Cryptocurrency: Social Media Influence and Digital Marketing Pitfalls
Over the last few years, cryptocurrency has grown, both in value and popularity. In fact, many industry leaders believe cryptocurrency has the power to change finance and marketing forever. But as digital currency, like bitcoin, becomes more commonplace , cryptocurrency may present some issues for marketers looking to collect consumer data.
For those readers out there who need a crash course, cryptocurrency is a type of blockchain technology, or peer-to-peer network, by which digital currency is sent and accepted, among other things.
What makes digital currency different from the traditional monetary system we use today? The transactions are created, verified, secured, and enforced on a decentralized ledger.
This means digital currency can be sent and received anonymously and securely without financial institution middlemen and fees. The anonymous nature of cryptocurrency is what may shape the future of marketing and how social media can influence its growth.
Cryptocurrency and Social Media
Social media affects our lives daily. Some people even believe that if something isn’t trending on social media, then it simply isn’t happening. This is why social media plays such a large role in the success and value of cryptocurrency.
People interested in and holding bitcoin, which is currently the most popular and valuable cryptocurrency, can get just about any information on it via social channels. Facebook, Twitter, and especially Reddit have helped launch bitcoin into the mainstream. Even Facebook is considering cryptocurrency as an investment opportunity.
But just as social media can help popularize cryptocurrency, it can also contribute to market price fluctuation. For instance, when Tether, a digital currency system, was hacked last year for over $30 million in tokens, bitcoin and Ethereum dropped in value, the former by 5.4 percent.
This is part of social media’s role in the future of the global adoption of cryptocurrency. That influence may work inversely, too: If mainstream acceptance is achieved, this could result in another generation of social media networks.
Is Cryptocurrency Changing Digital Marketing?
Due to the decentralized peer-to-peer network the blockchain and cryptocurrency maintain, marketers will find it more challenging to collect consumer data. And without rich and timely consumer data, digital marketing strategies can be very hard to target.
Using cryptocurrency is also another step toward online anonymity, something many internet users are striving for. According to Pew Research Center, “86 percent of internet users have taken steps online to remove or mask their digital footprints — ranging from clearing cookies to encrypting their email, from avoiding using their name to using virtual networks that mask their internet protocol (IP) address.”
The smaller the digital footprints, the less consumer data marketers can compile to identify audience segments and key demographics, predict consumer behavior, test ads, and more.
Cryptocurrency transactions allow consumers to purchase products and services anonymously and securely. While that can be great for consumers, it has led to some serious hiccups for marketers — and will continue to do so as digital currency gains momentum.
Future Consumer Information May Become Costly for Digital Marketers
The digital marketing pitfalls cryptocurrency presents are forcing marketers to go directly to the source for consumer information. Paying users directly for their information is one strategy, but it is an expensive one.
This can affect marketing ad profit for social media networks like Facebook or Instagram. If marketers need to pay users directly for data, they will be less likely to pay social networks.
New crypto-minded social channels like Steem and Earn.com have popped up, which let marketers engage with these platforms’ tens of thousands of users for purchasing details and other personal information.
These networks are a potential solution, but users may want a nontrivial amount of money for their personal information. The upside is that the users willing to give a specific company their information are more likely to be potential customers.
Cryptocurrency's role in the future of social media and digital marketing is still uncertain. The influence social media has on the growth and value of digital currency may be flipped upside down, paving the way for new crypto-minded social networks.
Digital marketers, on the other hand, may need to shell out more consumer research dollars to get the data they need to achieve advertising success. This puts much of the power back into the hands of consumers, yet another twist to cryptocurrency adoption. But in both cases, the future could be valuable for everyone.