What Does Shilling Mean in Cryptocurrency?

Published in

The Capital

3 min readJan 20, 2022

Shilling is the implied promotion of a cryptocurrency by an individual with authority or prestige or someone attempting to promote a project.

You may have overheard someone discuss the “greatest cryptocurrency to ever emerge” and been advised to “buy immediately before the price skyrockets.” If you have, you may have encountered an instance of cryptocurrency shilling.

A “shill,” or “Shiller,” is a phrase that is often used in this field to refer to someone who pushes others to invest in cryptocurrencies. As a result, interest builds, people purchase it, and the coin or token’s value increases.

In the cryptocurrency industry, a Shiller is essentially a fraudster. They may have purchased some cryptocurrency to profitably sell it. Additionally, several cryptocurrency projects provide rewards to influencers who “shill” their coin.

The brief answer is that shilling a coin refers to the advertisement of a project before it finishes in a rug pull.

Is it legal?

As a result of the risk of fraud, it is prohibited in conventional financial markets to “shill” products.

However, things aren’t as simple as they look. It must be shown that the ignorant parties were put in danger due to the shilling activity. Take a look at the controversy and misunderstanding around Kim Kardashian’s Ethereum Max-related sponsored Instagram stories. While it has a bad connotation, it is widespread without any governmental agency to regulate it since there is no legislation to follow.

What to watch out for when it comes to the shilling and the possibility of “pump and dumps”

Many of us are familiar with the phrase “pump and dump,” which describes a group of people attempting to profit from an item. The gang arranges itself to purchase significant volumes of digital assets. When the price point reaches its highest, the team artificially raises the price and sells it off at the top. Pumpers use the notion of “supply and demand” to their advantage, knowing that by purchasing in massive amounts, the supply would decrease, increasing demand. When the demand for something rises, the price rises with it. Pumpers often target unpopular cryptocurrencies because they recognize that manipulating them does not need many resources. This deed deceives many investors since the whole system takes roughly 30-seconds to activate.

Another thing to think about is cryptocurrency economics. Does it seem to be making huge profits out of thin air? It is critical to do extensive study to identify specific factors like price volatility, mining and/or staking features, and, most significantly, who the creators are and whether they’re looking beyond the “get rich fast” mentality. Otherwise, you might be one shill away from being a victim of a pump-and-dump strategy orchestrated by some savvy shilling.

How to avoid being taken advantage of by a shill

Make sure you do the following before allowing someone to persuade you to invest your time and money in a project (no matter how excited they are):

1. Do your own study to acquire vital information without the hype.

2. Examine the credentials of the individual promoting the project to check whether they have any prior bitcoin experience. If they push for a project without considering the basics, proceed with caution.

3. Celebrity status does not imply knowledge, and celebrity status does not mean fundamental understanding.

Conclusion

The more you understand crypto, the more likely you are to enter with the necessary knowledge. If you can avoid the initiatives that aren’t worth your time or money, cryptocurrency offers immense, exciting potential. Remember that the crypto world is uncontrolled; thus, you must protect yourself by exercising good judgment and comprehending the surroundings.