Fake news of a fatal car crash wiped out $4 billion in ethereum’s market value yesterday

Alive and well.
Alive and well.
Image: John Phillips/Getty Images for TechCrunch
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“Vitalik Buterin confirmed dead. Insiders unloading ETH” read the title of the post on 4Chan, the notorious online message board frequented by internet trolls. “Fatal car crash,” it went on. “Now we have our answer. He was the glue.”

“ETH” refers to ethereum, the world’s second most valuable cryptocurrency, which was invented by a 21-year-old, Vitalik Buterin, in 2015. The currency’s price has risen by 50 times this year so far, and many market watchers have wondered when the gains would stop. The price was already in the midst of a sudden decline yesterday that saw about $4 billion wiped off its total market value, and according to the post, Buterin’s untimely death explained it and heralded a crash.

It turns out that Buterin wasn’t dead, nor involved in a car crash. He took to Twitter to prove that all was well, but how to supply evidence that he was indeed behind the Twitter account? In the cryptocurrency equivalent of posing with the day’s newspaper, he scrawled out some data linked to the latest block (you can see that data for yourself here) mined on the ethereum blockchain on a piece of paper and took a selfie with it. Wikileaks founder Julian Assange did something similar to dispel rumors of his demise by reading out data from the bitcoin blockchain on a live stream in January. Buterin then posted the selfie on Twitter:

Ethereum’s slide seemed to hit a bottom after the hoax was posted on 4Chan, recovering about 10%. Despite yesterday’s steep sell-off, it’s still trading 39 times higher than it was at the start of the year.

This is what market manipulation looks like in the age of cryptocurrencies and fake news. The hoax did reveal something interesting about cryptocurrencies: Unlike bitcoin’s creator, Satoshi Nakamoto, an almost mythical figure whose identity remains unknown, Buterin is the de facto public face of ethereum. He doesn’t control the network—it’s a piece of decentralised software that anyone can run or build on, just like bitcoin—but his status as its creator means that rumors like this one have a higher chance of taking hold in the markets.

That means that $26 billion in market value partly depends on a 23-year-old staying healthy and alive—and providing selfies to prove it.