Key Opinion Leaders Are Bad for the Crypto Industry

It was strange that Professor Crypto’s announcement didn’t sit well with many crypto experts: few were familiar with him, and his accomplishments appeared scant. Within 24 hours, investigators like ZachXBT uncovered evidence suggesting that “Professor Crypto” had artificially inflated his online presence by buying thousands of followers and using bots to generate social media engagement. A day after claiming a significant award, Professor Crypto deleted posts, silenced critics, and appears to be in the midst of a public relations predicament.

Although not all “Influential Figures” are as blatantly deceitful as Professor Crypto appears to have been, his scam serves as a cautionary tale about their potential risks. The Influential Figure business model, which often involves paid and undisclosed endorsements, encourages them to generate engagement at any cost. Honesty seems to be of secondary concern – and the entire crypto industry is bearing the consequences.

Why it’s time to K.O. the KOLs

On occasion, that cost is truly significant. In the early months of July this year, the Polkadot network disclosed a treasury report showing they had expended over 87 million dollars in the initial half of the year. While this sum is substantial, it was the fact that nearly half, approximately 37 million dollars, were allocated towards “Outreach” initiatives like advertising, sponsorships, events, and “influencer” collaborations that stirred quite a reaction among the public.

In the world of cryptocurrencies, influencers are similar to what they are in other sectors – individuals such as YouTubers or TikTokers who have built substantial audiences. They receive payments directly for promoting or covering projects, or more accurately, for endorsing specific tokens. The most notorious example might be BitBoy (real name Ben Armstrong), who was exposed for accepting compensation to boost tokens without disclosing these affiliations.

Due to the precedent set by figures such as BitBoy, crypto influencers have been trying to transform their image into “Key Opinion Leaders” lately, which sounds more refined, but it’s essentially just a fresh coat of paint on the old model. Regardless of the new title, their methods haven’t seen much evolution: Likewise, Key Opinion Leaders are still compensated for expressing favorable opinions, instead of pursuing actual truth.

People were troubled by the distribution of Polkadot funds to influencers, as it seemed to suggest that the crypto industry prioritizes image and promotion over actual value (ironically, Polkadot’s development budget actually decreased during this timeframe).

What is a key opinion leader, really?

In simpler terms, influential figures like Key Opinion Leaders might cause issues due to their hybrid role that blurs the lines between journalism and public relations. This dual nature often leads to potential conflicts of interest. Essentially, they may not prioritize the needs or interests of their audience above all else.

As an analyst, I understand that my work’s primary objective is to deliver high-quality, reliable information to readers, as this is crucial for our revenue generation. To uphold this goal, news organizations typically take great care to shield their reporters from financial aspects, such as who’s purchasing ads. This is to ensure that our coverage remains impartial and unbiased by any potential influence of advertising dollars, presenting a picture that accurately reflects the facts rather than being skewed positively or negatively.

On the opposite side of the spectrum are PR representatives or content creators who openly support a project and communicate its message. They receive compensation directly from the projects, which is acceptable since the relationship is transparent. They’re expressing the viewpoint of a company or project, so it’s wise to approach their statements with a moderate level of suspicion, as they will naturally present information in the most favorable light.

A potential issue with Key Opinion Leaders lies in the fact that they function as paid endorsers who often resemble journalists. They possess their own broadcasts or platforms over which they have control, discussing a diverse range of subjects. However, the content they decide to address and the opinions they express can be influenced by where their financial resources originate from.

Legally, influencers such as BitBoy should openly declare any financial relationships they have with projects they promote, but this rule isn’t consistently followed. In fact, BitBoy is not the first figure in the cryptocurrency sphere to be accused of accepting payments without disclosing these partnerships. What adds to the concern is that Armstrong has also been caught engaging in “pump and dump” practices – a scheme where he would boost a token’s value by promoting it, then sell his holdings once the price increased due to his own endorsement. This practice is troubling because tokens are often given as incentives to Key Opinion Leaders, making “pump and dump” almost an inherent part of their business model.

The fundamental issue with Key Opinion Leader (KOL) deception lies in the fact that viewers believe they’re receiving impartial guidance from authorities. However, it’s a clever camouflage; what they’re essentially exposed to is an advertisement masquerading as news reporting. It’s this misconception that ultimately leads to problems.

The thought-terminating KOL death spiral

In the realm of Ethereum, there’s frequent discussion about cryptocurrency serving as a tool for collaboration – essentially, facilitating groups of people to work towards common objectives. However, Key Opinion Leaders (KOLs) can be seen as a disruption in this coordination process: they create divides, notably between influencers and their followers, but even more crucially, between these influencers and the broader industry.

A Key Opinion Leader (KOL) aims to receive compensation for expressing favorable views on a particular subject, while what their followers seek is an honest and unbiased account of that topic, regardless of its positive or negative nature. Essentially, KOLs may sometimes be at odds with the interests of their audience, whether this conflict is conscious or not.

Beyond my initial point, I firmly believe Key Opinion Leaders (KOLs) are detrimental to the overall success of the cryptocurrency initiative. After all, truthful builders ought to advocate for public information that is accurate, as it fosters lasting adoption and trust in the entire industry.

It’s reasonable to assume that each project might incentivize Key Opinion Leaders (KOLs) to express positive sentiments exclusively towards their own projects. However, this trend leads to a situation where everyone is essentially purchasing praise, with honesty taking a back seat.

In simpler terms, many potential cryptocurrency users often find themselves misguided and exploited by unscrupulous individuals such as Bitboy. “Professor Crypto” was one of the more blatant examples of Key Opinion Leaders (KOLs) who didn’t seem to care about the long-term prosperity of cryptocurrency at all.

Beyond just new users, both investors and project participants often find themselves compelled to utilize Key Opinion Leader (KOL) marketing due to immediate triggers from poser detection alarms when we encounter the poor-quality content that these KOLs produce. This has unfortunately led many developers and investors to lose faith in our industry, fostering feelings of isolation and despair.

It’s a race to the bottom that everybody loses.

This town deserves a better class of influencer

It’s impossible to cultivate a fresh financial system when its primary visible information comes from Pepsi ads. This is one of the reasons we’re choosing a unique approach as we get ready to debut Last Network, an Ethereum Virtual Machine (EVM) chain focused on sustainable incentives.

Rather than compensating social media influencers for discussing Last, we’re assembling a partnership of industry and community figures whose backgrounds, morals, and thoughts resonate with ours. In the industrial sector, we’re extending invitations to trusted companions we’ve developed over years of collaboration to establish credibility and aid in spreading the word. As our community expands in anticipation of the launch, we will also motivate die-hard crypto enthusiasts who are passionate about Last to assist in educating and welcoming newcomers into our environment.

Information about those initiatives will be available shortly, and we’re optimistic that others might emulate our approach. It would certainly benefit the crypto sector if more projects were to disassociate themselves from the KOL (Key Opinion Leader) cycle. At minimum, it could have spared Polkadot some resources and Professor Crypto from potential future encounters with various governmental organizations.

Please be aware that the opinions shared within this article belong solely to the writer and may not align with the perspectives of CoinDesk Inc., its stakeholders, or associated entities.