How Social Media Analytics Supports Cryptocurrencies?

The emergence of cryptocurrencies has been largely due to the reliable and fully secured peer-to-peer network provided by Blockchain. Cryptocurrency is a decentralized, fully encrypted, digitally produced, and stored currency that employs blockchain techniques to protect user information.

The only reason behind the growth of cryptocurrencies is public belief. It also gained traction as a result of the 2008 financial crisis, when the government had to bail out the largest banks. While Ether (which is based on the Ethereum Blockchain) and BTC (or Bitcoins) remain the most popular cryptocurrency, many others have joined them to form the top ten list. Those are:

Even though most of these cryptocurrencies have experienced consistent growth for the majority of their life, certain occurrences have resulted in a crypto market disaster. Various social media companies take the top place on the platform among these events. Many of these new-age currencies from Tweets to Reddit posts have attained high records, though most of these occurrences saw an adjustment and stabilization soon after.

Social Media and Cryptocurrency

Social media plays an important role in our routine and many of us stay updated from various social media like LinkedIn, Facebook, or Reddit. Debates about cryptocurrency or news linked to it began on social media networks, as the creators or exchanges attempted to educate more public. This was necessary because the technique was not only new but also much more complicated than previous types of payment, such as gold or paper money.

Cryptocurrency specialists and trading websites publish vital information on current events regularly, as well as articles that thoroughly explain the principles. This assists merchants, buyers, and workers in developing new things or brushing up on old ones. It also encourages constructive debates about the different coins and boosts social networking participation.

For instance, before the end of 2018, around 5 million posts and conversations on social media were studied to see a link between the rise in social media and the next day’s surge in Cryptocurrency pricing. In every case, there is a rise of 10% found in social media conversation that led to a 5% increase in rates of Bitcoin in the next 3 days.

Social media is a platform where inexperienced traders look for necessary information and assists before going into crypto-mania. This helps them to get started while also giving them a place to talk regarding marketing trends and their development.

The entire crypto project is developed through social media and also the first true crypto transaction was made through the forum Bitcoin talk. This inspired a legendary post that led software developer Laszlo Hanyecz to buy two Papa John’s pizzas for 10,000 BTC.

Several well-known companies, CEOs, inventors, and other elevated individuals have entered these forums, boosting their popularity and the buzz surrounding cryptocurrency overall. The network that grows on such social media sites promotes personal development in symmetric encryption and brings together the appropriate kind of people who can co-operate and pool their resources for a larger crime.

The Internal Pricing of Cryptocurrencies

Cryptocurrencies do not have any inherent worth. While some of them began as useable tokens on specific platforms, the majority of them have no actual assets tied to them, and their rates change based on user trust and acceptance. theoretically, if the user stops use of a specific cryptocurrency, its value will fall to $0. This is because that it is not backed by any bank or government, no one would make an effort to reclaim it from the outside.

There are 3 kinds of participants in the cryptocurrency community that boosts growth. Those are:

If the number of new members joining the community declines or players transfer to the latest products, most of these coins will lose all of their value. However, for the most part, their prices tend to stick at a certain level and climb steadily (in normal circumstances). Their costs are determined by:

1. Utility

These are all the advantages of owning a specific cryptocurrency. This might include broad acceptability (you can use it in a variety of retailers), voting privileges in online forums, and the intention to afford digital goods, among other things. These benefits normally encourage more people to purchase the coins, raising the average number of transactions. As a result, prices would rise.

2. Scarcity

The price of cryptocurrencies is heavily influenced by the disparity between supply and demand, just as it is with any other resource. Some coins, such as Dogecoin, can exist in unlimited quantities and therefore have very cheap pricing (less than a dollar), but Bitcoins can only exist in a finite number of bitcoins. Bitcoins are limited to a certain quantity of coins. Surprisingly, there are roughly 18.7 million BTC in existence as of 2021, which is extremely close to its peak figure of 21 million. This could be a big factor in its current high pricing.

