An informal group of self-styled cryptocurrency advisors are using TikTok, Discord and other online platforms to reach nascent crypto investors.
5 min
On March 22, 2020, the day before the United Kingdom announced its first Covid-19 lockdown, Joel Davies joined TikTok, excited by the buzz surrounding it. He was unaware that doing so would lead him toward life-changing money. Davies, 23, had been interested in cryptocurrency since the age of 16, but apart from a small investment in Bitcoin, his curiosity remained on the back burner while he finished his studies in film, television and digital production at Bath Spa University. After graduating in 2019, Davies moved back into his parents’ house in South Wales, stacked savings from his marketing job and, in the evenings, logged on to a Discord server, a communication platform he discovered through Dennis Liu, 26, a leading crypto influencer on TikTok, who also goes by the name VirtualBacon.
“When I found VirtualBacon on TikTok, that spurred me more into investing and learning about [cryptocurrency],” says Davies. Liu’s down-to-earth style and emphasis on research and analysis stood out to Davies in a space that he saw as rife with shilling, scams and hyperbolic price targets. Aided by VirtualBacon’s Discord community and TikTok videos, Davies learned the basics of investing in crypto, including how to trade on centralized exchanges and create a digital wallet, then more advanced skills, such as how to analyze tokenomics and assess the fundamentals of a company. He made his first crypto investment a month into the U.K. lockdown. Over the course of a year, Davies says he transformed his initial investment of 2,500 GBP into nearly 100,000 GBP (about $3,548 into nearly $141,930).
Perhaps no other market is more susceptible to social media’s influence than cryptocurrency, where, for instance, a single tweet from Elon Musk can pump Dogecoin, a meme currency, to all-time highs or send Bitcoin spiralling. One TikTok user created a coin called SCAM (“Simple Cool Automatic Money”) as a joke and it grew to a $70 million market cap an hour after its release. It is currently at an approximately $850,000 market cap.
Newer, self-directed investors are more likely to put their money in riskier investments like cryptocurrency, in part because of the thrill, novelty and social cachet, according to a study commissioned by U.K. watchdog Financial Conduct Authority. Much of cryptocurrency’s buzz, the study found, is due to influencers and hype on social media. An informal coterie of crypto enthusiasts has recently flocked to TikTok because it represents the greatest potential to expand their audience, says Liu. And the audiences they are reaching likely skew young, according to an April survey from Pew Research Center that shows 48 percent of adults under age 30 say they use TikTok, compared to just 22 per cent of those ages 30 to 49. Scams—like meme economies in which online memes are treated like financial commodities and vice versa as well as pump-and-dump schemes—also run rife, according to some influencers on the platform.
“When I started doing crypto [videos] on TikTok, nobody was doing them,” Liu says. Liu’s first foray into crypto was mining Dogecoin—using computers to solve complex mathematical problems in order to introduce new coins into circulation—from his McGill University dorm room in 2014. In 2017, he had some extra cash he wanted to invest and crypto was what he knew best. “It’s a more risky playing field, but, in a weird way, that’s kind of more fair for someone that’s new—a younger audience,” he says. Liu’s most popular TikTok videos are timely analyses, he says, of major price shifts in Bitcoin and Ether, especially when they dip, and other highly traded crypto assets. “People on TikTok are often very new investors, so those types of videos do well,” he says. “It’s not just analysis, but a bit of reassurance to calm their minds in the volatile crypto market.” In his videos, his straightforward delivery, talking over a green screen that displays a coin’s chart or other information, is now a popular format on crypto TikTok.
CryptoWendyO, the TikTok username of a person who says she is a woman in her 30s and declined to give her real name, saying that she has experienced online harassment, makes four to eight TikTok videos a day, analyzing Bitcoin’s price movement, responding to questions in the comments or rounding up the top three daily news stories in crypto. Her most-watched video has over 500,000 views and details a simple investment strategy known as the “moon bag.” “The moon bag strategy is you pull out your initial investment once you’re in profit, and then you take your initial investment and roll it into another project,” she says. “Rinse and repeat.”
