About a year ago we wrote to ignore celebrities who promote crypto. A few months later we wrote that folks were suing celebrities for FTX crypto losses. The point is that being a famous movie star, television personality, athlete, or social media influencer does not make your advice about cryptocurrencies reliable. So, our advice is that you should beware of celebrities in crypto (or any investment arena). Sadly, the issue has arisen again with crypto’s friend.tech on Coinbase’s Base.
The Latest Fad in Crypto
As the cryptocurrency world recovers from crypto winter and prices have generally recovered a bit you might have thought there is nothing especially exciting or risky going on. That may have been the case until friend.tech showed up. Friend.tech is a blockchain platform where users can purchase and sell crypto tokens. These tokens are linked to influencers (celebrities). One such personality is a Milwaukee Bucks star, Grayson Allen. This platform became the highest earning service provider in DeFi over just a couple of weeks and then it fizzled.
Friend.tech users buy tokens linked to influencers on X which used to be Twitter. They use the tokens as a gateway to interact in dedicated group chats with other backers. One tenth of every purchase is split between the platform and the individual influencer. These fees went from nothing to $1.7 million in a couple of weeks. This is where the platform became the top earner on the Ethereum blockchain. Total fees generated came to $7.5 million according to Dune Analytics.
Fast Rise and Fast Fall of Friend.tech
About the time that friend.tech surpassed all other services on Ethereum, it reversed course and fell. Fees went down by 70% over three days. New accounts dropped from more than 20,000 to fewer than 5,000. Complaints arising out of friends.tech include steep prices, slow load times, and high fees for trading. Something that is not always mentioned in this sort of situation is that markets are fickle, especially when it comes to the popularity of celebrities. The crypto world is always looking for new ways to attract users and social media is one of the targets. Anyone who gets into something like friends. tech needs to think about why they are doing it and what they expect to get out of it.
Are You Investing or Trading or Just Being a Fan?
People buy tickets to watch the Milwaukee Bucks play basketball. This team was the NBA champion in 2021 and its star players became celebrities. One of these players is Grayson Allen who capitalized on his celebrity by getting into the friends.tech game. It makes perfect sense if you are a Milwaukee Bucks fan to pay for tickets to their games or buy paraphernalia like Bucks jerseys. And if you are a crypto investor or trader, it makes perfect sense look to for ways to profit by trading or investing in various tokens or even starting up your own DeFi business. What does not necessarily make good business sense is mixing the two. Anyone who spends money in something like friends.tech needs to decide if they are being a fan and want to rub shoulders with a star athlete or if they are trying to profit from the tokens they are buying and selling. Otherwise, this is just another time when you need to beware of celebrities in crypto.
Beware of Bots
After the rapid rise and fall of this new platform, traders are blaming automated trading robots or “bots” for both the rise and fall of the platform. They may be absolutely correct. But this does not negate our point about just why someone is dealing with this platform in the first place. People who have become very rich in the investing world only invest in things that they understand. People like Warren Buffett only invest in things when they have a clear idea about how an investment will make money now and far into the future. They do not invest in something because a celebrity endorses it. And they do not invest in things that can be controlled by automated trading bots.
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