When you first get started into cryptocurrency, there can be a lot of new terms and words to learn and understand.
Not knowing what these terms mean can sometimes lead to confusion and mix-ups when trying to buy and sell your own cryptocurrency, so it’s important that you know what they mean.
One term that always seems to cause confusion is ‘shilling’.
So – what is shilling and what does it do to cryptocurrencies?
Here we are going to be taking a closer look at shilling so you can understand the term and know everything you need to know about it. So, let’s dive right in!
What Is Shilling In Cryptocurrency?
Shilling is a term used to describe the ‘hype’ and activism around promoting a type of cryptocurrency just before the prices rise.
It’s a method that some people use to try and drive their profits up by investing in a relatively cheap cryptocurrency, then they promote and advertise it to increase the number of people also investing, so they can sell their tokens for a profit.
Basically, they are trying to create a ‘buzz’ around a type of cryptocurrency – that is known as shilling.
Shilling is generally seen as a bad thing because it’s basically someone trying to sell the idea of a cryptocurrency without actually knowing if it will take off or not.
The people who ‘shill’ a cryptocurrency are only doing so because they want to generate a large amount of profit off of the tokens they have already bought.
This can lead to unhappy outcomes where you have listened to someone who was shilling a cryptocurrency only to find out that it has very little prospects – meaning that you have potentially wasted a lot of money investing in that cryptocurrency.
So, it’s important to be aware of those who are simply ‘shilling’ a cryptocurrency and those who are actively sharing the news with you that a new cryptocurrency has potentially good prospects.
Let’s take a look at some of the different types of people who ‘shill’ cryptocurrencies and why they would do so.
Who Shills Cryptocurrencies?
It’s not as easy to spot shillers as you think it would be. Not everyone who tries to promote a cryptocurrency is shilling, so it’s important to try and think about the person themselves and their motives.
A friend telling you that they bought some tokens for this cryptocurrency is not the same as someone who comes up to you, tells you about this ‘amazing’ cryptocurrency that you need to invest in before prices shoot up and it’s too late!
The difference in behavior here is the red flag, and shillers tend to be pushy when it comes to getting you to invest in a cryptocurrency.
They may even follow up on the idea sooner after and continue trying to pressure you into buying some tokens.
If you are ever approached directly like this, never cave into the pressure – stand your ground and follow your gut on whether or not you should invest. It’s your money, so you should spend it how you want to.
But some shillers are not just friends you have in the community. Shillers come in all shapes and forms, so let’s look at a few more.
Another well-known type of shiller are businessmen, the ‘Elon Musks’ of the world.
These people will invest in large quantities of tokens and then continue to shill to try and increase the demand of those tokens just so they can sell them later, and generate a profit.
Also, don’t be surprised if that once they have sold their tokens for a huge profit, they turn and start bad-mouthing the cryptocurrency to try and drive prices down again.
This is known as the ‘pump and dump’ strategy – so, it’s important not to fall for these shillers otherwise you would end up worse off in the ‘dump’ part.
The easy way to spot one of these businessmen shillers is how focused they are on the profit a token will generate – because that is all they care about in the end.
They won’t mention things like the tokens’ functions or anything else, just about how you can generate a lot of profit by investing in these tokens – but in actuality, they’re just talking about their own profit goals.
Another type of shiller is the cryptocurrency’s founder or team member.
These people are motivated by success and they will want to entice as many investors as possible to their cryptocurrency to get it started.
This makes sense for a founder or team member to do but you should be on your guard.
If the cryptocurrency has no roadmap or doesn’t look promising, there’s no shame in waiting until it’s more successful to invest or to not invest in it at all.
And finally, we come to the most prolific shiller of them all – the influencer.
Influencers are more than just models on Instagram holding up a branded water bottle – they can be any kind of celebrity or content creator, even on platforms like YouTube and more.
They may try to use their reach to try and promote a cryptocurrency for their own gain, or they could have been hired by a founder to promote their cryptocurrency.
In this case, the influencer will not talk about their interest in cryptocurrency or why they decided to invest in a particular project.
Although influencers have to be transparent about paid promotions in many countries, some may try to slip it through under the guise of ‘genuine interest’.
So, stay alert and always think about a person’s motives when they try to promote a cryptocurrency.
Investing in cryptocurrency can be tricky business but at the end of the day, it’s still business.
This means that you will always find people who try to promote or ‘shill’ an unpromising project in the hopes of making an extra buck.
So, to avoid being ‘shilled’, you need to always look at the person promoting the project and see what their motives are.
This way, you can distinguish those with a genuine interest in cryptocurrency and those who are just trying to dupe you for their own gain.
Paul Martinez is the founder of BendingDestiny.com. He is an expert in the areas of finance, real estate, and eCommerce.
Join him on BendingDestiny.com to learn how to improve your financial life and excel in these areas. Before starting this blog, Paul built from scratch and managed two multi-million dollar companies. One in the real estate sector and one in the eCommerce sector.