The introduction of Bitcoin was able to open an unexplored dimension of virtual currency. This headed to an instant growth of blockchain-based currencies. As there are many more advantages and benefits in cryptocurrency, there are also some losses and risks in cryptocurrency such as hacking, server breakdowns, pricing variation, initiating charges, impermanent losses, volatility, and spoofing. Considering the risks such as hacking/server breakdowns are considered as common internet-based issues. The modern community holds at least a basic idea about these situations. But, concepts such as volatility, impermanent losses, spoofing, should be properly understood while investing in crypto coins. The goal of this context is to introduce “what cryptocurrency spoofing is”.
What happens in Cryptocurrency Spoofing?
Cryptocurrency Spoofing is an activity that is done by financial fraudsters and scammers. They create an artificial influence on digital currency by producing fake orders. This artificial pretense might appear either in a pessimistic or optimistic situation in the digital market.
How does Cryptocurrency Spoofing affect?
In general, the traders and investors are proceeding on cryptocurrency after a proper or at least after an approximated prediction. This prediction is specially performed considering the volatility of cryptocurrency. The closest example of volatility is the price fluctuation of Bitcoin. In the end-2017 the price of bitcoin was about $18,000. After a couple of weeks, the value became half of the above; the value was stated as $7,270.51. But in the current situation, the value of a single bitcoin is higher than forty-nine thousand dollars. These fluctuations arise according to many reasons.
The most considerable portion of the context is, how do fraudsters are benefited through this financial fluctuation. By the creation of spoofing, artificial financial stability (or unitability) is visualized. It drags the investors and traders into an unpredictable situation. On the other hand, the misunderstood situations and predictions subject to many worthless trades.
The only beneficial party of these situations is the fraudsters who create the spoofing on currencies. This situation creates a huge un-stability on the market and ends up losing the hottest and highly valued coins for a lower price. Once the price is corrected, fraudsters used to sell them for the actual price.
How can the investor protect themselves from Spoofing?
As the investors cannot visualize the actual scenario behind the market it is very hard to protect the assets. The most recommended way is to be more aware of the cryptocurrency market. Furthermore, the investors should be very careful and mindful in more clear and awesome-looking situations. Because it might not be the actual scenario. It can be an artificial pretense created by scammers.