3. Perceived Worth

The value of cryptocurrencies is determined by the amount of money people are willing to pay for them. When more firms and brands accept a coin as a payment method, or when banks engage in it, its price increases, and consumers are prepared to pay more for it. When nations prohibit the use of Cryptocurrencies or new laws restricting their use is passed, the opposite occurs.

Cryptocurrency’s Ups and Downs

Major corporations such as Burger King, Home Depot, Shopify, Twitch, Pizza Hut, and Starbucks have begun to accept cryptocurrency and blockchain due to the growing popularity of these technologies. Large publicly traded corporations are also investing a portion of their assets in cryptocurrencies.

Tesla, Mogo, a Canadian Fintech firm, Microstrategy, a business analytics firm that currently owns $3.1 billion in bitcoin, and Square are among them (owned by Twitter founder Jack Dorsey). Many people have likewise made significant investments in coin mining equipment. Where does social media analytics, on the other hand, come into the picture? Let’s have a look.

Data about cryptocurrencies may be accessed on numerous social media networks in its most basic form. This might simply be comments of price changes, huge price decreases or gain, projected price changes soon, or even forthcoming events that could affect the pricing of individual coins. Individuals can use this information and data to make data-backed judgments as they navigate their way through symmetric encryption.

However, some events, postings, and conversations on social media sites have been shown to have a direct impact on crypto pricing. Popular figures and tech titans, for example, might create postings that build enthusiasm around cryptocurrencies, resulting in more interaction and, in turn, increased transaction volumes.

The role of social media in symmetric encryption is the most significant. Let’s take a look at some of the most popular social postings about cryptocurrency. Dogecoin, a cryptocurrency created as a joke, experienced a tremendous surge of about 638% in July 2020! This happened shortly after a user named jamezg97 posted a video urging people to purchase Dogecoin to grow its price and make money collectively. More social media platforms followed suit, posting youtube posts to boost the buzz.

While the Dogecoin rally was one of the strangest happenings in the Cryptocurrency industry, it did demonstrate the power of social media in the area.

Elon Musk, the inventor of Tesla and the crypto-messiah who’s been able to influence crypto market movements with such a Twitter post, recently stated that Tesla has purchased $1.5 billion worth of Bitcoin. Tesla also accepts bitcoins for Tesla vehicles.

This occurrence, which took place on Twitter, sent Bitcoin into a tailspin, with the cryptocurrency reaching a new all-time high of $44,000. Musk fueled the flames by including #bitcoin in his Twitter bio, which increased social media activity. Bitcoin continued to rise until it reached $58,000, at which point something even more strange occurred. He commented on the rising prices of Ethereum and Bitcoin on Twitter, saying that they were both quite expensive. Multiple cryptocurrencies’ prices dropped immediately as a result of this.

While it is impossible to say with confidence that Musk’s tweets or Tiktok videos directly caused changes in Crypto prices, there does appear to be a link between multiple social media conversations and price movements.

Data-Driven Decisions with Social Media Analytics

To analyze client emotions, forecast events, or create recommender engines, social networking analytics has been utilized as a non-traditional source of data or an emerging new data provider. The connection between perceived media dialogues and stock market performance has also been investigated, but no definitive conclusion has yet been reached.

When it comes to cryptocurrency, many experts believe that putting track of true social media data and receiving notifications on events as they happen is crucial. X-Byte Enterprise Crawling team can deliver a true stream of all social media activity about cryptocurrencies, including mentions of certain keywords.

This would be a reduced, highly scalable cloud-based solution that our team will fully maintain and operate. You can tell us your particular needs, and we’ll tailor a solution to meet them, providing you with a stream of data that will allow your crypto-dream.

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Originally published at https://www.xbyte.io.

Founder of “X-Byte Enterprise Crawling”, a well-diversified corporation providing Enterprise grade Web Crawling service & solution, leveraging Cloud DaaS model