Cryptocurrencies are always associated with celebrities. There was Bitcoin under the "Trump deal" before, and later Musk established the Department of Government Efficiency (DOGE), which caused the DOGE coin (Dogecoin) to rise crazily. Emerging market fund manager Mark Mobius said, "Cryptocurrency is a currency, not an investment." In an attempt to quell public enthusiasm for cryptocurrencies, cryptocurrencies There is indeed a certain personality cult, but this word does overestimate cryptocurrency. This article will explore the impact of celebrity effect on the cryptocurrency industry in this cycle from aspects such as the formation mechanism of celebrity effect.

Myth and Personality Cult

According to Émile Durkheim's "Basic Forms of Life", it is a unified system of beliefs and practices related to sacred things, and sacred things are distinguished Coming and forbidden, these beliefs and practices unite all those who profess them into a moral community called the Church. On the one hand, we see that currencies directly endorsed by celebrities deify celebrities, especially the founders who have a huge influence on the currency. On the other hand, Bitcoin is different. In the early days of Bitcoin, the mystery and symbolism of “Satoshi Nakamoto”, the Absentee Godhead, directly brought Bitcoin to the level of “divine creation”. Today, Trump is becoming a contender for the role of Bitcoin Jesus, leading the market.

However, we believe that cryptocurrency has a cult of personality (Cult of personality), which is equivalent to a "myth". The cult of personality in cryptocurrency is actually fanaticism (Cult) Or faith, not (Religion).

Cryptocurrency does not distinguish and prohibit "sacred things" that violate taboos, nor does there exist "rituals" to strengthen the community. This article will briefly describe how cryptocurrency evolved from a cult of personality to a celebrity effect.

Even if you think cryptocurrencies are, let us quote scholar Russell McCutcheon: "What is worth studying is not what it is or is not, but what makes it 'The process itself', such as 'the process by which a group makes claims about their own actions and institutions', i.e. how cryptocurrency enthusiasts assert a cult of personality.

The formation mechanism of celebrity effect Charismatic leadership

The famous German sociologist Max Weber defined charismatic leadership (Charismatic Leadership, also known as charisma) in his book "Economy and Society" Authority) is defined as "compliance with a person's sacred, heroic, or outstanding extraordinary qualities and the pattern of behavior they demonstrate." Charismatic leadership is based on the leader’s power to “attract the loyalty and obedience of followers through extraordinary personal qualities, miraculous insights, or achievements.”

For example, Musk, followers admire not only his resume, but also the impressive mission he has created through the implementation of new energy vehicles, exploration of outer space and other projects. Assume that followers believe that supporting Musk means supporting human progress. A survey by global consumer research platform Piplsay showed that 37% of U.S. adults have invested based on Musk’s tweets.

After following a charismatic leader, people will strengthen their belief in the celebrity through a series of self-verifications.

Self-verification

According to William B. Swann's Self-verification Theory, people will continue to seek to gain a sense of control and predictability over the outside world. or elicit feedback that is consistent with their self-concept, thereby maintaining and strengthening their original self-concept.

Especially in the trading of volatile cryptocurrencies, traders have already assumed that "I know how to grasp the volatility of this market", coupled with their interest in charm For followers of type leaders, it can be said that they have assumed that "I know how to interpret 'God's' prophecies." When the market price of cryptocurrency rises as celebrities say, personal self-validation is further strengthened. Even the Federal Reserve is like a "temple" where people conduct self-verification with the future currency through various interpretations of "Archbishop Powell's" ambiguous remarks.

In addition, the almost "god" belief in celebrities is coupled with external opposition, especially in the face of polarization, which further strengthens the worship of individuals. For example, during the US election, because "Harris" (Democratic presidential candidate Harris) did not propose the benefits of cryptocurrency in the early stage, even if she expressed a positive attitude in the later period, it was not as strong as Trump. Polarization has further strengthened Trump's celebrity effect, and market sentiment has been extremely high after Trump was elected.

