Social media has become arguably the biggest factor in the distribution and delivery of news. Through social media, it has become much easier for news to spread and reach its target audience. While this has its advantages, it also comes with some dangers that people need to be wary of.
Fake News And Speculation
Financial markets have some significant dependence on speculators and they are vulnerable to the effects of said speculation. The ease of access to news means that traders can be easily influenced by the information that goes around through the news. When news goes around, it creates an air of anticipation which markets may react to.
The influence of news on traders and the markets can happen through both accurate and fake news. The internet and social media carry a lot of fake news and cryptocurrency has fallen victim to fake news on various occasions. Rumors spread faster on social media and they can easily reach all parts of the world and thus their potential impact can be far-reaching.
A study by Pew Research Center revealed that about 60% of adults in the United States who read news on social media admitted to sharing false information. When other forms of conventional media such as TV and newspapers are taken into consideration, the percentage drops down to 51%. This shows just how big a role social media takes in the spread of fake news.
Social media platforms recognize the effects of fake news and they have taken up measures to fight against fake news. Social media can distort news and public events even if they are genuine and positive. It can also magnify small negative details and make them out to be larger than they actually are and in that manner, create panic and negative perception where there is none.
Creating Scandals, Scams And Panic Through Fake News
The crypto industry, being a new age industry, finds most of the conversation regarding activity in it taking place on social media. Scammers have taken advantage of this and the crypto industry has seen a variety of scams being created and run on social media. Misinformation is spread online and unsuspecting investors end up losing their money to pump and dump schemes.
Fake news has also been used to create scandals in the crypto industry, some of which have been quite damaging to companies and individuals in the industry. Just last week, Tron fell victim to such fake news when a Twitter user shared footage of Chinese officers “raiding Tron’s headquarters” and hinting that the crypto project was a scam. It was later clarified by Tron CEO, Justin Sun, that the police presence was in relation to a Ponzi scheme that claimed to be in business with Tron.
Fake News Affecting Government Perception And Policies Towards Cryptocurrency
The spread of fake news may have a much deeper effect than many would think. The negative perception developed around cryptocurrency may be affecting how governments around the world view the digital assets and in extension, it affects the policies around the industry. In some countries, cryptocurrencies and crypto trading have been banned due to the view that they fuel criminal activity.
Sun believes that fake news may have influenced American President Donald Trump’s views about cryptocurrency. President Trump expressed his distaste for cryptocurrency through a series of tweets in which he said Bitcoin is not real money and that cryptocurrencies are highly volatile and based on thin air. Trump went on to say that crypto-assets can facilitate unlawful behavior. Sun replied to Trump’s tweet saying that he believes the president has been misled by fake news and inviting him to meet with crypto leaders.
Mr. President, you are misled by fake news. #Bitcoin & #Blockchain happens to be the best chance for US! I'd love to invite you to have lunch with crypto leaders along with @WarrenBuffett on July 25. I guarantee you after this lunch, nobody will know crypto more than you! https://t.co/ZpRFEbninv
— Justin Sun (@justinsuntron) July 12, 2019
The Bottom Line
Fake news has far-reaching consequences and the crypto industry has suffered the effects of fake news on various occasions. Investors are particularly at risk of being misled by fake news and it is important that one exercises due diligence before they make any investment in crypto. The industry will also benefit from ensuring that fake news is seasoned and people can be exposed to the truth about cryptocurrencies.