The Hustlers Fueling Cryptocurrency’s Marketing Machine
It took only a few months for Sally, an executive assistant living in British Columbia, to become Crypto Sally, a Lambo-touting altcoin influencer who makes a living on YouTube videos. She got interested in cryptocurrencies last summer as the buzz around initial coin offerings, or ICOs, surged. She bought some ether—at the top of the market, she admits—and spent her free time researching how to trade lesser-known cryptocurrencies called altcoins, eventually making enough money to quit her job.
For someone with no tech or finance background, it was a lot to figure out on her own, so Sally (who asked that her last name not be disclosed) created a 34-page beginner’s guide to crypto investing and shared it online. “My goal was just to get some basic info out to people that I wish I would have had when I started,” she says. In January, she created a Twitter account to promote her guide, and in March she posted her first YouTube interview with the CEO of a blockchain company. Her following quickly grew to nearly 18,000 subscribers on YouTube and 14,000 followers on Twitter.
That’s small potatoes compared to, say, beauty or gaming influencers boasting tens of millions of followers. But in the burgeoning world of crypto, it’s enough to make her a star. “I’m like a nobody in traditional marketing terms, but because this space is so new and it’s so crazy right now, there aren’t a lot of crypto influencers yet, and especially female ones,” she says. As her influence grew, requests flooded in—often 10 a week—from up-and-coming coin companies offering to pay her to promote their ICOs or post a “review” of their coins.
When we speak, Sally is fighting off a cold she picked up at Consensys, the 8,500-person conference in New York City, her first crypto event. She also attended an awards banquet that honored crypto influencers as “most impersonated,” “best coin analysis” and “best crypto musician.” It feels weird to be considered a crypto influencer, she says, “because it’s just something I started doing for fun.” She believes cryptocurrencies have staying power, but she isn’t as sure about the market for influencers like herself. “I don’t plan on this being a lifetime career. It could end a month from now, I don’t really know,” she says. For now, she has signed a contract with an agency to produce one to three videos per week featuring the firm’s clients.
Opportunities for new influencers like Crypto Sally are growing as the easy money for crypto projects evaporates. The ICO market—where hyped-up projects raise millions of dollars overnight through fund-raising campaigns—is now crowded with thousands of similar-sounding projects competing for attention and investment. Scams and pump-and-dump schemes have turned off many potential investors. A Wall Street Journal investigation found that nearly 20 percent of 1,450 projects were obvious frauds. Increased scrutiny from the Securities and Exchange Commission has cast a gloom over US-based “utility token” projects that don’t register their tokens as securities. Meanwhile, a sustained drop in the prices of major cryptocurrencies like bitcoin and ether has left crypto investors with less capital to risk on new tokens. Making matters worse, Facebook, Twitter, Google, and Bing have banned crypto-related ads. Projects have to get more creative about spreading the word.
They’re turning to influencers. And growth hackers. And PR agencies. And Telegram managers. And bounty hunters. It’s getting expensive. Beneath the crypto industry’s deafening hype and bubbly scams, an economy of promoters is thriving.
The great innovation of ICOs was removing the most frustrating, arcane aspects of startup fund-raising. But now, between the multiple layers of promoters, the scammers and spammers, and the regulators, an ICO looks more complex, expensive, time-consuming, and risky than traditional ways of raising money. Startups are asking themselves, “If I could just raise $5 million from a VC by having a couple of meetings, why go through the whole process of having the ICO?” says Shaun Newsum, CEO of crypto analytics firm ICO Watchdog.
All Roads Lead to Telegram
Much of the industry’s action happens on a messaging app called Telegram. (Smaller crypto communities exist on messaging apps Slack and Discord.) There are Telegram groups for discovering new projects, networking, debating, thought-leading, and promoting. There are groups with the express purpose of planning illegal pump-and-dump schemes. There are rumors of exclusive channels for high-roller crypto investors (known as “whales”) that charge companies fees as high as $500,000 just to post a link to a new project.
