Ethereum, the world’s second most valuable cryptocurrency, suffered an immense loss in terms of market value amidst rumors of a death hoax. 4Chan, a famous online forum, had a thread claiming that Vitalik Buterin, the 23-year-old inventor of Ethereum, had died in a fatal car crash.
The alternative currency was introduced back in 2015. By 2017, the price of a share had risen by 50 times. Prior to this hoax, analysts were beginning to wonder if the upward trajectory would cease. Ethereum looked poised to overtake Bitcoin in the digital currency industry. However, after rumors of Buterin’s death began to gain traction, Ethereum saw their market value decline by roughly $4 billion.
Buterin went to Twitter to dispel the rumors and prove he is in fact still alive. The young entrepreneur posted a picture of himself holding a paper with the latest block data from the Ethereum blockchain. The blockchain is like a digital ledger that tracks transactions. It is updated constantly (like a market value) and Buterin posted the latest stats to prove his existence. A similar situation happened to Wikileaks founder Julian Assange and he also took to Twitter with the latest Bitcoin blockchain information to prove he was alive.
After the hoax was proved false, Ethereum managed to recover about 10% of their market value. They were still trading 39 times higher than at the beginning of the year. This showcases that the cryptocurrency is strong enough to withstand an attack of this nature and keep building momentum.
This is in fact an attack. In this digital age, information can be used as a weapon. Buterin presents a different situation because he is a well-known figure and considered the public face of Ethereum. The Ethereum network is regulated by its peers with no centralized financial institution, meaning Buterin has no ownership of the network, but the fact that he is considered a representation of it leaves him vulnerable to attacks like this. Gambling sites that allow Ethereum deposits to fund accounts were not affected.
Bitcoin’s founder, Satoshi Nakamoto (if that is even his real name), is a shadowy figure whose real identity is unknown. There are rumors that Daniel Lee, the founder of another cryptocurrency, Litecoin, is Satoshi Nakamoto, but Lee dispelled the conspiracy theory.
In any case, this situation highlights an interesting trend in the cryptocurrency market. Anonymity is one of the more favorable points associated with digital currencies. Nakamoto’s faux-identity protects Bitcoin from a similar situation, even though he has no real effect on the market. The Ethereum death hoax revealed that investors are quick to panic and could jump ship if something happened to its young founder. Ethereum is a billion-dollar corporation, and the fact that its success hinges on its founders health directly contradicts the independent mantra of the entire cryptocurrency industry.