Ethereum, a blockchain-based cryptocurrency, fell to a price of around US$216 from US$317 per token following a hoax on 4chan which claimed that Vitalik Buterin, Ethereum’s creator, had died in a car crash. The price crash wiped nearly US$4 billion off the value of Ethereum, with the perpetrator hoping to purchase token for a reduced price before their value recovered.
Whilst Buterin responded quickly to the hoax, holding up a written confirmation of the then-current block information, this serves as a highlight of the web-based dangers faced by businesses.
In a market as volatile as cryptocurrency, combating highly profitable hoaxes is a priority. If cryptocurrencies such as Ethereum or Bitcoin are to adapt to become true services, embraced by the mainstream rather than remaining niche, they will need to recognize the threat from market distortion from fake news and come up with a defense. This will in future include limiting vulnerabilities; in comparison to Bitcoin’s low-profile creator, Ethereum’s prominent and involved creator presents a front for malevolent cyber-entities to attack through misinformation. This can violently affect the market, force margin calls and leave people out of pocket by large amounts.
The potential for hoaxes has always been a threat to businesses, but the danger posed has increased with the speed of modern communication, as well as easy access to software that can fake ever-increasingly convincing hoax media. Social media allows content to be relayed among users of similar views with no significant third-party filtering, fact-checking, or editorial judgment. Theoretically, anyone can now reach an audience of the same size as any classic media outlet, and when users have a malicious intent this is where the issue lies.
Such “fake news” or hoaxes can severely damage startups and even established businesses, as well as the political mood and individual lives, with more than half of UK companies being victim to malicious online abuse. This comes with a cost, with 18% of companies spending as much as £30,000 to counter this issue.
The solution to all this will require fluid, pro-active approach by brands in response to misinformation. Had Buterin ignored social media, the damage to Ethereum could have been far worse.