Ines AissaniWhen we talk about social engagement, we are actually talking about community. Even more, we talk about presence on social networks. The number of hashtags, mentions, notes or pages shared on this or that crypto tells us a lot about its potential…
I ask the question that prompted me to write this article:
What if when it comes to crypto investing, we were all wrong about value indicators?
In other words, and if today what he did the value of a crypto, was it his social commitment?
As you know, on this blog, we like to ask fundamental questions; We will therefore see what is hidden behind social commitment.
Social networks attack cryptos
Many people, me first and foremost, tend to consider that the technology (and possibly the business model) behind a cryptocurrency is the main driver of its success. With hindsight, however, we are beginning to realize that it is elsewhere... In an indicator that we tend to take lightly (perhaps because it is more difficult to evaluate ): social engagement.
You know the saying: behind every great man...Whether we agree or not, its translation into the crypto sphere seems much more relevant to me. Because yes, behind every major cryptocurrency there is a community of enthusiasts who exchange, share progress and invest in the project.
To better understand the impact of this social commitment, I wanted to return to its most emblematic illustration (small clue, the project started from the same, that is to say its link with virtual communities). But also on the reasons why crypto communities are so influential, and the platforms on which they are formed.
But let's start from the beginning ...
Social engagement in crypto: the Dogecoin case
To better understand the impact of social engagement on the value of a crypto (and especially why it can be more important, or even completely uncorrelated from the technology or the project itself), there is no example more telling than that of Dogecoin
Without real technology or intrinsic infrastructure behind its development, The Doge was initially created as a meme. Recovered by crypto-enthusiasts, it took on another meaning. This was picked up by the founders who deliberately wanted to create a crypto joke, literally. Dogecoin was then considered an unassuming crypto joke.
(👋 You can read our article onhistory of dogecoin to know more. Also do not hesitate to see our video on Youtube which explains how the dogecoin went from being a joke to a serious topic…
It's a bit the same phenomenon that we were able to observe with the success of Bored Apes Yacht Club. Investors clearly love nothing more than being able to shatter preconceived notions about the crypto world by backing a project that, at first glance, has no intrinsic value.
Its potential also lies in the hope it gives us of gaining enormously by investing little.
But beyond its symbolic value, DogeCoin has especially exploded (experiencing an increase, remember, of more than 8%). thanks to the social commitment of its community. And especially its most influential representative, Elon Musk through Tesla.
Un tweet from Elon Musk has completely turned the world of cryptocurrency on its head. Whether you like him or not, you have to give him credit its ability to mobilize its audience (of several million people). While many people will shy away from tokens such as Shiba Inu and Doge, even considering that they give a bad image of what cryptocurrency represents, the power of communities is to guide the decision of investors beyond the logic.
We can choose what we want to believe in and invest in. And crypto communities are precisely the incubators of this unwavering support!
The power of the crypto community
The cryptocurrency sphere is recognized as being volatile, easily ininfluenced and impacted by external events or forces. In this respect, it is not fundamentally different from any other economic sphere or financial institution, starting with the stock or raw materials market.
What drives investors to act is often the fear of missing an opportunity. The fear of missing the train is the fear of every investor. You certainly know this fear, right?
😲 FOMO = Fear of Missing out and FUD (fear, uncertainty and doubt) is the opposite feeling.
In a relatively new field, long shunned by traditional news sources (starting with the financial media), having reliable sources was difficult. We feed the FOMO all the more strongly that finding relevant data requires considerable monitoring work…
The triumph of crypto influencers…
Many investors therefore rely almost entirely on what they can see or read online. And, for this, nothing better than a good crypto influencer.
Gurus are popular. They always have been. Anyone who likes to talk (and show off) is popular. Anyone who likes to listen to themselves talk, get on platforms and go on TV sets is popular. The more they talk, the more we listen to them. The more we give them credit. Some people have known about crypto since March 2021 and are already called "experts".