Each project needs a Telegram group to recruit users and investors, keep them interested, and answer their many questions. (“When Lambo?” is a popular shorthand for “When will this token make me rich enough to buy a Lamborghini?”) Since many token sales happen before any technology is built, the Telegram groups also serve as a rare data point for a project’s popularity. “That becomes the heartbeat of the activity of the company,” says Michael Jones, CEO of tech investment firm Science Inc. And like any arbitrary measure of success, it can be gamed.
The easiest way to attract users to a Telegram group is by giving away free money—or rather, “pre-money” in the form of tokens—as “bounties” for a not-yet-launched crypto project. In April, SpringRole, a blockchain company focused on professional verification and recruiting, gave 100 of its Spring tokens for every friend a user invited to join its Telegram group. The group jumped from 1,500 members to 60,000 in a month. The goal, says CEO Kartik Mandaville, is to get them to use SpringRole’s professional profile service when it launches.
“It’s a very simple growth hack,” Mandaville says. Plus, giving away tokens is cheaper than acquiring users on Facebook, which he says would have cost SpringRole around $10 a person. “This is the first time in this world where you can acquire users without actually paying anything. You are paying them in tokens, which right now have no value,” Mandaville says. Of course, SpringRole hopes that will change if it can sell tokens to the public and its Spring currency trades on exchanges.
Programs like SpringRole’s have spawned a new form of wealth creation: bounty hunting. A crypto bounty hunter might start their day by visiting a website or Telegram group dedicated to curating token giveaways, like ICOdrops, Bounty0x, AirdropAlert.com, or the altcoin bounties section of Bitcointalk, a popular message board. They can scan a buffet of projects offering tokens in exchange for completing small digital tasks, decide which look most promising, and begin clicking.
Joining a Telegram group earns you tokens. Voting in online quizzes earns you tokens. Translating the project’s website into Vietnamese or Turkish or Russian earns you tokens. Posting on social media about a project earns you tokens. Creating videos about the project earns you tokens. All of these must be reported into a spreadsheet and tallied. Some projects are dispensing with bounty tasks, opting to give away coins in promotional events called “airdrops.” If those tokens ever are released and traded on exchanges, they could be traded for other cryptocurrencies and fiat currency.
“ICOs are a like a growth hacker’s dream,” says Newsum of ICO Watchdog. “If you know how to drive affiliate referrals, you can do well.”
A bounty hunter calling himself “Crypto Shaolin” told WIRED he spends an average of 15 to 20 hours a week completing bounties through Bounty0x, earning more than $50,000 so far this year. His wife has done some bounty hunting as well; he estimates she’s earned around $25,000. Crypto Shaolin looks for bounties with the “best time/payout ratio” for the least amount of work, he says. He also assesses which projects are likely to succeed, giving their tokens real value. (WIRED could not confirm Crypto Shaolin’s identity.)
Jonas Karlberg, CEO of AmaZix, a Denmark-based firm that manages Telegram communities, says bounty programs can work for projects because videos and social media posts “give the products a voice” and help outsiders better understand them. “Everyone cannot sit down and read a 60-page, highly technical white paper,” he says. But he warns that low-stakes bounties, like mindless social media shares, create little value for the project. “These bounty hunters are only doing this to get their hands on some quick reward,” he says.
US companies are treading carefully after the SEC started taking a closer look at unregulated token sales late last year. As a result, many crypto projects do not allow US residents to participate in bounty programs or require all participants to go through “Know Your Customer” compliance by verifying their identities. Still, it’s common for fraudsters to use multiple accounts to accumulate tokens. SpringRole rejected 65,000 fake Telegram accounts—more than it allowed into its group—because of suspicious-looking activities like duplicate IP addresses or temporary domain names.
Customer Support in Crypto-Land
Once a project amasses a following on Telegram, the crowd control begins. Any active Telegram group contends with spammers promoting other projects, bots adding fake users to the group, and impersonators trying to trick people into buying fake tokens. (Mandaville says he’s found seven fake SpringRole Telegram groups and 10 different accounts using his name and photo.) Oh, and competitors will be eager to spread FUD (fear, uncertainty and doubt) about the project. “It’s like fighting a live Twitter stream of 50,000 people either supporting or dissuading people about your product,” Science’s Jones says.
Beyond that, the real, human supporters have questions, in many languages, across many time zones. When will they get their tokens? When will the project launch? When can they convert their tokens into cash? “These people are asking questions every second, so it’s a nightmare to manage,” Mandaville says.
