Today was a bustling series of events and exponentially unfolding drama for the cryptocurrency world. A surprise implementation of a new currency on the world’s most popular buying and selling platform, Coinbase, reeked from the second the announcement was made. The new implementation of Bitcoin Cash came at a time where the legacy Bitcoin network was overwhelmed with transactions, causing transaction fees to raise to all-time highs. The Bitcoin network’s struggle caused cypto enthusiasts and investors to begin considering if the Bitcoin backend’s struggle to keep up with its growing popularity would kill the coin all together.
Early risers woke this morning with some unpleasant news. Their Bitcoins, which had been rising at astronomical levels for the past three months, had finally seemed to have popped, devaluing over 7% in 24 hours. The news may have been simply disappointing for those hoping to quickly capitalize on the currency’s recent peak popularity, but veterans to the investment venture quickly began detective work to determine what had caused the recent devaluation. Breaking the traditional format of announcing major changes weeks in advance, coin-selling giant Coinbase silently implemented full buying and selling functions of Bitcoin’s rival coin, Bitcoin Cash. The latter coin came into existence in August 2017 when the Bitcoin blockchain reached its first hard fork, essentially duplicating the entire chain of original transactions. The new, duplicated chain had the opportunity to implement improvements to the network and security of the coin. Purists still on the original chain found this news revolting due to its backing by for-profit institutions. The divide between holders of the coin began to grow deeper and deeper as buyers had to choose between the new and the original. Following this hard fork, Bitcoin rapidly began to increase to values never thought possible, while Bitcoin Cash slowly gained its footing. This was the presumed outcome of the hard fork, but nobody could have predicted what drama would be stirring the pot elsewhere.
Mere hours before that unannounced launch of Bitcoin Cash on Coinbase, the cryptocurrency began to rapidly increase in value, with several enormous, bullish buys raising the asking price for the coin. When traders woke up to find they could instantly buy this rocketing coin using the same website they’ve always been using, most saw it as an exciting opportunity to ride the price up. Coinbase users began to empty their Bitcoin wallets in exchange for Bitcoin Cash. News articles began to pop up praising the potential applications of Bitcoin Cash, further fueling the price pump. Twitter techies and Redditors quickly spread screenshots detailing what they describe as an “Attack on Bitcoin”. Accusations of insider trading and intentional manipulation of the cryptocurrency ecosystem on Coinbase’s behalf launched internal probes at the company with the intent of determining what, if any information was leaked. Early investigations by users show comments from users on Reddit’s cryptocurrency forum advising to buy Bitcoin Cash immediately, citing advice from “a friend that works at CB”.
Developments to this scenario were unfolding faster than news outlets could keep up, with every article scrambling to expand upon the progressing situation. This seems to be the case whenever something stirs the cryptocurrency pot. News will break and holders on either end of the spectrum will try and stir the pot in a way that favors them. FUD, or fear, uncertainty and doubt, inciting posts spammed automated comments urging holders to sell in one way or another, trying to reinforce that their respective currency is the only option to move forward with. If a new buyer wanted to learn about turning their cash into crypto, this sort of environment would be entirely uninviting and far too confusing to navigate. It is this cautious attitude that prevents the cryptocurrency userbase from expanding. It is interesting enough of a phenomenon to make “how to buy bitcoin” Google’s top search for 2017, but who could possibly want to put their hard-earned money in something polluted by would be crooks and questionable positions of power?
Drama is not new to cryptocurrency. Perhaps the first big crypto heists, and perhaps one of the largest online scams in history, occurred in 2014 with the closure of Mt. Gox, the world’s largest crypto buying and trading platform. The company, who had struggled with security breaches and internal issues for some time, had declared bankruptcy after millions of dollars worth of currency went missing. It seemed obvious to many that they had ran off with the funds, but Mt. Gox insisted they were simply missing. Numerous lawsuits were filed against the company with mixed outcomes. Since then, many of the coins have been found and returned to rightful owners, but many remain in limbo. This news hit the press like a shockwave, with countless angry customers and investors out for blood. To the public, the notion of having your savings hacked and cleaned out with no safety net made the currency’s barrier to entry unfeasible.
Cryptocurrency again made the news when a slew of ransomware attacks targeted businesses in 2016. The viruses made their way into corporate computers through an array of exploits and embedded itself into the network’s filesystems. Once the software had control of important documents, it digitally locked access or modification of the files until a Bitcoin ransom was paid. The virus even gave explicit instructions on how to buy Bitcoin with a bank account and send it to the necessary recipient. If the company or individual decided to pay the outlandish amounts (often exceeding one-million dollars), the attackers could then release the files. Oftentimes, they wouldn’t, asking for more money or simply mocking the desperate businesses through their anonymous channels. This caused some very troublesome news coverage, with most journalists mistakenly pinning this as Bitcoin’s fault.
The only good coverage that cryptocurrency really receives is when it raises in price. So in short, its always horrible until you’re making money. Although cryptocurrency is astronomically different from traditional investing, its image and public perception makes it more of a conversation piece. It can be exciting to wake up every day and read news about your investment, but if the majority of news is bad news, it’s understandable why adoption rates are still sluggish after years of popular coverage. If you take a bit of time to understand the principles and processes behind the market, you will find the coverage exhilarating and protect yourself from potential scams. The core issue with adoption is that people want their money to work for them, not the other way around.