“Pump and dump”
Although it is nothing new to the world of finance, ‘pump and dump’ seems to be one of the easiest ways to exploit the crypto markets and make some fast cash.
Typically, a “pump and dump” works when a group of investors or single large investor starts promoting a stock they hold. Once the price has risen because of their endorsement, they sell it off.
With cryptos, chat rooms fill with gossip, forums spread the news, exchanges make announcements and so on. Once a coin gets some recognition, it is hard to stop people from buying it. For 10$, would you rather own 766 dogecoin or 0.00068 bitcoin?
A quick blurb about dogecoin. It was originally created from a meme of a Japanese Shibu Inu. It has almost no functionality, not been updated in over two years, can be mined infinitely, and it’s market capitalization reached $2 Billion this week!
https://en.wikipedia.org/wiki/Dogecoin
There is even a bigger and more powerful direct form of pumping that is occurring with cryptos. Huge investors, called whales, enter a market and choose a coin that they would like to raise the price of.
Let’s say the whale buys up half of the coin’s market. They can start to raise the price of the coin on the market. Unfortunately, there are not enough people who will sell at that price. So the whale pushes the market higher. In some cases this could be as much as 50%.
Other people in the market see this coin rise 50% in one day and they buy the coin in a fit of FOMO. That draws more investors and soon enough the coin starts to rise 75%, 97%, 147% and on.
That is, until the moment the whale decides to dump their coin at a massive profit and swim off into the sunset.
A Pump in the Midst?
Today, I have been watching the price of Bitcoin Cash rise in spite of the price of bitcoin.
I am enjoying it as I have several dozen Bitcoin Cash coins waiting to be used to buy more mining machines.
But, why is the price rising?
At block 512666, there will be a hard fork of Bitcoin cash. So, sometime on the 13th, the fork should occur and if successful, the new coin will be called Bitcoin Candy.
As we know about forks, normally the new coin is issued at 1:1 with the coin it is forking. But, in this case, Bitcoin Candy will fork at a ratio of 1:1000. Yes, one thousand. Therefore, if you had 10 Bitcoin Cash, you would get 10,000 Bitcoin Candy for free.
I went to investigate this a little bit deeper. You should give it a search, too.
http://bitcoincandy.one/index_EN.html
Reading the Bitcoin Candy website seems like it was partially written by Dr. Emmett Brown (referring to Back to the Future) – they propose to “explore anti-quantum attacks”, and by the way, the project was established on Jan. 1st, 2018.
Maybe, people are grabbing up some Bitcoin Cash ahead of the fork and this news might be the cause of driving the price up? If it is, I wouldn’t hold onto those Candies too long.
It was only a matter of time until the forking started, but this forking weird (pun intended).
Cryptocurrencies 