Storyboard: The pitfalls of influencers promoting crypto

Simply put, social media influencers offer an easy way to build brand trust. It is dangerous that these influencers are making cryptocurrency trendy for their unsuspecting followers who do not fully understand this risky asset class.

A recent study shows 18-34-year-olds account for 40 percent of crypto owners globally, indicating a higher disposition among a demographic which is hyper-connected with and influenced by social media.

This has led to an interesting trend in India, wherein influencers are promoting cryptocurrencies like handbags and shoes. In the process, they are doling out a risky instrument to followers who are probably financially unaware.

In fact, the level of financial awareness in India already leaves something to be desired. When you add cryptocurrency to the mix and sell it as ‘cool’, the risk only grows manifold.

If more influencers join the bandwagon, they could end up creating a trust bubble for something that is not yet fully understood and when that bubble bursts it could forever alter customer behaviour.

Some onus also lies with the consumer, who must research and understand this instrument before investing. A larger risk appetite in itself is not bad. However, an uninformed risk appetite can prove to be disastrous.

As an insurance marketer, I am not a stranger to issues of consumer distrust. Despite reforming its practices, the industry still has to go the extra mile in proving its transparency.

While cryptocurrency understandably has a high interest, people are unaware of its nuances. Irresponsibly promoting it can be irreparably damaging not only for people’s financial stability but also for this emerging industry.

While there is no inherent issue in creating a market for your product, what’s risky is not explicitly divulging the risks involved. Cryptocurrency is unregulated in India, which leaves a wider room to scam consumers.

With the escalating influence of social media, people must consume information with a pinch of salt and determine facts for themselves before acting. Influencers too must be cautious of what they promote.

Ignorantly passing on the Kool-Aid can prove catastrophic!

—Abhishek Gupta is the Chief Marketing Officer of Edelweiss Tokio Life Insurance. Views expressed are personal.