Last week bitcoin surpassed its all-time high of $69,000 and its popularity has risen. What a surprise, as people see the benefits they hop on to a trend without a second thought. Bitcoin is amazing but it can also be devastating.
Cryptocurrency reminds me of Forex for some reason. It is legit but a lot of the time people who want to make quick easy money are present. There is nothing wrong with wanting to make money but it should always be in the right way not using others.
For example, a “pump and dump” scheme is often mentioned in the cryptocurrency context. This is where a group of individuals use manipulative tactics to inflate the price only to sell large amounts at its peak value affecting investors who were influenced to buy. Here is more detail on how it works:
Pump: The individuals will first buy x at a low price and try to hype up x to artificially inflate the price. This can be through social media or by spreading positive rumours on x.
Price surge: As the price goes up, it can attract potential investors to buy and join the momentum.
Dump phase: Once the price reaches its peak, the pumpers sell x in large quantities causing the price to plummet. Panic selling can catalyse the price fall as well. The pumpers profit and the investors like you and me suffer.
Horrible right? Why would people do this? You would be surprised what people would do for money.
Bitcoin is not all bad. There are benefits from bitcoin but people only see the benefits and ignore the risks. For example, bitcoin is volatile and you can gain a lot of money from it. Wow, I can get rich quickly. That’s where people don’t realise that you can lose a lot of money. They start to invest more than they can afford to lose which leads to the risk of financial instability and harsh times.
Like I said before bitcoin is not the worst thing in the world. Bitcoin is transparent as every transaction is recorded on a ledger called the blockchain and is accessible to anyone. Also, bitcoin is decentralised as it is not controlled by a single entity like banks meaning that banks can’t manipulate the market.
I am not saying don’t invest in Bitcoin. Just do your research. Bitcoin isn’t for you if you are greedy and looking to make money the easy way. If you think it is easy, it is the equivalent of gambling and will always result in a loss.