Understanding the risks of pump schemes and landfills in cryptocurrenia
The world of cryptocurrencies has been developing in recent years and many new users are entering the market every day. While cryptocurrencies offer a high degree of liquidity and flexibility, they are not without risk. One of the most important threats for investors is the pump and landfill system.
What is pump and landfill?
Pump and landfill scheme is a kind of securities fraud in which the price of a cryptocurrency or other financial instrument is artificially inflated by the spread of incorrect information about your value, which makes it more valuable than it actually. The program is based on a group of people who artificially store the price through coordinated marketing, false messages or other means.
How does the pump and landfill scheme work?
The pump and landfill scheme usually follows this process:
1.
- Marketing campaign : The company begins with a marketing cryptocurrency through social media, campaigns e -mail and other channels and creates a hype for its value.
- Price inflation : Since more investors buy in the token, the price rises rapidly, so it seems more valuable than it actually.
- Failed reports : Fake news articles or contributions are created to support the pump and landfill system that further reveals the price.
- Dumping
: When the price reaches a certain level, a person involved in the system sells his coins at an inflated price and reduced the price.
Risks related to pump and waste systems
While cryptocurrencies are generally considered to be a low risk investment, pump and landfills can be a significant risk. Here are several potential consequences:
* Fund loss
: Investors who buy pumps and landfills in the system can lose their entire investment if they sell at an inflated price.
* Loss of confidence in cryptocurrency : Sudden loss of value can lead to investors lose confidence in the cryptomena, which means they give up or go to other investments.
* Regulatory Harassment : Pumps and landfill programs often examine the supervisory authorities that you can see as securities fraud. This can lead to fines, punishments or even to close the system.
Examples of famous pump and waste systems
Over the years, several top pumps and landfills have been uncovered. A remarkable example is the investment fraud with a $ 1 billion -Bit -BitConnect cryptomena, in which a group of people created false news articles and social media contributions to promote their cryptomenic BitConnect.
Another example is the ICO scandal in 2017, which includes BitConnect, Coincheck and Bitconnect, Kyubey Nakamura. The scheme included the dissemination of incorrect information about the value of these cryptocurrencies that artificially improved their prices before they lost it.
How to protect yourself from pumping and landfill
To protect yourself from pumps and landfills:
* Create your own research : Before investing in cryptomena, examine the project thoroughly and understand its basic technology, team and its market.
* Check the information : Be careful with fake messages or articles. Please check for serious sources before sharing with others.
* Diors Your Portfolio : Distribute your investments on several cryptomena to minimize the risk.
* Monitor the regulatory activity : Stay in the current state of regulatory development in connection with the sector cryptocurrency.
Diploma
Cryptomena is a high -risk investment and pump programs and landfills are just one of many potential risks. If you understand these systems and take steps to protect yourself, you can make the right decisions about your investments and minimize your risk exposure.