Answering those questions falls to hired community managers, who play a crucial role, acting as spokespeople, tech experts, legal experts, marketers, spam filters, and rule enforcers. Agencies like AmaZix have emerged to serve the crypto world’s particular needs. The firm dispatched 25 community managers in 12 time zones to manage SpringRole’s Telegram group.
In one year in business, AmaZix has grown to 95 clients and a staff of 150. It has expanded into bounty programs and influencer marketing, including a freelance contract with Crypto Sally. The firm’s services are in such high demand that it charges potential clients $7,900 just to assess whether a project is viable. The assessment and fee are designed to shield the firm and the broader crypto community from scams, says Karlberg. AmaZix turns away roughly 80 percent of projects that pay for the assessment.
But fraud always finds a way in crypto-land. AmaZix has dropped clients who added fake users and bot accounts to their groups. It also fired an employee who was working for the company under four separate identities. (“He was actually a good moderator,” Karlberg notes.)
The WIRED Guide to Bitcoin
Crypto service providers of all kinds are overwhelmed with requests. Last fall, crypto-focused public relations firm Melrose PR was getting 100 cold requests a week from ICO projects looking for marketing services, surprising for a service-oriented business like PR that typically must seek clients, according to cofounder Kelley Weaver. To weed out scams, the firm created elaborate forms for potential clients. Ultimately it stopped considering those, too. “It’s more scammy than it is legit at some point, unfortunately,” Weaver says. Beyond that, the crowded market means it’s more difficult than a year ago to cut through the noise and generate coverage for ICOs, she says. Lately Melrose PR has focused more on blockchain infrastructure projects instead of ICOs and encouraged clients to tell their own stories on Medium and Steemit (the crypto world’s version of Medium), rather than pitch press.
But why bother wooing the media when you can pay influencers for coverage, preferably in a currency that doesn’t exist yet? SpringRole’s Mandaville notes that there are numerous reviews for SpringRole on Steemit, which were free, thanks to the company’s bounty program. (Some reviews include the disclaimer that they were created as part of a bounty program, others don’t appear to do so.) He marvels at YouTube influencers charging as much as $15,000 to $25,000 for token reviews; some companies are allocating $150,000 for YouTube marketing alone.
Skirting Ad Bans
Announced advertising bans by Facebook, Google, Twitter, and Bing haven’t stopped crypto players from trying to buy ads. Crypto companies found work-arounds, in some cases using the word “c-currency” or replacing the “o” in bitcoin with a zero.
Etherisc, an insurance-focused blockchain project that’s launching a token sale later this month, evaded Facebook’s ban by using generic, high-minded tech terms that don’t bring to mind get-rich-quick schemes, like “ICO” or “token sale.” The company spent €1,132 on Facebook ads promoting its “decentralized protocol” on Facebook in late May. A Facebook spokesperson says the ads violated its policy and were approved in error.
Even so, the results were not what Etherisc expected. The company wound up with more than 56,000 “likes,” primarily from Nepal, Indonesia, and Bangladesh, according to an image of the company’s advertising dashboard viewed by WIRED. Etherisc founder Stephen Karpischek said he suspects the likes came from bots or click farms that direct their fake accounts to follow legit organizations in order make the accounts look real. He doesn’t want Etherisc to be associated with buying fake followers, so he’s considering deleting the page and starting over.
Google’s ban, announced in March, has not yet gone into effect, a company spokesperson said. (It was set to take effect in June.) Until it does, crypto companies will take advantage of the lag. Searches for terms like “buy ico,” “token sale” and “invest crypto” turn up numerous ads for cryptocurrency projects, white papers, and ICOs.
It’s a prosperous moment for crypto hustlers. Skyler Sigman, a recent high school graduate, launched a podcast, The Crypto Sky, three months ago, thinking it might help him get a job. But it’s grown quickly enough—5,000 downloads and counting—that he believes he can earn a living on sponsorships. Sigman notes that crypto influencers “have been getting heat” on Twitter for partnering with projects, but he doesn’t see a problem. “People should be paid for hard work and rewarded, especially when these people have followings,” he says.