What Is FUD in Crypto?

Written by Sean GraytokUpdated: 5th Dec 2021
Share this article

Disclaimer: This post contains references to products from one or more of our advertisers. We may receive compensation (at no cost to you) when you click on links to those products. Read our Disclaimer Policy for more information.

Ever heard the term “FUD” and wondered what it meant? This article will define FUD, explore why it occurs, and identify its impacts on the cryptocurrencyspace.

What Is FUD?

The acronym “FUD” stands for Fear, Uncertainty, and Doubt. It is used by crypto enthusiasts to dismiss uninformed narrative attacks on a specific coin, such as Bitcoin.

FUD is typically spread by the corporate media and is either framed to fit a particularly hostile viewpoint or entirely false with little or manipulated data to support a claim.

Here are some classic examples of Bitcoin FUD:

  • Used by criminals
  • It’s a bubble
  • No intrinsic value
  • Too volatile
  • Satoshi sells his 1M coins
  • China controls it
  • Can’t scale
  • Tether
  • Uses too much energy
  • Quantum computing
  • Government bans

Antagonists critique the legitimacy of Bitcoin using these negative, misleading, and even false pieces of information.

Bitcoiners label the misinformation as “FUD” and passionately dispute it on social platforms like Twitter, Reddit, and Discord.

Next, we’ll walk through an example of FUD and analyze its impacts.

Example of FUD

Let’s say a company gets hacked, and the hacker requests $25 million in Bitcoin.

Media outlets spread information about Bitcoin being used by dark web computer hackers for illegal activities and suggest the possibility of a government ban.

Bitcoiners hop on Twitter and explain that less than 1% of Bitcoin transactions facilitate criminal usage.

They’ll also mention that criminals actually prefer to use fiat currencies and that a significantly larger percentage of fiat transactions, somewhere between 2% and 5%, facilitate illicit activities.

Additionally, it’s easier to track ransom paid in Bitcoin compared to cash since one is transacted on an open and public ledger, while the other can be laundered into oblivion.

“Bitcoin is used by criminals” is a lazy flavor of FUD that’s commonly used by traditional economists and politicians. Criminals also use cell phones, the internet, and even automobiles.

>> Related: How High Will Bitcoin Go?

Impacts of FUD

The initial “Hacker Uses Bitcoin to Steal $25M” headline, and the subsequent disputes are broadcasted to different audiences.

People who heard the original misleading headline may not ever hear the rebuttal because they’re not plugged into Bitcoin Twitter or on the message boards.

Over time, the compounding of these unrefuted FUD campaigns can significantly sway an audience towards an anti Bitcoin opinion, understandably so.

It’s difficult for people to change their minds once they form an opinion about something, especially if that opinion is continuously reinforced by media sources they have blindly trusted their whole lives.

Additionally, newcomers tend to be more easily influenced by FUD than people who have been in Bitcoin for years and have seen these narratives repeated time and time again.

Weakening price action combined with an abundance of FUD may be enough for new market participants to panic-sell their coins and not return for quite some time.

Understanding FUD

So, why does the corporate media spread FUD? Well, it’s good for business.

They’re just following the incentives — controversial headlines get clicks and views, and that’s the business.

When Bitcoin falls 50%, the corporate media’s audience wants to know why it fell, and they want to know why in a 90 second digestible sound byte.

Therefore, it’s much easier to say things like “Bitcoin falls on fears of a government ban” compared to “Bitcoin falls because of the rising percentage of BTC-backed derivative contracts.”

Or explaining why a completely new asset that is monetizing and accruing value in real-time may experience a certain level ofvolatility in an open and free market.

FUD can be a reason for a sell-off, but it’s rarely the only reason for it.

At times, there’s just too much leverage in the system, and the markets need to flush it. Or long-term holders take some profits, and sometimes it’s just that simple.

Lastly, and on a more macro approach, Bitcoin threatens the existing legacy system.

It’s hard to ignore the parallels between decentralized, tech-enabled journalists disrupting the legacy media and a decentralized tech-enabled money and payments system that is challenging the legacy financial infrastructure.

FUD: Frequently Asked Questions

What does FUD stand for?

FUD stands for “Fear, Uncertainty, and Doubt” and refers to the reasons why Bitcoin skeptics believe the digital currency will ultimately fail. Bitcoiners and crypto enthusiasts label the narrative attack as “FUD” and view it as just another misinformed viewpoint with an agenda.

What is a FUD cycle?

A FUD cycle, or Fear, Uncertainty, and Doubt cycle refers to a propaganda tactic used to influence an audience towards a certain directive. Here’s the cycle:

  • Stoke fear, uncertainty, and doubt about a specific subject
  • Provide your team’s answer or alternative to that subject
  • Recruit your audience and grow your team
  • Benefit from a larger, more passionate team (financially, more power, influence, etc.)
  • Repeat

What causes FUD?

FUD is generated from various sources that share a common interest: Bitcoin’s failure. Whether it be politicians finding a particular angle to pander to their base, or traditional finance trying to slow it down, FUD comes from several places.

Bottom Line: FUD Definition

If you’re ultimately against Bitcoin, then some FUD will ring true for you. For example, if you think Bitcoin is worthless, then, of course, its energy consumption is wasteful.

But the large percentage of FUD that spreads is objectively misleading or simply untrue.

Keep Reading:

This article is for informational purposes only, and it is not intended to be investment advice.

Sean Graytok
Sean Graytok

Sean Graytok is our Co-Founder and is a recognized expert in investing, cryptocurrency, and financial management. His work has been cited in leading industry publications, such as InvestorsPlace and Business Insider. Sean is interested in the people and companies who are driving financial innovation.