After the cult of personality takes shape, how are psychological and ideological activities transmitted to market behavior? It needs to be explained through bounded rationality theory.

Bounded rationality

Bounded rationality (Bounded Rationality) was originally proposed by Kenneth Arrow. He believed that bounded rationality means that human behavior "is consciously rational, but this rationality is limited." Human rationality is limited. First, it is due to environmental uncertainty, that is, incomplete information sources. Second, it is because people have limited computing and cognitive abilities for the environment and information. Third, people often use the first signal system (realistic, concrete Stimuli, such as sound, light, electricity, and taste, as opposed to the second signal system composed of language and characters) process information instead of processing information rationally.

Faced with the large and complex system of the cryptocurrency market, people tend to choose charismatic leaders who simply believe in "deification" to reduce decision-making costs, celebrities The trend has become the most weighted information source for followers. Therefore, when making investment choices based on the information base, following the trend has become the optimal solution for followers.

These deified leaders are divided into different levels due to the information cocoon created by advanced social media. As well-known as US President Trump and "Iron Man" Musk, they influence billions of users around the world. The tokens related to them rise due to their little actions and words. A KOL with thousands of X fans calls for an unknown currency in his "wealth group", and everyone in the group will also like this wealth code.

Everyone has his or her own "god".

This is especially obvious in Meme coins. Everyone is unwilling to think about complex investment logic and asset values. They are only willing to immerse themselves in the wealth fantasy and anxiety brought by the so-called KOL, and engage in the same group behavior in various information cocoons. Even through the call of celebrities, the essential object of people's worship may go beyond a specific person, but an animal, a popular symbol or a story that is "deified" by the Internet.

At this point, a personality cult has been formed.

The value and risk of celebrity effect and the catalyst for short-term explosion

On the one hand, celebrity effect has a short-term promoting effect on cryptocurrency.

Celebrity speeches can increase the exposure of some assets. In the era of information explosion, public attention is of extremely high value and attracts the attention of potential investors. Strength is the basis for good performance in the secondary asset market.

A well-known cryptocurrency platform can also significantly boost market sentiment and attract new capital inflows, thereby promoting short-term explosions.

For example, Trump returned to the White House and unprecedentedly supported Bitcoin as a U.S. reserve asset, which instantly raised market expectations and contributed to the market's rise. The market value of Dogecoin was pushed from obscurity to tens of billions of dollars at one time. It is inseparable from Musk's "never give up" back then, especially the Meme coin. If it succeeds in creating a "god", its explosive power cannot be underestimated.

Excessive binding amplifies the risk

On the other hand, there are risks in binding cryptocurrencies to projects. First, excessive binding to specific celebrities may amplify the risks. Although the aura of celebrities can bring opportunities to cryptocurrencies, celebrities may also bring risks. Celebrities attract Traffic may accelerate the outbreak of a crisis. For example, if a celebrity is at a disadvantage, it may cause holders to panic. Secondly, even if the celebrity does not overturn, it cannot guarantee long-term value. What determines the long-term value is the potential of the ecosystem itself. , whether it can attract continuous inflows and interactions of long-term funds is the real question.

If the celebrity effect is lost after short-term capital inflows, the evaporation of value will be a severe blow. You can certainly easily imagine what will happen if Musk's DOGE is lost.

From Unity to Decentralization

So how to use celebrity effect to better grasp its benefits for cryptocurrency?

We believe that the development form of communities and projects should change from unified to modular and multi-centered. In the early stage, growth led by strong leaders can lay a good traffic foundation; in the middle and later stages, it is more suitable for DAO (decentralization) Autonomous organizations) can effectively reduce risks while maintaining effective leadership and promoting the stable development of the cryptocurrency ecosystem. Of course, to complete the transformation, projects also need to go through a period of pain, and projects that can be completed are truly worthy of investment. .