own. Tik Tok, for example, have released culturally significant videos as NFTs, placing the videos on the Ethereum blockchain with proceeds going to the authors and the artists.
The Future And Web3
With Meta also announcing an interest to use Facebook as a virtual market for NFTs, it is clear to see that the relationship between social media and crypto is only progressing. Going into the future, it is not hard to see the two of them being completely interlinked. With Web3 supposedly around the corner, the internet as a whole is said to become an entirely decentralised system, meaning social media might even become part of a blockchain, where users can buy, sell and value their tokens on platforms themselves, rather than simply using them as a bridge for interaction and communication.
Whatever happens, blockchain tech and social media are intrinsically connected to crypto’s rise. Of course, this relationship can have its downsides regarding fluctuating valuations, but social media is altogether a much-needed companion for crypto’s future accomplishments. Without it, the rise of the blockchain would undeniably have taken far longer than it already has, and the future of the currency would be far less exciting and revolutionary as it appears.
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