CryptoWendyO says she didn’t take TikTok seriously at first but was won over after Ben Armstrong, who goes by BitBoy Crypto, among the most popular crypto accounts with over 2.6 million TikTok followers, encouraged her to join. “TikTok is a great platform to get a large amount of information in a very short amount of time,” says CryptoWendyO. “I can get a lot more on a TikTok video than I can on a Twitter [thread], and more people are going to watch the TikTok.”
Lucas Dimos, 20, known on TikTok as TheBlockchainBoy, says he first heard of Bitcoin from his mom in 2017. “I came for the money, but I stayed for the tech,” he says, echoing a common refrain on crypto social media. Later, he started his own blockchain company, CryptoKnight, to develop an algorithmic trading bot and today runs a Discord server by the same name. Dimos joined TikTok on January 27, 2021 in the heat of the GameStop short squeeze. Since then, he has gained more than 210,000 followers.
A study by Paxful, a cryptocurrency trading platform, analyzed more than 1,200 videos from TikTok finance influencers and determined that one in seven videos misleads viewers by encouraging them to make investments without making clear the content is not meant to be taken as professional financial advice. The study did not conclude whether or not the videos intended to mislead. Dimos describes what he sees as an ecosystem of undisclosed paid promotions. “Developers will go to the influencer and say, ‘We want to give you $3,000 worth of this token—make a video, hype it up and then you can sell for a massive profit,’” he says. (Dimos and CryptoWendyO say they disclose all of the sponsors in their videos, per TikTok’s community standards. Liu did not respond to a request for comment about compensation and sponsorship.)
TikTok declined to comment for this article. Its community guidelines state, in part: “We remove content that deceives people in order to gain an unlawful financial or personal advantage, including schemes to defraud individuals or steal assets.”
Dimos and CryptoWendyO stay away from meme coins, which tend to be online jokes that are turned into cryptocurrencies, like Dogecoin. “By the time the videos circle TikTok’s algorithm, the coin is already pumped and dumped,” says CryptoWendyO. This happened on May 12 with Shiba Inu, a meme coin, which the coin’s website has nicknamed the “Dogecoin killer.” In part thanks to viral TikTok videos targeting investor FOMO—“fear of missing out”—in the wake of Dogecoin’s parabolic rise, $SHIB rocketed in price, increasing 25-fold within the beginning of May, until an approximately $1 billion sell-off by Ethereum co-founder Vitalik Buterin, which he said was a donation to help fight Covid-19 in India, caused $SHIB and several other meme coins to plummet.
Dimos believes all the scamming—what insiders call “rug pulling”—that happens on TikTok in particular, not only takes advantage of new, vulnerable investors, but also tarnishes the image of cryptocurrency. “Every meme coin that exists today feels like a spit in the face to people like me who’ve worked for the professional blockchain industry,” he says.
After becoming an early and active member of VirtualBacon’s Discord server, which has over 20,000 members today, Davies recently joined VirtualBacon in an official capacity, serving as the content marketing lead for BaconDAO, or “decentralized autonomous organization.” Led by Liu, a community of expert contributors shares daily market analysis, picks for low-market-cap “gems” and other insights, while the community can vote on what topics Liu will cover in his TikTok videos, ask questions and chat about their trades. Although it’s not yet publicly listed, those who purchase and hold the $BACON currency will gain access to BaconDAO exclusive content.
TikTok has exposed a class of new investors to cryptocurrency, but for crypto influencers it is now becoming a feeder channel for other online platforms, like the BaconDAO community and Patreon, where many influencers monetize their Discord channels by charging for access. Young crypto investors seem to be particularly mercurial. In March 2021, one year and six figures later, Davies became bored by TikTok and deleted it.
Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: May 21, 2021.
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What a quarter-million dollars gets you in the western capital.
Alexandre de Betak and his wife are focusing on their most personal project yet.
The bequests benefit charities, distant relatives and even pets
4 min
Charities, distant relatives and even pets are benefiting from surprise inheritances. They can thank people without children.
Not having children is becoming more common, both among millennials and older people. A July Pew Research Center analysis found that 20% of U.S. adults age 50 and older hadn’t had children.
And many of these people don’t have wills. An AARP survey found half of childless people age 50-plus who live alone have a will, compared with 57% of others that age. Those without wills have less control over what happens to their money, which often ends up in the hands of people who don’t expect it.
