What you need to know about crypto shilling

June 27, 2021

If you’re new to the cryptocurrency market, there might be projects which grab your attention with major endorsement from celebrity investors and intriguing project ideas. While some projects are worth your attention, others are designed to gather investor’s funds without any real future plan. Crypto shilling is a popular approach used by marketers to earn money through a project by promoting it as an incredible opportunity – often when it isn’t.

What is cryptocurrency shilling?

“Shilling” refers to a person promoting something so that they can earn money. Often a person shilling a project will be promoting it so that the price of the token rises as more investors buy into the project. As more investors buy a cryptocurrency, the token’s demand rises (often linked to limited supply) and the value increases. If the value increases, the promoter can sell their tokens at a higher price and earn profit from the project’s increased value. This is also referred to as a “pump and dump” scheme.

Why do cryptocurrency shillers promote a project?

There are a few reasons why a person might shill a cryptocurrency project. Usually, it’s with the end goal of the project growing in popularity so that the value increases. This can happen in a few ways:

  1. The person shilling the coin might be an influential figure in the market (either crypto or tech) and was paid directly to put their name behind the project.
  2. The person might be involved in the development of the team or be part of the project internally and wants to see the cryptocurrency project succeed and gain traction in the market.
  3. The person might be an investor who has bought cryptocurrency and hopes to sell it at a higher value to take profit. In this case, the shiller will promote the project as fantastic to entice new investors so that the demand increases and then the value rises. They’ll then sell their holdings at the raised value to take the profit.

How to tell if someone is shilling a cryptocurrency

Basically, shilling is seen as advertising in cryptocurrency. A quick checklist to see if someone is genuinely excited about sharing a new project opportunity with you or whether they’re shilling the token is to ask the following questions:

  • Are they often telling you about how incredible the cryptocurrency is?
  • Is their main promotion of the project that it’ll earn you lots of money down the line?
  • Is the main use-case for the project that it will hold value and give you profit?
  • Do they own a lot of the token?
  • Are they actively involved in developing the project and have financial stake in the company?

If the answer is “yes” to these, it’s likely that they’re shilling the token.

If this is the case, proceed with caution. The project might be great, but it also might not be all it’s made out to be!

What to avoid in the cryptocurrency market

Before investing your money based on someone’s shilling – make sure you avoid the following:

  • Going in blindly and invest without conducting your own research.
  • Follow celebrity advice without looking at their credentials and previous analysis.
  • Follow the herd. There’s every chance a project will rise as investors enter the market. But it will also likely see a correction and will take a dip. If you invest too late and don’t take money from the project, you might end up losing money.
  • Invest what you can’t afford to lose. You might not see profit, but you don’t need to go into debt. Go in cautiously if this is your first time investing!
  • Take out a loan to buy a cryptocurrency. Even worse than investing in crypto with money you are trying to save is going into the red to buy a cryptocurrency. Going into debt to trade crypto (especially if you’re new to the market) is a dangerous move.