The field of marketing has always benefited from the use of celebrity endorsements.
From Frank Sinatra’s appearance in Chesterfield cigarette ads in the 1950s to the more recent Terry Crews’ Old Spice commercials today, celebrity endorsements are a way for a brand to give credibility to its image or expand its outreach.
The problem arises when these celebrity endorsements are no longer for consumable products, but for financial products and investments.
In June of this year, Kim Kardashian posted a paid Instagram story endorsing the crypto token “Ethereum Max.”
She was paid an undisclosed amount, but based on previous reports on how much she charges, the amount for this post that she released to her more than 250 million Instagram followers was probably somewhere in the hundreds of thousands.
As a quick note, practically anyone could make a cryptocurrency token with the words “Bitcoin” or “Ethereum” in it because of a lack of copyright and policing. Legitimate projects that have done this include Bitcoin Cash, Ethereum Classic and others. Ethereum Max, the token Kim K was paid to promote, like the ones just mentioned, has no affiliation whatsoever with Ethereum.
It was later revealed that the so-called Ethereum Max developers, of whom the public had no knowledge of whatsoever, most likely were creating a “pump and dump” scheme. In this scheme, prices of a financial product are boosted with fake recommendations based on false, misleading or greatly exaggerated statements, such as Kim K’s post, and the perpetrators of the pump and dump will sell once prices are greatly increased.
This rapid sale of the asset will decrease the price of the product, and most investors will be burned as the asset is “dumped.”
I’d like to think, however, that this scam comes with a silver lining.
During the 1990s, thousands of tech start-ups swindled investors in much the same way. By exclaiming big dreams and demonstrating questionable results, these companies became one of the cornerstones in what is now known as the dot-com bubble, in which any company that was targeting the internet consumer market would get investors excited with little to no scrutiny.
The point is, at the start of any great technology, we see people capitalizing on speculation without presenting any real product.
Perhaps we are living in a time where — just like the internet in the 90s — the world is preparing for crypto and blockchain tech to catapult itself into our daily lives.
More importantly, the current flow of events indicates to me we stand closer to what is called “Web 3.0” than I thought.
To quickly explain, Web 1.0 was the first form of the internet. Tim Berners-Lee, the creator of the World Wide Web, explains Web 1.0 as “read-only,” as in you could search for information and read it. There was very little user interaction or content generation.
Web 2.0 is a “read-write” web. YouTube, MySpace, Facebook and many others symbolize the content-creating and interactions made available in this 2nd phase of the internet. We are still yet to see the full potential of Web 2.0, as we continually see innovations on the internet such as live streaming, cloud storage, and with it, data compression innovations.
Web 3.0, a “read-write-execute” web, is what we now stand at the precipice of. Web 3.0 would be a leap forward to an open, trustless and permissionless internet. It would be open in that networks are built from open-source software by a community of developers in full view of the world. It would be trustless in that the network allows participants to interact publicly or privately without a third party — like eBay, the platform, without eBay, the company. And finally, it would be permissionless, in that anyone can participate without authorization from a governing body, like the National Security Agency.
Basically, Web 3.0 is a completely democratized internet.
These three pillars of Web 3.0 will be difficult to expand and maintain, but Ethereum has begun shooting its roots to establish a Web 3.0 network that follows these principles.
While the future is promising, we can’t say much yet for sure. Until the time when cryptocurrency adopters and blockchain developers are no longer considered “early adopters,” we will continue to see scams like the one Kim K endorsed. Perhaps even bigger.
Stay safe out there. Again: please don’t listen to the Kardashians for financial advice.