With that in mind, let’s see in detail and with example why we so easily fall prey to fabricated stories about crypto and what lessons these stories can teach us.
All the News That’s Fit to Print
There are many different forms of lying (for example, lies by omission and lies by commission), but for the sake of this brief introduction to the art of misinformation and manipulation, we will deliberately restrict ourselves to fake news stories. These are typically short-lived anyway, but the damage they wreak is, nonetheless, quite real.
Be it mainstream news websites and press agencies such as Reuters and Bloomberg or social media platforms like Twitter and Facebook on top of a slew of private chat rooms, channels, and groups, the misinformation all these sources sometimes spread around can be divided into two broad categories depending on the effect its pushers are trying to achieve.
With a small-cap cryptocurrency, it’s almost certainly some false news or rumor that tricks the hapless investor into buying the coin in the hope of selling it later at a higher price. With a major cryptocurrency, however, events may proceed along a different line since the fraudsters might aim at driving its price lower in an effort to buy it cheap for themselves.
Without any further ado, here are the 3 fake news stories that took the Internet and the investing crowd by surprise (no doubt, you can come up with many more of your own).
Vitalik Buterin Confirmed Dead
Even if it’s an old story, this example of fabricated news proves once again that some folks have no respect for anyone’s personal life the moment money starts to talk. The false report of a fatal car crash in which Vitalik Buterin, the genius behind Ethereum, had been killed became viral in less than no time, with more fictional details being added down the road:
The original report first appeared on 4Chan; the online message board notoriously famous for its trolls. But the Internet mass media apparently didn’t care. As this “breaking news” had instantly spread across the Internet, Ethereum lost $4 billion in the market value in a matter of hours on June 25, 2017.
As it turned out, Buterin was very well alive indeed, and there was no car accident in which he had been involved in any way. To stop the rumors, Ethereum’s author took to Tweeter and posted a selfie with the last Ethereum block and the address of the miner who found it — the state-of-the-art version of “the reports of my death are greatly exaggerated” paraphrase:
At the end of the day, though, it proved to be a good opportunity to buy Ether low and… well, to hold it. In any case, Buterin wouldn’t have been hurt if you had taken advantage of the situation and shamed the devils in the process.
Walmart Starts Accepting Litecoin for Payment
GlobeNewswire claims to be “the world’s leading news distribution service” that specializes in corporate press releases as well as official announcements and financial disclosures. We won’t question this assertion, but the hypesters definitely knew through which channel to inject the fake news about Walmart, the largest American retailer, partnering with Litecoin and starting to accept the cryptocurrency for payments:
It still remains unknown to the wider public how exactly the fraudsters pulled off the trick and convinced the (then) respectable news agency to publish the report, but the global news outlets such as Reuters, Bloomberg and CNBC followed by many others were only happy to pick up the news and feed it to their readers without checking the facts.
As a result, the price of Litecoin shot up over 30% within minutes, which undoubtedly helped the con artists to rake in some profits and then even more after both Walmart and the Litecoin Foundation quickly distanced themselves from this hoax while the price of the cryptocurrency as quickly went down to where it truly belonged at the time.
Essentially a flash crash in reverse, it was an excellent occasion to sell high and buy low at this point.
And Kroger to Accept Bitcoin Cash
In the wake of the GlobeNewswire little shenanigan, another distributor of press releases, PR Newswire, fell victim to a similar hoax, now involving Bitcoin Cash, Bitcoin’s spinoff. According to its news feed that was duplicated on Kroger’s official website, the grocery chain from Ohio was planning to start accepting the cryptocurrency at its stores:
The hoax had also been reported by a number of major media outlets. But unlike the Litecoin story, it went largely unnoticed or even was deliberately disregarded by the cautious public as the price of Bitcoin Cash failed to break its resistance levels and quickly dropped back to its baseline level. Okay, not so much surprise this time around.
It was probably not worth the money invested by the impostors in this scheme, either, unless, of course, their real goal was to discredit the news release distributor, which, ironically, presents itself as the “most trusted source of company news” in the world.
Because in Bitcoin we trust, one and only.
Why the Fake News?
Any cryptocurrency investor of a speculative type knows painfully well the importance of being the first to act on both the news and the fact that it’s fake news. However, that paints a big red target on his chest because he most certainly won’t be the first to know either. As Benjamin Graham, the father of value investing, notes, people who invest make money for themselves, while people who speculate make money for their brokers.
With crypto, it is market manipulators who are making money from speculators.