This phenomenon of a surprise inheritance is common enough that it has a name: the laughing heir .
“All they do is get the money and go, ‘Ah ha ha, look at that,’ ” said Michael Ettinger , an estate lawyer in New York.
Kelley Gilpin McKeig, a 64-year-old healthcare-industry consultant in Ridgefield, Wash., received a phone call several years ago saying her cousin Nick Caldwell left behind money in a savings account. They hadn’t been in touch for 20 years.
“I thought it was a scam,” she said. “Nobody else in our family had heard that he had passed.”
She hunted down his death certificate and a news article and learned he had died about a year and a half before in a workplace accident.
Caldwell, who was in his 50s, had died without a will. His estate was split among cousins and an uncle. It took about two years for the money to be distributed because of the paperwork and court approval involved. Gilpin McKeig’s share was $2,300.
Afterward, she updated her will to make sure what she has doesn’t go to “just anybody down the line, or cousins I don’t care about.”
There are trillions of dollars at stake as baby boomers age.
Most people leave their money to spouses and children when they die. A 2021 analysis of Federal Reserve survey data found that 82% of heirs’ inheritances came from parents.
People with no children say they want to leave a greater share of their estates to charity, friends and extended family , according to research by two Yale law professors that surveyed 9,000 U.S. adults.
Rebecca Fornwalt, a 33-year-old writer, created a trust after landing a book deal. While her heirs are her parents, her backup heirs include her sister and about a half-dozen close friends. She set aside $15,000 for the care of each of her two dogs.
Susan Lassiter-Lyons , a financial coach in Florence, Ariz., said one childless client is leaving equal interests in her home to her two nephews. Another is leaving her home to a man she has been friends with for a long time.
“She broke his heart years ago and she feels guilted into leaving him property,” Lassiter-Lyons said.
A client who is a former escort estranged from her family is leaving her estate to two friends and to charity.
Lassiter-Lyons, who doesn’t have children, set up a trust for her two dogs should she and her wife die. The pet guardian, her wife’s sister, would live in their house while taking care of the dogs. When the dogs die, she inherits the house.
In the Yale study, people without descendants—children or grandchildren—intended to give 10% of their estates to charity, on average, more than triple the intended amount of those with descendants.
The Jewish Community Foundation of Los Angeles, which manages $1.3 billion of assets, a few years ago added an “heirless donors” section to its website that profiles donors and talks about building a legacy.
“Fifteen years ago, we never talked about child-free donors at all,” said Lew Groner , the foundation’s vice president for marketing.
In the absence of a will, heirs are determined by state law . Assets can wind up in the state’s hands. In New York, for example, $240 million in unclaimed funds over the past 10 years has arrived from estates of the deceased, not including real estate, according to the state comptroller’s office. In California, it is $54.3 million.
Financial advisers say a far bigger concern than who gets what is making sure there is enough money and support for a comfortable old age, because clients without children can’t call on them for help.
“I hope there is something left to leave,” said Stephanie Maxfield, a 43-year-old therapist in southern Colorado. “But if there isn’t, I think that’s OK, too.”
She said she would like to leave something to her partner’s nieces and nephews, as well as animal shelters and domestic-violence shelters. Her best friend is a beneficiary.
Choosing an estate executor and who would handle money and health decisions on your behalf can be difficult when you don’t have children, financial advisers say. Using a promised inheritance as a reward for taking care of you when you are older isn’t a good solution, said Jay Zigmont , an investment adviser focused on childless people.
“Unfortunately, it is relatively common to see family members who are in the will decide to opt for cheaper medical care (or similar decisions) in order to protect what they will be inheriting,” he said in an email.
Kirsten Tompkins, who is from Birmingham, U.K., and works in consulting, along with her husband divided their estate among their dozen nieces and nephews.
Choosing heirs was the easy part. What is hard is figuring out whom to ask for help as she and her husband get older, she said.
“A lot of us are at an age where we are playing that role for our parents,” the 50-year-old said, referring to tasks such as providing tech support and taking parents to medical appointments. “Who is going to do that for us?”
