The recent boom in the cryptocurrency market despite a global pandemic has managed to gain worldwide attention. As a consequence, we have seen a spark in crypto startups and investors during this pandemic to cater for the ever-increasing demand for Bitcoin and other currencies alike. This sudden shift in the paradigm associated with the crypto market has forced individuals around the world to dig a bit deeper into the dynamics of this industry. We have also observed the unwavering role of social media platforms such as Twitter, Facebook, Instagram among many others in controlling the actions of traders while simultaneously adding up to the prevalent herd behavior. Despite this recent spike in the value of cryptocurrencies many still question the future stability associated with this currency.
Cryptocurrency is a form of payment that can be exchanged online for goods and services. For an individual to be able to access those goods and services the cryptocurrency needs to be exchanged for real currency. It is fundamentally based on a new type of technology called Blockchain. Blockchain is a specific type of database that stores data in blocks that are then chained together. Essentially as new data comes in it is entered into a fresh block. Once the block is filled with data it is chained onto the previous block, which makes the data chained together in chronological order. In Bitcoin’s case, blockchain is used in a decentralized way so that no single person or group has control—rather, all users collectively retain control. Decentralized blockchains are immutable, which means that the data entered is irreversible. For Bitcoin, this means that transactions are permanently recorded and viewable to anyone.
The current price of Bitcoin is $58,834.31, indicating a +851.97% with respect to last year while a +438.09% with respect to last six months. This immense increase in the price of cryptocurrencies has compelled investors to wonder why. One of the major reasons attributed to its recent growth in 2021 is institutional adoption. Cryptocurrencies especially Bitcoin, is referred as a safe haven asset against market volatility and inflation. Moreover, the recent trend owing to societal and economic condition has compelled people to hold less cash and stay hedged against market swings. A lot of public companies followed suit and have converted their cash treasuries into cryptocurrency. Examples include Square, an American payments company which recently bought Bitcoins worth 50 million US dollars. Another major reason to justify this surge in the price of cryptocurrency is PayPal’s announcement in October 2020 that it would be launching cryptocurrency buying and selling features on its platform. Paypal with its wide market of 350 million users is becoming a means for its user to avail crypto as payment means reinforcing the stability associated with crypto in the mind of masses. This year’s third Bitcoin Halving further drove the demand for the 21 million Bitcoins left in circulation.
In addition to the factors mentioned above one of the crucial factors that has affected the growth of Bitcoin not only in 2021 but ever since it launched back in 2009 is Social Media. Social Media has unprecedented power when it comes to formulating the public’s opinions therefore Mass communication agenda-setting and framing theories focus on the medias ability to tell the public what to think about and how to think about salient issues perhaps also what to do about them. Most of the social media platforms have now actively replaced news forums and have become the primary source of information for masses. Most individuals turn to these platforms when it comes to crypto based knowledge. Facebook, Twitter, Reddit and YouTube have become very popular conveyers of crypto information. This close relationship between social media and cryptocurrencies come as no surprise since the very first real-world transaction completed through Bitcoin was the purchase of two pizzas and was done through a social networking platform.
We have observed big players like the blockchain company Ripple—they’ve made a big deal of sharing educational content and webinars on cryptocurrencies to their nearly 1 million Twitter followers. They even launched a TV show, The Ripple Drop. Besides offering crypto based knowledge social media also fuels the herd mentality when it comes to affecting the price of Bitcoin. The surge observed in the price of Bitcoin as Elon Musk added the term “Bitcoin” to his bio on Twitter is a clear indication of masses religiously following the information they attain on social media.
However, it must be noted that just as social media can help popularize cryptocurrency it can also contribute to market price fluctuation. For instance, when Tether, a digital currency system, was hacked last year for over 30 million US dollars in tokens, the value of Bitcoin dropped by 5.4%. This is part of social media’s role in the future of the global adoption of cryptocurrency. That influence may work inversely, too: If mainstream acceptance is achieved, this could result in another generation of social media networks.
Owing to crypto market’s recent success there has been a lot of speculations about what the future holds for this industry. Given the easy accessibility to information through social media and trading platforms like Coinbase, Bitfinex, Gemini among many others the true potential of this industry is yet to be determined. While it must be noted that Blockchain as used by Bitcoin has a lot of potential as a decentralized distributed ledger technology, the extremely volatile and fragile nature makes it difficult to be used as a stable currency for transactions and devoid this market of human trust. Cryptocurrency market is controlled by various social and government factors which keeps it fluctuating. While many argue Bitcoin is the currency of the future, it should be noted that a currency needs stability so that merchants and consumers can determine what a fair price is for goods. Bitcoin and other cryptocurrencies have been anything but stable through much of their history.
 USC Information Sciences Institute. (2019). Identifying and Analyzing Cryptocurrency Manipulations in Social Media 2019 https://arxiv.org/pdf/1902.03110.pdf
 Statista. (2021). Bitcoin price from October 2013 to March 22, 2021 https://www.statista.com/statistics/326707/bitcoin-price-index/
 International Congress on Big Data. (2017). An Overview of Blockchain Technology: Architecture, Consensus, and Future Trends https://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=8029379
 National Bureau of Economic Research. (2018). Risk and Returns of Cryptocurrency https://www.nber.org/system/files/working_papers/w24877/w24877.pdf
 Air Force Office of Scientific Research (AFOSR). (2020). Charting the Landscape of Online Cryptocurrency Manipulation. https://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=9120022
 International Criminal Justice Review. (2020). The Rise in Popularity of Cryptocurrency and Associated Criminal Activity. https://journals.sagepub.com/doi/pdf/10.1177/1057567719827051
 Bouoiyour, J., and Selmi, R. (2016). Bitcoin: A beginning of a new phase? Economics Bulletin, 36, 1430–40
 Letra, I.J.S. (2016). What drives cryptocurrency value? A volatility and predictability analysis. https://www.repository.utl.pt/handle/10400.5/12556