(See video “the Triumph of Imposters and crypto traders"):
The higher the number of views and shares they have, the more they are considered.
So, crypto projects will pay crypto influencers to talk about it in their videos. This is part of the crypto ecosystem.
This will create engagement and a certain popularity. This is all marketing. Yes, a crypto remains above all a company with all that that entails.
A social media word-of-mouth phenomenon which takes on even more importance as soon as a new entrant invests in a crypto, he nourishes this social commitment. And he encourages others to do it, giving the impression that this is what all investors do. This is how you create a crypto community…
In crypto-speak, this is called “shilling.” You shine a light on a crypto, you bring light back to it. You make others believe that you have found the best of the best. This reassures us and we also hope to have the approval of others. Finally, we will talk about this psychological mechanism again in a future article, eh 😉
But basically, the idea to remember is that It is the community that sets the tone. This will create a group effect. The more important and active it is, the more potential it has to trigger the FOMO effect. And encourage others to get involved, for fear of missing out on the next Bitcoin or DogeCoin…
On which platforms can we measure social engagement?
By analyzing the communities behind them, we can identify three distinct sources of engagement. Each with its own rules and effects on the value of a crypto.
- Reddit, the new crypto Agora. With over 6,6 million posts dedicated to crypto, Reddit is very popular among crypto communities. This dates back in particular to the time when other social networks, like Facebook, still banned advertising around crypto. They are particularly active there, with very popular subreddits like r/CryptoMarkets (which has 4,5 million active users).
- Twitter and public support. Less anonymous than Reddit, Twitter is the ideal virtual space for projects that wish to boost their social capital by accumulating followers. Due to its open nature and sharing features, Twitter has the potential to make the enthusiasm of a crypto community completely viral.
😇 By the way, if you feel like it, you can follow us on Twitter too 😉
- Discord, the new Telegram for crypto : offering a much nicer interface and features than the mobile chat application, Discord has become the new Eldorado of crypto communities. One of the most in-demand new jobs at the moment is even that of Discord Manager.
Today, social engagement is such an important indicator that there are more and more sites dedicated to this data. This is for example the case of LunarCrush.
Social commitment: the limits and excesses of advertising
Generally speaking, social engagement is essential data to evaluate the success, and especially the sustainability of a crypto.
When you want to make a crypto fundamental analysis, you must consider the social commitment of a project.
This will tell you, just like the tokenomics, an idea of the value of a crypto project.
Remember this: "A good crypto project that doesn't have a community won't go very far, due to lack of resources and uses. Conversely, a shaky project with a strong community will have more potential to reach the moon..."
In short, what I'm getting at is that there are limits to social engagement...
It's a bit like with influencers or Block Busters in the cinema. Having a strong popularity does not mean the quality is there. Often, the great popularity indicates the opposite…
Just because you follow the biggest YouTuber on a given topic (in terms of number of subscribers) doesn't mean you're dealing with the "best" or the most "knowledgeable" on the subject. The most downloaded song of the year doesn't mean you have the best song of the year in terms of musical quality. You have the one that managed to reach the most people.
And, for cryptos, it's the same thing.
A crypto that has strong social engagement can simply be a crypto with a very good marketing team that knows how to pay influencers to be talked about. This project can be based on sand ( safemoon?) and be appreciated by a beginner crypto community.
Pay attention to what you see (and this is valid for all subjects in fact) and what you are sold.
Today, it is clear that you are being sold cryptos like you would be sold a handbag on social networks.
And that is the problem.
The founder of Ethereum talked about it recently in an article that we summarized here. Likewise, Andrew Cronje, one of the godfathers of DeFi warned us against this kind of drift…
In short, whether you consider yourself a sociable person or not, whether you feel like a fish in water on social networks (or like your grandmother who discovered TikTok) it is undeniable that the way we engage socially with of a crypto project is a good indicator of its ability to explode on the markets.
To the best of my mind.
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