Understanding of pump and landfill schemes in cryptocurrency
The world of cryptocurrencies has grown exponentially in recent years, with many people who invest their money earned hard in this class of digital activities. However, a new series of risks arrives next to the growth that can make vulnerable and deceived investors feel. Two of these risks are the pumping and landfill patterns: the tactics used by the scammers to artificially inflate the price of a cryptocurrency, only to sell to a swollen value once.
What is a pump and landfill scheme?
A pumping and landfill scheme is a type of market manipulation in which a group of people collides to artificially inflate the price of a cryptocurrency, often through coordinated campaigns on social media or online advertising. The goal is to create clamor and attract more investors on the market, which can lead to a rapid increase in prices.
How do the pumping and DUMP schemes work?
Here’s how it takes place in general:
- Initial promotion : an individual or group creates a buzz around a cryptocurrency through social media, forum and online community.
- Price manipulation : the scammers artificially inflates the price of the cryptocurrency by spreading false information, creating false news articles or by publishing promotional content on various platforms.
- Increase in question : as the more people become aware of the cryptocurrency, the demand increases, increasing the price.
- Pump-e dump cycle: scammers therefore sell their participations at the artificially inflated price, generating a profit from the sale.
Types of pump and landfill schemes in cryptocurrency
There are different types of pumping and landfilling schemes in cryptocurrency:
- Social media pump : scammers use social media platforms to create clamor around a cryptocurrency through false posts, tweets or Facebook updates.
- False news articles : Scammer write and publish articles on websites, blogs or online publications on the cryptocurrency, disseminating false information to attract investors.
- Online advertising : scammers use online advertising campaigns targeted to promote cryptocurrency in potential investors.
- Price manipulation via ICO (offer of initial coins) : scammers can manipulate the price of a new cryptocurrency by spreading false information on its potential returns or legitimacy.
Warning signals of a pump and a dump pattern
To avoid falling victim to a pumping and landfill scheme, be cautious in the following warning signals:
- Unusual or inexplicable price inflations : If the price of a cryptocurrency increases quickly without any logical explanation, it could be a sign of a pump and a drain scheme.
- Overwhelming church : Be wary of whether the cryptocurrency demand suddenly becomes overwhelming, leading to an increase in the artificial price.
- False or post -social media news articles : be skeptical on articles or posts that seem too good (or bad) to be true.
- Non -recorded projects : Search for the registration and legitimacy of the project before investing.
Protect you from pump and landfill patterns
To protect you, follow these best practices:
- conducting in -depth research : before investing in any cryptocurrency, seeking its potential risks and benefits.
- Check the information : Check the information on a cryptocurrency through reliable sources before spreading it online.
- Join the cryptocurrency communities : interact with the legitimate cryptocurrency communities to learn from expert investors and avoid disinformation.
- Be cautious with the unsolicited promotions : distrust promotions or unrealized offers, especially if they seem too beautiful to be true.
Conclusion
The cryptocurrency has made a long way since its beginning, but the pumping and landfill regimes remain a serious threat to those who invest in these digital resources. By understanding the warning signals of these scams, you can protect yourself from the victim.
