What is Crypto Shilling?
|— Shilling is the implicit advertising of a cryptocurrency by someone with either status or reputation or someone who is trying to promote a project.|
— Usually a shill will want to draw attention to the project so that investors flood to the cryptocurrency, raising the demand and spiking the price.
— It’s important to know what to look out for in a shill. There are a few ways to identify them such as the influencer, the enthusiastic businessman and the zealous founder.
— To avoid investing in a project because of a shill, make sure you do research, keep a clear head and invest wisely.
If you’re just starting your adventure and want to navigate it safely, you need to know what is crypto shilling.
You might have heard someone talk about the “best cryptocurrency to ever emerge” and receive the advice that “you need to invest now before the price surges.” If you have, you might have experienced a case of the crypto shilling. In this, we’ll look at what shilling is and what you should look out for to avoid getting your funds plundered despite your best intentions.
What exactly is shilling?
The slightly longer answer: when a person is actively engaging in covert endorsement of a cryptocurrency, they’re shilling it. The end goal is to generate hype around the project so that people buy into the buzz and invest. The more people invest > the more the demand of the token rises > the more the price increases.
What kind of crypto shilling can you look out for?
Crypto shilling isn’t as obvious as someone saying “Hey! Look at this great token, you should 100% invest in it right now if you want to make money and save the world!” Although a crypto shill is often less obvious, the flags glare red when you know what to look for. A couple of shills to look out for include:
Yeah, not all influencers are on Instagram and not all influence is good. In the cryptocurrency scene, you might come across an influential figure like a celebrity (not even necessarily crypto-related) who has actively put their name and endorsement behind a project. They will encourage new and old investors to invest in the project without necessarily offering transparency into why they back the project. Go in with caution because there’s a possibility that the celebrity has been paid to promote sales of the cryptocurrency and they don’t have any real insight – or interest – in the project.
The red flag: When an influential figure seems to suddenly turn their attention and advocacy to a cryptocurrency – without any signs of interest in the market before – and promote that their fans buy-in.
The enthusiastic businessman
Calling on those who are exceptional marketers but not necessarily tech experts here. These shills will invest in a token and then advocate the shill out of it so that others invest. Once the cryptocurrency reaches a tasty price tag after people flood in, the shill will tap out and sell, taking a massive profit with them. It’s also called a pump-and-dump strategy and leaves new investors in the lurch when the project price suddenly falls after big-bad-businessmen sell-out.
The red flag: The businessman is promoting the token – hyping up the profit you could gain rather than talking about the use-case or fundamental function of the cryptocurrency. Often these shills are entrepreneurs or professional investors in other markets and make their money by trading.
The zealous founder or team member
If you had a business, you’d want to see it succeed right? Of course. And most founders and teams behind a cryptocurrency project are the same. So to entice new investors, they’ll advertise their project and hype it up so that it gets attention and funding. It’s not necessarily as malicious as a paid influencer or a businessman trying to bag a profit, but it’s still worth recognising that a person might be overselling their project.
The red flag: The team promises that their project will be able to deliver the world and more without having a well-documented white paper or roadmap. If there’s hype and hurry without function and focus, you might be looking at a shill.
How to avoid falling prey to a shill
Before you let someone talk you and your money into a project (no matter how enthusiastic they are) make sure you do the following:
- Do your own research (DYOR) and get the key facts without the subjective buzz.
- Look at the credentials of the person who’s endorsing the project and see whether they’ve got any previous cryptocurrency reputation. If they advocate a project without any consideration of the fundamentals, go in with care.
- Don’t YOLO or FOMO because of others following the influence. Volatility is part of cryptocurrency and while a project’s trajectory might look enticing, it’s probably going to see a correction.
- Fame does not equate facts and celebrity status does not mean there’s true insight.
Approaching crypto with comprehension
The more you know about crypto, the better your chances are that you will go in armed with the right information. Cryptocurrency has enormous, exciting potential if you can steer clear of the projects that aren’t worth your attention or your money.
Just remember, the crypto scene is unregulated – so looking out for yourself, exercising good judgement and understanding the environment is essential. If you’re getting up to speed on how to detect scams, check out our articles on the blind signature vector, and the classic rug pull – you’ll be glad you did!
Learning to trust yourself? You’ve got this! And we’re here to help – check out our School of Block episode In the Head of a Scammer – an essential video for keeping what’s in your wallet safe.