Fear, uncertainty and doubt; ‘FUD’ has always been (and always will be) a part of the cryptocurrency ecosystem. The way it’s dealt with needs work, a lot of work.

“No FUD” is usually the number one rule across every crypto related subreddit, forum or wiki. It’s looked down upon, often deleted by moderators and generally ignored.

Firstly, let’s not ignore that FUD affects equity markets too. It’s a complex issue which should symbolize the spread of false information in order to manipulate the price of an asset or class of assets. The problem in crypto, and why it’s so frowned upon, is that FUD can have a disproportionately large impact on prices to the reality or truth of the information at hand. Many attribute the large market swings caused by FUD to the amount of unsophisticated investors in cryptocurrency markets. That might be true but there is also a lot less fundamental information available to investors to make informed decisions about their risk level.

Investments in cryptocurrencies are highly speculative with most providing seed funding to a team to ‘build a DApp on the blockchain’. No proven monetization model, no proven revenue model, generally just a proof of concept. This is the beautiful part of cryptocurrency. It allows great ideas to come to fruition without the normal constraints of venture capital or greedy angel investors however it also presents a challenge for investors to stay calm and think long term about the projects in which they invest.

Banning FUD & anything negative

Don’t get me wrong FUD should be banned, if it’s real FUD that is. There seems to be a growing problem in crypto circles where all negative news is being rejected as FUD. This isn’t healthy. Bad news such as failures of certain projects, information about impending government regulation, growing numbers of scams and other ‘FUD’ material should be discussed at length in crypto forums.

There is still much great debate that happens on crypto threads and I’m not saying this is dead- but think to yourself. How many negative posts you have seen at the top of your favorite coin’s subreddit in the past few months? Negative news is all too often frowned upon as ‘FUD’. Are people are getting too caught up in the appreciation of their holdings rather than constantly evaluating the project’s success and fundamentals to make good investment decisions? Probably.

A good medium

There needs to be a clear distinction between actual FUD and ‘fake news’ rather than negative opinions or negative news. A good example of this paradigm is when Weiss Ratings LLC released their A+ to D- cryptocurrency ratings which gave no cryptocurrency over a B+. The majority was screaming FUD rather than discussing at length the fundamentals or experience behind the ratings team and their models.

In this sense the community needs to be less reactionary and more focused on the long term goals of their investments. There should be room for criticism, negative news and actual problems on projects. People should be more wary of FOMO propaganda purported by project owners and detest the whitewashing of real information that helps people understand their risk.

The future of FUD

As the ICO and cryptocurrency ecosystem develops in maturity there should be standards of disclosure which will help investors accurately measure the current risks in the progression of their chosen projects. The reality is we are likely quite far away from such a disclosure model. In the meantime be rational, do your research & don’t dismiss all negative news because it’s bad for your ROI.