What is Crypto Shilling?
| KEY TAKEAWAYS: |
| — Shilling is the implicit advertising of a cryptocurrency by someone with either status or reputation or someone who is trying to promote a project. — To identify crypto shilling, you need to know what to look out for. There are a few ways to identify shills 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. |
You might have heard someone talk about the “best cryptocurrency ever to 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. So, let’s look at what shilling is and what you should look out for to avoid getting your funds plundered despite your best intentions.
What is shilling in crypto?
The short answer: Shilling a cryptocurrency refers to the advertising of a project before it ends in a rug pull.
The slightly longer answer: crypto shilling is 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. People invest > the demand for the token rises > 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. Most of the time, individuals or organizations shilling a particular cryptocurrency will use one of the following methods:
The influencer
Yeah, not all influencers are on Instagram and not all influence is good. In the cryptocurrency scene, you might encounter 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
This type of shilling is practiced by exceptional marketers, but not necessarily tech experts. 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 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 recognizing 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 crypto shilling
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)
Get the key facts without the subjective buzz. Join different communities and ask questions, check out what other crypto users are saying on social media platforms such as Reddit or X (Twitter). You should also use this opportunity to look into the reputation of the project’s founders and development team. Have they already launched 3 hyped-up failed tokens in the past year. Then perhaps you don’t want to jump in!
Don’t fall for FOMO
Don’t YOLO or FOMO into a project purely because it’s popular. While a project’s trajectory might look enticing, there may be more under the surface. Perhaps it’s a coordinated pump and dump, and the original holders are waiting to dump a soon-worthless token on their unsuspecting victim: you. Alternatively, it could be a straight-up rug pull, with founders draining the project’s liquidity. Worse still, it could be a honeypot scam, meaning that as soon as you invest, you realise you can’t withdraw your funds and nor can anyone else. The project’s deployer is the only one that can access the liquidity and you get scammed along with all of the other victims that FOMO’d in.
A trusted name can’t always be trusted
Fame and celebrity status does not equate to true insight. Following your favorite influencer into a project blindly is usually a mistake. While you may be enamoured with a sports legend or pop queen: do they actually know anything about cryptocurrencies? Countless celebrities have (perhaps naively) allowed crypto projects to use their fame to sell crypto tokens or coins. Of course, these paid celebrities make their endorsements, and probably never think of the project again. When their fans jump in, the job is done. Sometimes, celebrities don’t mind a scammer using their audience, or maybe they are just not aware. Either way, you should always exercise caution if you see a celebrity endorsement on a crypto project.
Approaching crypto with comprehension
The best way to avoid any scam, including crypto shilling, is simple: knowledge. With the right knowledge, you can equip yourself for anything a scammer can send your way. Believe it or not, understanding shilling is just the beginning. Bad actors have countless scams up their sleeves, from rug pulls to impersonation scams and much much more. To be prepared, make sure you check out the full article on the most common crypto scams. But above all, the best thing you can do is to stay vigilant, do your own research, and verify every transaction before you click sign.
Knowledge is power
