Fake News

The Impact of Fake News on Cryptocurrencies

If you’ve been following the price charts of most crypto assets for some time now, you would know the impact and supply of fake news in this niche is astounding.

A month can hardly pass by without a fake Vitalik Buterin or Nick Szabo posting about a new coin worth investing in or another dubious character asserting that India is about to ban all crypto assets from its space. There are usually some people lurking in the shadows waiting to post happy or sad news so they can benefit from it.

The major disappointment is that many reliable websites have not been left behind either. Whether it’s the lack of reliable sources for a news column or the need to keep viewers glued on the site or tight working deadlines, these big shots have misled the masses by publishing content that was based on flimsy evidence one time or the other.

Some unscrupulous fellows out there post fake news with an aim to buy or sell coins in large quantities.

Examples of fake news and their effects

  • Amazon will add Bitcoin to its payment options

Amazon is one of the largest online shops and it means a lot to any businesses if they can collaborate with this online giant. The internet was set ablaze and crypto corners were alive with celebrations when a piece was published that this billion-dollar online merchant will be adding Bitcoin to its payment options.

After a while, it was discovered that the article was written from James Altucher’s newsletter which speculated that Amazon may soon come to terms with adopting Bitcoin. According to his newsletter, Amazon’s main competitor, Overstock.com already accepts payment in Bitcoins and Amazon may be pressured into following suit.

Altucher is a major figure in the cryptocurrency industry and while there could have been some truth in his “opinion piece,” Amazon has never released an official statement corroborating his story. According to some experts, the high volatile nature of cryptocurrencies makes it impossible for most merchants to give it a shot.

Since this erroneous piece came at a time when China had issued a crackdown on Cryptocurrencies and ICOs, and prices had plunged in full force, it somehow could have contributed to their sudden comeback.

  • New Zealand Prime minister to invest in Bitcoin

Towards the end of December last year, Bitcoin roared and soared in many charts and spaces making the traditional stock market look like a venture for vintage lovers.

It’s during this time that a fake version of “New Zealand Herald” shared a post on Facebook that the prime minister of the nation will invest in the almighty cryptocurrency. Here is a snapshot quoting what was said to be the minister’s words:

The post’s title was a captivating one and led many people (usually dependent on FOMO) to buy some Bitcoins for themselves. Faithful followers of John Key, the minister, may also have invested some money into the currency after reading the fake story. He actually got a couple of “thank you” messages for encouraging some to take a bold step.

This news resulted in some sellers gaining big on their sell orders within a short time span. However, the minister came out later and denied everything and even wrote to Facebook requesting them to pull down the post. The New Zealand Herald as well moved forth to have the false site obliterated for copyright infringement.

  • IOTA partnering with Microsoft and Other Data Companies

In December, IOTA invited many data companies to take part in testing of their Tangle. Microsoft, Deutsche Telekom, Schneider Electric, Accenture, Bosch, DNV GL, Orange and many more were available as participants only.

There were no formal papers signed showing a true partnership. Here is a caption of what IOTA’s founder said:

Without asking IOTA or Microsoft for more details, journalists took their pens for a writing spree and jotted down a story that they thought crypto fanatics would love to hear. The results? IOTA’s price plunged by 13% leaving most day traders looking for ways to offset their losses. Well, this was a good day for HODLers who were looking to expand their IOTA holdings.

  • Vitalik Killed in a car crash

One of the classic fake cryptocurrency news that peddled on the internet was the one which purported that Ethereum’s founder Vitalik died in a car crash. It was a case of Christmas came early for those who yearned to buy the tokens of the leading smart contracts blockchain.

After this news, the digital asset lost almost $4 billion in less than 24 hours.

Early the next morning, Vitalik updated his Twitter page affirming that he is well and in one piece. This is a good example of how detrimental fake news can be to any digital asset. Despite everything, Ethereum is still the second most valuable crypto coin by market capitalization.

Pump and dump groups are notorious for spreading false news just to get prices up, sell and leave naïve traders holding coins that have little to no value. Early January, someone opened a Twitter account pretending to be the outlandish and infamy programmer, John McAfee.

Even after using double “l” in the word “official” most people failed to see that and ended up buying and selling a crypto called GVT that the fake account shilled.

In merely 20 minutes, GVT jumped from $30 to $45 and the early birds made quick bucks before the fake news was discovered for what it was.

How to stay safe

Bitcoin and cryptocurrencies, for some reason, may not run out of fake news anytime soon. Here is what you can do to avoid becoming a victim of fake publishing:

  • Double or even triple check everything you read
  • Don’t forget that everything you read on social media is credible
  • Don’t follow hype unnecessarily
  • Analyze the post to see if there’s any underlying motive
  • Check if some of the renowned websites have a similar publication
  • Ask for sources of information through the comment section
  • Follow a bunch of experts who are generally unaffected by fake news

The bottom line

Fake news can have both positive and negative impact on cryptocurrencies. While most of its proponents would smile upon any white noise that leads to increased value, it’s just important that the media fraternity stick to producing unbiased articles.

These digital assets (at least most of them) have already proved themselves to be a worthy technology that brings financial freedom to the masses so there is no need for peddling fake news to get more followers on board.

This is a guest post made by Catalin. Catalin is the founder of Ecommerce Platforms and WebAppMeister. He’s a design enthusiast and loves matcha, and is uber passionate about bitcoin and blockchain technology.