What is Pump and Dump?

Pump and dump is not a legal way of doing business. It is a process where a hype is created over a commodity so that its value gets raised in the market over its actual value. In bitcoin, this risk factor can be seen. Pump and dump have two categories of individuals. One group includes those who try to increase the price by endorsing and promoting the bitcoins. They buy the bitcoins at low rates and start the process of hype or pump and when the prices increase they dump the bitcoins. There is no guarantee how long the entire process may take.

People selling the bitcoins influence the price by creating an impetus. The users pump and dump as well. You pump in with some propaganda when you wish to buy so that it effects the bitcoin owners. Some tend to panic and will sell off instantly. You buy and wait till the price rises to the extent you desire and quietly sell making a good profit in the bargain.
After purchasing, these players participate actively in forums and create a conversation using multiple accounts. Some readers get interested and purchase the bitcoins creating a demand and the price automatically starts increasing.  

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