[BTC/USD] Price Analysis: $10,000 for Bitcoin in 2019 — Is It possible? Of Course!
[BTC/USD] Price Analysis: $10,000 for Bitcoin in 2019 — Is It possible? Of Course!

Crypto Pump and Dump Schemes Brought to Light: The Worrying Side of Things

  • Darryn Pollock
    🤷 Opinions

    New research has emerged that shows just what a scary place the cryptocurrency market is when it comes to manipulation and pump and dump schemes

Crypto Pump and Dump Schemes Brought to Light: The Worrying Side of Things
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The Social Science Research Network (SSRN) revealed that there is a hugely concerning amount of pump and dump schemes that have been enacted on the cryptocurrency market, conducted through messaging apps.

The pump and dump dilemma for the cryptocurrency market is a serious one as there has already been concerns and questions brought up by regulators as large as the SEC about the market manipulation that occurs within the cryptocurrency market.

This research from SSRN shows that they uncovered 4,818 pump and dump attempts between January and July this year. This data was derived from messaging platforms Telegram and Discord.

The explosion of cryptocurrency tokens brought about through ICOs, as well as the hype and excitement in the volatile cryptocurrency market throughout 2017, enticed many speculative investors who were trying to get in at the bottom of some of the famous rallies seen by these digital assets.

This fever of investing has been taken advantage of countless times by these pump and dump artists, and this research shows just how rife it has been in six months this year alone. It is proof and vindication for the regulators and institutional investors who were reluctant to get in on the cryptocurrency market, and of course a huge blow to the reputation of the market.

Manipulation is rife

This sort of market manipulation is nothing new for the cryptocurrency space; there has been evidence of pump and dump schemes in the past being uncovered on Telegram. In fact some of these pump and dump groups have been advertised in the past as competitive structures looking to entice new members.

The paper published by SSRN explains:

“The recent explosion of nearly 2,000 cryptocurrencies in a largely unregulated environment has greatly expanded the scope for abuse. Pumping obscure coins (with low volume) is much more profitable than pumping the dominant coins in the ecosystem, but at the same time Bitcoin is not immune from the pump-and-dump phenomenon.”

The report managed to identify 76 Bitcoin pump and dump groups on Telegram and six on Discord.

The reaction from regulators about this type of manipulation has seen the likes of the SEC refrain from enabling a Bitcoin ETF, as well as two bills, dubbed “The Virtual Currency Consumer Protection Act of 2018” and “The U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2018”, in the US being put forward to try and deal with these instances.

Damage being done

The idea that such market manipulation is being done and easily coordinated on messaging groups is greatly concerning for the reputation of a market that is purporting to be decentralized and free from any sort of coercion or corruption.

Because the market is still so new, and there is an influx of smaller and easily targeted coins, these market manipulators are having an easy time of it. The catch is that the regulators who are starting to enter and sort this out are also cautious, and that caution is spreading to institutionalized investors and companies.

With all this ‘Wild West’ action going on, many are being kept at bay and the market is not being allowed to grow and expand. Because of its decentralized nature, ironically, it is a lot harder to regulate and streamline so that it can gain bigger mass adoption.

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Ethereum Price Predicted to Climb in the Long Run as Buterin Explains Need for Higher Coin Values

  • Jack Thomas
    🤷 Opinions

    Vitalik Buterin, the co founder of Ethereum, has come out and said that while the price of a coin is not that important, it is still a good thing for ETH to rise. He made mention of security, and the ecosystem development being better when the price of Ethereum is higher.

Ethereum Price Predicted to Climb in the Long Run as Buterin Explains Need for Higher Coin Values
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Ethereum is in a key phase of its development, having pioneered the smart contract blockchain. It is now in a position to take things further and grow its ecosystem as it looks to, for one, switch its algorithm from proof-of-work to proof-of-stake.

This development of the ecosystem will no doubt have an effect on the price of the Ether token, but more than that, Ethereum’s co-founder Vitalik Buterin has said that a higher Ethereum price is good for the development of the Ethereum ecosystem, as well as adds a higher level of security.

Essentially, it is a double-edged sword as the price of Ethereum is expected to rise when any cryptocurrency project is doing well, but the long term price prediction is then expected to rise, as Buterin adds it will help improve the project further.

Buterin’s beliefs

Buterin made his comments during an interview for Laura Shin’s crypto-focused “Unchained”.

In response to Shin’s question as to whether protocol designers and project leaders should be focusing on the question of a cryptocurrency’s price, Buterin spoke of how the Ethereum project had explicitly downplayed the importance of the asset’s value earlier on in Ethereum’s history.

“In part, it was counter-signaling to distinguish ourselves from other crypto projects that do pumping and lambo-ing way too much. But it was also about minimizing legal risk by basically trying to make the project seem more distant from something that would be covered by financial regulation.”

However, he has now gone on to explain that in today’s context, the price does in fact have a part to play.

“I can tell you what things are clearly important about why the price being higher rather than lower is good. One of them is obviously security. If the price is zero, then the network can’t be secure. That’s true in proof-of-work and proof-of-stake,” he added.

Long-term price prediction

With this being said, it makes sense that the price of Ethereum is thus being aimed at long-term growth. The project itself is working on improving its own worth and value as a blockchain project, and in that, the price of Ether should also naturally rise.

And, with a focus being on the importance of a higher price adding to the value of a blockchain project, this could even compound the growth of Ether's price in the long run.

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