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Who’s afraid of the big, bad FUD?

November 1, 2018 3:52 pm Published by

Cryptocurrency has experienced something of a reputational rollercoaster in recent years. Its peak came in December 2017 when the value of Bitcoin hit a high of $19,783.06. Of course, it’s not all stunning highs and media accounts of millionaires made overnight – extreme market volatility means lows too. Since the start of 2018, the reputation of cryptocurrency and companies that support it have received their fair share of mud-slinging. These troughs in the public perception of crypto are characterised by FUD – Fear, Uncertainty and Doubt.

Anonymity – one of the core tenets of decentralised digital currency –  is a key FUD-causing factor. It’s also one of the main reasons governments and institutions have so far been reluctant to jump on the crypto bandwagon. Let’s look at why…  

2013 – The Silk Road

The Silk Road – Ross Ulbricht’s dark web marketplace – was responsible for a great deal of early FUD. Ulbricht’s high-profile arrest in 2013 was many people’s first introduction to Bitcoin. The Silk Road was an anonymous, online marketplace through which more or less anything – particularly drugs and weapons – could be purchased. Silk Road could only be accessed through the Tor browser and all transactions were made in Bitcoin. In 2013, after two years of business, it was shut down by the Federal Bureau of Investigation and Ulbricht was arrested; he was only 29 years old and already worth $28.5 million. Ulbricht – who went by the pseudonym ‘Dread Pirate Roberts’ – was convicted for money laundering, computer hacking and conspiracy to traffic narcotics, and was sentenced to 20 years, 15 years, 5 years and two life sentences respectively. However, the legacy of Ulbricht’s very public conviction was that the Silk Road and Bitcoin were now, for many, synonymous.

2014 – Dark Wallet

Dark Wallet was an anonymous payment software that launched in 2014, less than a year after the Silk Road was shut down. It was “designed to make bitcoin use completely private.” Dark Wallet didn’t come out of the blue. Online magazine Wired had already argued that “[B]itcoin transactions are in some ways nakedly public – even more so than those made with traditional money.” Investopedia also described the software as “a welcome tool for tackling growing issues surrounding data privacy and anonymity.”

However, subsequent statements made by crypto-anarchists Cody Wilson and Amir Taaki (Dark Wallet’s 26-year-old creators) were so provocative that support for Dark Wallet swiftly evaporated. The pair claimed that Dark Wallet was developed specifically for the purposes of laundering money. “Everyone is trying to take bitcoin and make it something less than bitcoin. In our mind bitcoin has to move back into the dark.”

Mainstream coverage of Dark Wallet was inevitably influenced by Wilson and Taaki’s ill-judged statements, as well as the existing perception of Bitcoin as the criminal’s payment method of choice. The BBC ran a story on Dark Wallet in 2014 with the caption, “The man behind the new Bitcoin technology Islamic State want for money laundering.”

2017 to today

Since last December’s wild peaks, Bitcoin and its fellow cryptocurrencies have experienced something of a rehabilitation in the eyes of the public and press. Digital currency is no longer the tender of the underworld; however, mainstream coverage of crypto is still riddled with inaccuracy. Here are some examples of recent discrepancies:

South Korea Ban

  • Earlier this year, Forbes reported that “South Korea wants to ban crypto trade, while government officials and big banks make millions.” Forbes explained that insider trading had led a government agency official to make big gains two days before a proposed ban of cryptocurrencies in Korea. In fact, the announcement made by South Korean government policy coordination minister, Hong Nam-Ki, neither demanded a ban on cryptocurrencies nor implied that one was imminent. “Policy makers will continue monitoring the global discussion around cryptocurrencies and that an exchange ban is still a possibility, even though it isn’t currently a focus of the government.”  

The Coinrail Hack

  • After South Korean exchange Coinrail was hacked in June 2018 (just one of a series of exchange hacks that caused widespread FUD), the Guardian claimed, “The latest attack highlights the lack of security and weak rejection of global cryptocurrency markets.” They reported that Coinrail had lost $37million. Although that figure is correct, what didn’t make the headline was the fact that 70% of stolen funds were safeguarded and moved to a cold wallet, while two-thirds of the remaining 30% were frozen.

Crypto on the mainstream rise

Despite these inaccuracies, cryptocurrencies are beginning to enjoy a more flattering representation in the mainstream media. Fans point to a prescient 1997 Simpsons episode where Homer and Marge meet outside “Crypto Barn, a place for codes” as foreshadowing the rise of cryptocurrency. 2012 Simpsons video game Tapped Out sees users ‘mining Bitcoin’ to progress through sections of the game.

Crypto featured in Marvel Comic’s Wolverine this year with a storyline involving a character who chooses crypto instead of the cliched ‘unmarked bills’. Digital currency’s favourite son Bitcoin even made it onto the Ellen Degeneres show, introducing crypto to a vast, new and slightly confused audience.

These examples might seem insignificant in the face of public ignorance and wide lack of understanding among the media. Nevertheless, they represent an important step in the fight against FUD. Remember – knowledge is power.

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