Fake news is costing Bitcoin and cryptocurrency investors hundreds of millions of dollars every year. Here’s what you can do about it.
Over the weekend crypto media was ablaze with the news that Australian supermarket chain IGA has begun accepting Bitcoin payments across its 1400 stores.
The only problem is, that it’s not true. The original story in Nuggets News made it clear that just one supermarket in Bowen Hills Queensland was trialing TravelbyBit’s crypto payment processing equipment.
At best, the story suggested two other stores might get on board.
That didn’t stop Bitcoinist from breathlessly reporting all 1400 stores had enthusiastically embraced crypto in a major breakthrough for adoption.
“IGA is a network of independent retailers comprising over 1400 stores spread all over Australia,” reported Bitcoinist. “Now, these stores are accepting payments in bitcoin and other cryptocurrencies.”
FX Street, Token Post, Bitcoin Exchange Guide and various posts on Reddit, Facebook, and Twitter all pushed the fake story.
Tron raided by police for being a scam
It came just three days after Tron (TRX) lost $100 million off its market cap when a Twitter user named Hayden Otto posted a video of Chinese police in Tron’s offices suggesting it was a police ‘raid’ due to Tron being a scam.
The rumour caused many traders to sell out immediately in the hope of avoiding losses.
However, it quickly emerged the police were actually there to protect Tron staff against a bunch of angry protesters who’d just found out that the ‘Wave Field Super Community’ was a Ponzi scheme that had been trading off a non-existent association with Tron.
— Hayden Otto (@haydenotto_) July 8, 2019
CoinJazeera reported a week ago that Warren Buffet had cancelled his lunch with Justin Sun. Although the site fancies itself as The Onion for crypto, many users took the report seriously.
Craig Wright proven to be Satoshi
Then there was the famous instance in May where a bunch of Chinese scammers pumped the Bitcoin SV price with a fake “news alert” from Chinese news site Coinbull.
“CSW transferred 50k BTC from the biggest BTC wallet to Binance, which confirmed he is the real Satoshi. As such CZ will re-list BSV and make an official apology on Twitter.”
The price of Bitcoin SV almost doubled overnight from $114 to $233 – inflating the market cap by $2 billion or so. (SV fans claim the spike was also associated with Wright’s appearance at the CoinGeek conference in Toronto.)
The Bitcoin SV price has once again returned to essentially where it was in May before the fake news pump.
Motivated to accept fake news
This is one of the main reasons that fake news abounds in cryptocurrency – the markets are highly volatile and a single tweet is sometimes all it takes to move the price up or down.
Traders are always seeking an edge, so they keep one ear out for passing rumours.
Even if they don’t believe it personally, the markets might move based on it. The perception that markets will move can actually make them move.
The issue isn’t helped by the millions of crypto news sites that predominately rewrite content from a handful of major news sites, thus amplifying and distorting stories in a Chinese whispers style effect.
The inability of some writers to bother checking basic facts on Google is a concern.
But even the big players report non stories. Bloomberg was the source of fake news that Goldman Sachs was about to launch a crypto trading desk in December 2017. It wasn’t.
The old Bitcoin ETF story …
Every couple of months, crypto news sites start reporting baseless rumours that a new Bitcoin ETF is ‘about to be approved’.
At some point, they’ll be right but it hasn’t happened yet – and the fake news and market manipulation in crypto aren’t helping the cause.
“With the influx of institutional money into crypto, we need more reliable sources of news and information than just Twitter.
“If markets continue to fluctuate so violently, it may ultimately cause institutions to pull their money out.
“This would be catastrophic for the digital asset space, which is only just starting to gain a veneer of credibility with big investors.”
Scammers deliberately create fake news
Throughout 2018 and 2019 we’ve seen Bitcoin Revolution and Bitcoin Evolution spamming social media with fake news stories about celebrities endorsing their product.
They photoshop the logo of a credible news source like the ABC and then make up a story in order to entice people into their scam.
Micky can verify this stuff works – our story titled “Hugh Jackman quits Hollywood, fronts Bitcoin scam” quickly became one of our most popular stories.
Celebs + crypto + get rich quick = viral content.
Pomp creates a viral news experiment
Anthony Pompliano, from Morgan Creek Digital Assets, created a fake news experiment last year to prove how easily the crypto community can be manipulated with fake news – especially fake news they want to believe.
“What would happen if I intentionally created a tweet that was inaccurate and presented it as fact?” he asked himself, and then spent a few days working on a tweet that was believable, related to something in crypto people cared about but also wasn’t harmful.
He came up with “There is a 1 in 302.6 million chance you will win the lottery. There is a 1 in 21 million chance of you owning a Bitcoin. Choose wisely.”
Even on a cursory glance, the tweet makes no sense – it’s comparing the random chance of winning the lottery with the conscious choice to buy a Bitcoin – which if you can afford it, is pretty much a 100% certainty if you set out to do it.
“Within minutes of tweeting the experiment, the engagement and subsequent virality was obvious. Within the first 10 hours, I was able to reach 88,000 people with a tweet that was mathematically proven to be inaccurate.”
I want to believe
Pomp’s tweet demonstrates that at heart, the reason behind fake news is that people want to believe.
They want to believe they’ll become rich from Bitcoin, they want to believe that competing projects will fail and that Tron is a scam.
They want to believe the price will moon after that Bitcoin ETF is approved next week.
So the next time you read a story that you want to be true, spend a few moments Googling to see if it is actually true before retweeting it or posting it on Reddit and help us stop the spread of fake news.