As we move forward in human history, everything around us rapidly changes. The technology that we enjoy is a product of brilliant minds who strived hard to make human life convenient. But this statement also applies to the vocabularies and terminologies that we use in our daily life. As we progress, our language continues to evolve. And the crypto market is no exception.
The crypto market is now one of the fastest-growing industries in the whole world which has now a market cap of more than $2T and will continue to grow with the adoption of cryptocurrencies. Blockchain, the underlying technology behind these digital assets is utilized to great lengths to launch profitable investments with use cases in the real world. If you are a prospective investor, it is best that you learn the basic terminologies in the market. In this article, we will be discussing two of the most used terms in the industry: FOMO and FUD. Fear, a strong emotion is a common factor of these words. We will also include the origin of these terms, their initial application, and their meanings when used in crypto and how to avoid falling victim to these phenomenons.
The Origin of FOMO and FUD
FOMO is an abbreviation of “fear of missing out”. According to Wikipedia, the word FOMO means the feeling of apprehension that one is either not in the know or missing out on information, events, experiences, or life decisions that could make one’s life better. It is also associated with a fear of regret, which may lead to concerns that one might miss an important event like social interaction or even a profitable investment. This has been attributed to a number of negative psychological and behavioral symptoms.
The phenomenon was first discovered by Dr. Dan Herman, a marketing strategist in 1996. The term FOMO was popularized by Patrick McGinnis in 2004 in the magazine of Harvard Business School “The Harbus”. Another article in the magazine by American academic and author Joseph Reagal published in the same year has also detailed about FOMO. In an interview with Patrick McGinnis by the Boston Magazine, that he along with fellow MBA candidates at Harvard suffered anxiety due to their pressing schedules in 2003. And they initially used the word “FOBO” or Fear of a Better Option to describe their condition. Later on, after realizing that their problems are not just about elusive “better option” they dubbed it as “FOMO” which includes “fearing that they’d miss a chance”. From afflicting a group of Harvard students in 2004, FOMO has now become a global epidemic and has pervasively evolved over the years.
FOMO has now become a major concern and can be associated with social media, video games, marketing, and investing. In crypto investments, influencers are now banking on FOMO to attract investors. With prominent people in the industry boasting their huge profits, people fear missing out on the next get-rich-quick currency. Bad actors exploited this vulnerability to scam people of their money. And it has also caused cryptocurrencies to become more volatile with the pump and dump scheme. The Squid Game $2.1M scam was driven by FOMO which has led to a loss of the investors’ money.
FUD is the shortened word for “fear, uncertainty, and doubt” and could affect anyone just like FOMO. It is more of a strategy to influence others by spreading negative or false information which could result to fear that cloud someone’s judgment.
According to Wikipedia, the term first appeared in 1920, and a similar term “doubts, fears, and uncertainties” was used in 1963. In 1975, Gene Amdahl used the word with its common current technology-related meaning after leaving IBM and putting up his own company, Amdahl Corp. IBM salespeople used the FUD strategy to dissuade prospective customers who are considering buying Amdahl products.
Today, the same strategy is being used in crypto that may result in a price drop. Rumors are being circulated through social media which are not substantiated and have no grounds in reality. Cryptocurrencies are not deemed as legal tender in most parts of the world. This has contributed to the fear of investors that they could lose their money when news of crackdown surfaces. China’s crypto ban and the move made by US financial regulatory bodies against cryptocurrencies have shaken the market numerous times. A crackdown by the Chinese government made headlines in May causing the price of BTC (bitcoin) price to plummet as a result of a massive sell-off. The price crash of the most dominant digital asset led to a market crash that has even extended to the traditional market. The long-standing debate about the effect of crypto mining due to carbon emission and massive energy consumption particularly BTC (bitcoin) is another FUD. Some virtual assets have already shifted from PoW to PoS consensus mechanism to address this issue just like in the case of Ethereum.
FUD is a fearful and blatant marketing strategy as this could result in massive losses. FOMO has the same effect on investors who are strongly driven by their emotions coupled with uncontrolled greed. But how can someone avoid falling prey to these?
How to Evade FOMO and FUD in Crypto
FUD and FOMO are is now rampant in the crypto market in a report by Forbes, FUD is fast replacing FOMO particularly for BTC (bitcoin). But how can one evade being caught in a FOMO or FUD? Here’s how.
- Avoiding misinformation – In crypto, we always see the slang term “DYOR” or “do your own research”. Although influencers and some well-known investors tend to promote their favorite digital asset, as an investor it is your due diligence to study these crypto projects before investing in them.
- Control your emotion – FUD and FOMO are phenomena that are associated with your emotion so it’s best to stay on guard and always be on top of yourself.
- Set clear goals ahead as this will protect you to go beyond and act according to your goals. If you are a trader, set your entry and exit points.
- Diversify your portfolio – This is one way of managing your risk in crypto. Investing in different crypto assets will ensure that your profit remains intact even when prices fall.
- Invest only what you can afford to lose.
The bullish trend of the crypto market today has attracted more investors to join despite the risk associated with it. Volatility characterizes every single digital asset in the market making them vulnerable to price swings at times. Given this, it is very important to always rely on your trading chart before making any investment. But also be noted that even charts can be manipulated so if you have any single doubt, then don’t even try to invest as you might find yourself a victim of either FOMO or FUD.