What is FUD in crypto? Crypto trading term explained

Crypto FUDs are the Fear-Uncertain and Doubtful claims circulated to fight crypto assets. They are a marketing strategy used to make something seem worse than it is.

Cryptocurrencies are not the first victims of FUDs but are among the most affected ones at the moment.

While it is true that cryptocurrencies are a risky investment, some of the claims that are circulating about their nature are not accurate, which is why it is important to learn what is FUD in crypto, exactly. You see, FUDs can be instigated by anybody and circulated by almost any communication means, including large organizations like corporations, media houses, and governmental bodies. 

The FUDs in the crypto sector aims to dissuade people from adopting crypto assets. For instance, significant people like Warren Buffet have continuously claimed that crypto assets are a bubble that will burst. This is one of the largest crypto FUDs in play at the moment. However, this investor is going against his ‘advice’ as he is investing in companies that are eyeing crypto products like the metaverse and NFTs rather than going at the cryptos directly.

Whom do FUDs benefit, and how can you tell the difference between a FUD and reality? In this article, we’ll explain the meaning of Crypto FUD, give examples of FUD, and discuss whether FUD is real in the world of crypto or just a speculation.

What is the meaning of FUD in crypto?

FUD, which stands for “Fear, Uncertainty, and Doubt”, is a term widely used in the crypto industry. Essentially, it refers to spreading false or exaggerated news, which can damage a digital asset’s value. The term is highly prevalent on social media platforms such as Reddit, Twitter, and Discord, where crypto enthusiasts congregate. FUD can create unnecessary panic and cause an asset’s price to plummet, making it a common tactic malicious actors use to manipulate markets.

Crypto enthusiasts and influencers use FUD to describe statements of non-crypto believers, called FUDDERs or FUDsters. These individuals or parties criticize crypto projects without solid evidence, needlessly sowing unfounded fear, doubt, and uncertainty. 

FUDDERS are the opposite of laser-focused Bitcoin and cryptocurrency optimists who believe the future will be more transparent, communal, and driven by the underlying blockchain technology. A notable example of such crypto pessimists is Warren Buffet. 

Below are five classic points and statements from crypto non-believers who spread FUD.

• Bitcoin (BTC) and other cryptocurrencies are valueless
• Cryptocurrencies enable crime and cyber attacks
• Cryptocurrency mining is harming the environment
• Governments will soon ban BTC and crypto
• BTC is the biggest Ponzi scheme of all time.
• Crypto enthusiasts readily debunk such statements. In their assessment, they discover that their claims are bogus and don’t hold water. 

Now that you understand what is FUD in crypto, let’s discuss who uses it and why?

FUD in crypto: who uses it and why?

FUD can be used by several entities or individuals to serve their goals. Over time, observations have been made showing FUD as a tool used by the media, who disseminate certain information to drive fear, uncertainty, and doubts to the general public. 

Some influential public figures also use it. Critics like Warren Buffett often cause FUD when they conclude that BTC is an unworthy investment that’s nothing more than “rat poison squared”. 

Often, the goal of FUD is to draw capital away from cryptocurrencies. This way, the asset’s value is impacted, forcing prices down. 

Now that we have explained the meaning and motivation behind FUDs let’s discuss some common examples of FUDs in the crypto world.

Examples of common crypto FUDs

There are many crypto FUDS out there. Here are some of the common ones and the accurate information behind them:

Crypto is a bubble that will burst

Claim

Some of the most influential people who have pushed this claim are Warren Buffet and Bill Gates. The two Billionaires believe that cryptos have no actual use and it is a fool’s gold, meaning that it will end one day and affect everyone. They believe that since there are no actual ‘products’ or backing for the digital money, a collapse is imminent, and once it starts, it will be unstoppable.

Reality

Cryptocurrencies have been around for over a decade now; while not all projects succeed in the crypto space, it is wrong to generalize them as a bubble that is set to burst in the future. These assets have caused a revolution in the world and birthed a new generation of digital awareness, forcing some governments to adopt CBDCs and BTC. They are also gaining support from institutional investors since they show growth and development by cropping up innovations. Such growth shows that the assets are bound to achieve greater heights rather than fail.

Cryptos have no real value

Claim

This FUD is one of the main ones government officials use to fight cryptocurrencies. Like Bank of England Chief Andrew Bailey, some believe that cryptocurrencies have no intrinsic value and could make investors lose all their money. This argument is based on the fact that cryptocurrencies are not backed by other assets meaning that they could collapse at any time.

Reality

While it is true that crypto assets are not backed by physical assets, it is also true that most fiat assets are only functional because people believe in them. Rogue central banks and governments can sabotage Fiat through overprinting, making them highly volatile. They are also not backed by anything, including the US Dollar.

Crypto gets the upper hand against fiat money because it keeps appreciating while fiat money depreciates. For instance, most crypto assets, including BTC, have a capped supply at a certain amount. That supply ensures that the coin stays safe from inflation through printing, unlike Fiat money. Others are also capped and have burning mechanisms that lower their supply.

