Why are celebrities now pitching cryptocurrency?
Gwyneth Paltrow, who promises a better life through items sold by her luxury wellness brand, is now promoting digital artwork of a blinking cartoon ape. Matt Damon pops up during commercial breaks to compare the act of investing in cryptocurrency to scaling Mount Everest or exploring space. Reese Witherspoon recently took a break from chatting about her book club and production company to share an ominous prophecy.
“In the (near) future, every person will have a parallel digital identity,” Witherspoon tweeted from her personal account in January. “Avatars, crypto wallets, digital goods will be the norm. Are you planning for this?”
Celebrities have taken to pushing cryptocurrency and non-fungible tokens at a speed once reserved for viral dance trends. The artists among them insist our real world will soon resemble the fictional sort they’ve spent careers envisioning. It has been said, after all, that NFTs could transform the very concept of art. The uncertainty there is key; NFTs exist in a volatile market, a trademark characteristic of crypto investments as well.
Of course, wealthier celebrities have little to lose, as the dollar-sign appeal of these endorsements is the same as any other. The price of bitcoin is surely a small fraction of what Damon took home to place crypto investors on a pedestal beside the Wright brothers. But influential figures attaching their names – and finances, in some cases – to the burgeoning form of currency carries implications beyond their own padded wallets, physical or digital.
For those unfamiliar with cryptocurrency, let us pause. (Consider this our version of the Los Angeles dinner last fall where venture capitalist Katie Haun shared her crypto knowledge with stars such as Paltrow and Mindy Kaling, according to Fortune magazine.) Cryptocurrency is mostly simply defined as a digital currency that operates outside of government and traditional banking control by instead using public ledgers known as blockchains.
Bitcoin, invented back in 2008, is the earliest, most prominent example. According to Bryan Routledge, a finance professor at Carnegie Mellon, that timing isn’t happenstance. The financial crisis cast doubt upon banks, boosting what he called the “libertarian” appeal of decentralized, peer-to-peer record-keeping.
It can seem an intriguing mode of investment. But a dicey one, too. Paul Krugman, winner of the Nobel Prize for economics, has referred to cryptocurrency as a “giant bubble” and, in a column last month for the New York Times, likened it to the subprime mortgage crisis because of “growing evidence that the risks of crypto are falling disproportionately on people who don’t know what they are getting into and are poorly positioned to handle the downside.”
But “all money is a bubble,” according to Routledge. “The issue is whether it’s irrational or unsustainable. Are people buying bitcoin at $35,000 knowing it’s worth less, but because they think there’s some greater fool out there they can sell it to down the road? Or are they buying it because they’re speculating on its value? It might go up, might go down. People speculate on the value of assets all the time.”
Now, back to Matt Damon. His one-minute spot for Crypto.com, the company after which the Staples Center was renamed, frames investing in cryptocurrency as a holy crusade. Its YouTube description paints Web3 – the vague concept of a decentralized World Wide Web, based on the blockchain – as our inevitable future. “Fortune favors the brave,” the actor pronounces, tracing the proverb back to the ancient Romans.
Damon is a storyteller by trade; his job, in many ways, is to sell ideas to the public. But many considered it ludicrous and unsettling for a man with such deep pockets to place himself on an even playing field with the average viewer – as he does while referring to historic figures as “mere mortals, just like you and me” – before encouraging them to direct their money toward what his grandiose calls for courage imply is a risky investment.
Even “South Park” made a mockery of Damon’s endorsement in its season premiere this week.
“What does Matt Damon say on that bitcoin commercial? Fortune favors the brave,” Cartman says in an effort to get classmates to join him in rebelling against their school principal. Clyde notes that his father “listened to Matt Damon and lost all his money,” which Cartman quickly brushes off.
“Yes, everyone did! But they were brave in doing so!”
Others of Damon’s stature have been criticized as well. Kim Kardashian caught flack last summer when she shared an advertisement for the EthereumMax cryptocurrency on Instagram. She insisted it was “not financial advice,” though the positive message shared with her hundreds of millions of followers with the #ad hashtag by definition constitutes an endorsement. Kardashian and boxer Floyd Mayweather were later sued over accusations that they misled investors (though Routledge said it is unclear what could come of such a lawsuit).
One of the preeminent voices leveling criticism at these stars is, unexpectedly, the actor Ben McKenzie, best known for his lead role in TV’s “The O.C.” In a column written last year for Slate, he described Kardashian’s post as “urging her 251 million Instagram followers to get involved in a highly volatile, speculative market that’s little different than gambling in the world’s most fraudulent casino.” (Kardashian’s follower count is now at 284 million.)
McKenzie has since written more for Slate alongside journalist Jacob Silverman, with whom he is collaborating on a book about cryptocurrency. The thesis generally boils down to the title of that first column: “Celebrity crypto shilling is a moral disaster.” Even if crypto and blockchain technology have great potential, McKenzie states, the executives, venture capitalists and celebrities pushing them “haven’t earned your trust – or your money.”
Skeptics may wonder whether celebrity marketing carries weight in this arena. Experts say it does. Consider the impact of retiring football player Tom Brady announcing his pivot from the NFL to NFTs. Or that a prominent British regulator said Kardashian’s post “may have been the financial promotion with the single biggest audience reach in history.”
Marc Beckman, a marketing professor at New York University who published a book on this form of technology, is also the founder of an advertising agency looking into possible applications of the blockchain. He highlighted the value of NFTs, or units of data living on a blockchain that, notably, are unique and noninterchangeable. Musical artists looking to skirt third-party ticketing platforms could seize upon this decentralized system, according to Beckman.
“Typically, when you see celebrities start to adopt and use something new ... you reach the tipping point where it’s going to spill over to the masses,” he said. “The fact that we’re seeing all of this star power jump in, from LeBron [James] and Gwyneth to Matt Damon and Jimmy Fallon, I think it’s just a sign that, culturally, we’re embracing this.”
Fallon recently invited Paris Hilton onto “The Tonight Show” for an appearance in which they compared their NFT purchases from Bored Ape Yacht Club, a collection of garish cartoon primates. This wasn’t the first time Hilton, an NFT aficionado, has swung by to discuss her new passion – but that didn’t quell the audience’s discomfort. The awkward energy was palpable even for viewers at home, who heard the studio fall silent as Fallon and Hilton transitioned from discussing her Oscar de la Renta wedding gown to analyzing the striped T-shirt worn by Fallon’s ape.
“We’re part of the same community,” Fallon said, pulling out a picture of his own NFT: “This is my ape.”
“Yours is so cool,” Hilton responded. “I love the red heart sunglasses. I love the captain hat.”
Tepid applause followed. A clip of the interaction circulated online; actor James Urbaniak shared a video of himself mimicking a “Tonight Show” stage manager desperately instructing the audience on when to applaud. While the motivation behind purchasing NFT artwork could be likened to what fuels any art collector – who determines artistic worth, anyway? – the reality of the digital purchase often summons eye-rolls over eagerness. (It’s also worth noting that NFTs have a notable carbon footprint because of the immense amount of energy consumed by blockchain technology.)
Paltrow, whose entrepreneurial career at least somewhat hinges upon consumers trusting her taste, barely bothered to seem enthused while tweeting out a video of her Bored Ape, also dressed in a striped shirt, and with a full head of shiny blond hair. Witherspoon has tried a bit harder, shoehorning NFT promotion into the feminist narrative that drives much of her work: “Crypto is here to stay,” she tweeted. “I’m committed to supporting creators who have pioneered the NFT space, and encouraging more women to be a part of the conversation.”