In the long run, the asset demand increases, and so does their price. For Example, BTC began selling at under a dollar and now is at $30K 11 years later, while the USD has barely increased its value within the same timeline.

Crypto assets are used for illegal businesses

Claim

This claim is hard to pinpoint several people who drive it as it is one of the classic ones. It has been there since BTC first began operations in the early 2010s. Many skeptics claim that the currency is shadowy since it is anonymous and thus the best fit for those who operate shady businesses. It is still in play, though it is losing power as more people are becoming blockchain literate.

Reality

While BTC has been used to facilitate illegal businesses before, everyone has used it, including major institutions and governments. Governments have worked closely with DASPs to control financial foul play proving that the asset is not an ark for illegal business organizations.

Cryptos will be dwarfed by Quantum Computing

Claim

Mark Webber, one of the scholars at the University of Sussex, is among the people who push this FUD. Earlier this year, he published an article detailing that quantum computing will break cryptocurrencies, making their blockchain technology inefficient and easily hackable.

Reality

Webber and his team claimed that quantum computers would break the technology behind cryptos, making them easily hackable. Currently, there is no available computer that has the power to break the algorithms behind the blockchain technology that powers cryptocurrencies. Also, no quantum computer is either in development or in the designing stage that has the power to break those algorithms.

Webber and his team failed to investigate and say what amount of computing power would be required to break the blockchain and how the computers would realize such power. While this possibility cannot be thrown out of the window completely, cryptos remain safe from quantum computing at the moment. 

Also, it is feasible to say that if developers from the last decade could design algorithms that will be safe even in the next hundred years, then the upcoming advancements will keep protecting Crypto from such attacks.

How to tell the difference between FUDs and the reality

The most important thing to do as a crypto enthusiast and investor is to learn how to spot crypto FUDs by evaluating them and then avoiding making decisions based on their influence. Some of the common characteristics of crypto FUDs include:

• They instigate the fear of total collapse.
• They are biased and based only on what could go wrong, excluding efforts and possibilities to avert the situations.
• They are strictly disapproving.
• They have no actual facts to back them as they originate from ‘professional points of view.’
• They have inconsistent backing

Here are the tips to follow while evaluating crypto FUDs and devising ways to get over them.

• Use reliable sources of information like live coin trackers alongside other sources like media houses. For instance, the New York Times once claimed that a single BTC transaction spends over 2000kWh of electricity. While this is a reputable media house, it is wrong on this claim.
• Always have an explorative mind while dealing with cryptocurrencies. Collect your facts and do quick facts checking across different sources.
• Avoid relying on ‘facts’ from individuals known to be against blockchain technology.
• Do not believe the hearsays surrounding cryptocurrencies in social media and other untrusted sources.
• Never follow opinionated facts about cryptocurrencies. Most of them are surrounded by misunderstanding, thus qualifying as FUDs.
• Examine the scientific logic of the technical FUDs before going into a panic. For instance, a FUD circulated on Reddit that the maximum height of BTC Blocks is 81.659 years. However, it was incorrect as the instigator had gone wrong on the calculation (2^32-1), which should have given 81,659 years rather than 81.659 years.

The media exploits cryptocurrency daily by publishing news for their sole benefit and profits. Most FUD-causing headlines are click baits. Examples are when BTC is referred to as a “bubble” or “a money-laundering tool for criminals”. In essence, BTC has not been in a bubble, and solid statistics reveal that the coin has been consistently outperforming traditional markets by several magnitudes. BTC rose one million percent in the last decade alone and topped the performance chart. Most other crypto projects also followed the same trajectory.

Meanwhile, using select cryptocurrencies like BTC for money laundering can’t be the best, even if these networks are pseudonymous. All transactions can be tracked online, and their IDs can be decrypted depending on how disciplined the sender or receiver is. The situation worsens because platforms demand the submission of revealing information as part of account registration and compliance with regulators’ requirements.

Frequently, when FUD articles are dissected for facts, they turn out to be baseless and purely click-bait, meant to drive traffic. The same can be seen in cable TV and other media where FUD aims to whip up culpable people’s emotions for traffic. 

Conclusion

Cryptocurrency FUDs should not deter you from investing if that is your choice. In the initial years of BTC’s operations, not so many believed in it. However, it has fought against all odds and has sustained its performance. Most of the people who criticized it back then have clarified that they were wrong about it then. That makes it probable for the current ones to claim the same in the future.

Several FUDs filed the air that the coin is a Ponzi scheme, it will be banned, it is used in illegal trades, and has no real value. All these FUDs have been disapproved as the coin counts years of operation. It has gained value significantly over time, and some governments and institutional investors have also adopted it. The coin has also been banned by China and received no effect.

Those developments prove that the bias against the coin and its alternatives are mostly misplaced and not a real reason to avoid them. They are being driven by people who do not believe in the real change brought by technology or are being scared of the change.

The best way to avoid falling into the traps of such ‘advisors’ is to conduct your research on the assets and determine whether the FUDs are feasible. Hang in there and keep watching crypto.news as more articles on crypto FUDs will follow shortly.

This article first appeared at crypto.news