The current landscape that exists in cryptocurrency coin trading is as close as possible to the wild west, as each of us would feel comfortable in being. This means that there is a certain level of uncertainty prevailing between coin dealers and the "whales" that move between them.
Consequently, the phenomenon of Cryptocurrency "Spoofing" has become an increasingly common strategy deployed by those who believe they can get away with it. And while this practice is frowned upon and banned from the exchange of cryptocurrencies, the same is not absolutely true for individual traders, who run the risk of this more than anyone else.
But the best way to fight spoofing is to know what it is, how it works and how to avoid it, and these are exactly what this article hopes to show you.
What Is Spoofing?
While it sounds like a simplified name for what could be a highly technical scam, the name is about the simplicity of the scam. The spoofing refers to people who order false orders from crypto traders without intending to complete them.
So, why make orders? It is to create the illusion of a market sentiment, so as not to arouse suspicion from users. The spoofing party is doing this to alter the prices of cryptocurrencies in order to favor them. Regardless of the currencies that influence their market sentiment, they are believed to be those in which they have a stake.
So, why does it work in the world of cryptocurrency trading as opposed to trade? It is due to the fact that exchanges are gradually eradicating the anonymity of its users, while traders and spoofers are able to maintain this secret status, preventing them from being discovered as scammers.
In the past, particularly in the research concerning currency trading and their use of Tether, the cryptocurrency supported by the USD, which were also, in some way, encouraging a certain level of macroeconomic spoofing. This is part of the reason why the authorities have focused their attention on these exchanges.
There are other weapons that the cryptography of "whales" has in their arsenal of scam in terms of scammers. Often, "Whales" combines this spoofing tactic with others such as stop-loss hunting and "wash trading".
Last [Wash Trading] refers to someone who buys their own lots of cryptocurrency to mislead traders into thinking that there is
How to identify the spoofing of cryptocurrency
It can be a serious challenge for anyone who identifies the cryptocurrency spoofing every time it happens, simply because these orders have nothing to distinguish them from other transactions, apart from the fact that they are "removed shortly thereafter." But there are some clues that someone is actively trying to forge from these signals.
The first is that the parody could appear as a sale of a large block of cryptocurrency, whether you buy or sell it.Watching the figure below, you can see a particular lot that stands out, since no one else sale has such a large amount of crypts behind it.
In the wake of trade, if the walls of buying and selling collapsed after it, there is a high-pr objection that the individual was trying to falsify. The reason for the collapse may have been either because the Spoofer attempts had failed, or they had succeeded.
Where high frequency robots come into play
With technology, you'd expect things like human scammers to become less effective, do not you? It is not true for the world of cryptocurrencies, such as the advent of new high-put APIs and cryptocurrency trading bots, it has become much easier and far more profitable to commit spoofing scams.
The only difference is time and speed, both APIs and trading robots are in vogue.
This need for speed and perfect timing means that a large number of whales that have spoofed, use some form of trading bots to do it. These robots are literally able to "paint" the order books, establishing and withdrawing offers within a few milliseconds thanks to the possibility of reacting with the same speed to market trends.
The use of trading bots effectively makes identification of spoofers all the more difficult, since these robots can react much faster than any human can. In this situation, the best you can do is monitor trading books during busy traffic periods and monitor any collapse in the buying and selling walls. If there are, then that could be an example of a spoofer at work.
C & # 39; is something done to prevent this?
At present, much attention is being paid to the cryptocurrency trade which, according to the US Department of Justice, has participated in a certain level of spoofing in relation to the value of Bitcoin.
This is certainly a step in the right direction to prevent spoofing from being authorized on what is supposed to be reputable & # 39; & # 39; exchanges. The problem is that little of that same attention is given to individual traders who may find themselves more susceptible to spoofing.
In addition, the United States has little or no jurisdiction over those coin exchanges that have their operations based elsewhere. It did not prevent the Department of Justice from sending judgments to exchanges such as Bitfinex, a currency exchange based in the British Virgin Islands, however.
Cryptocurrency Negotiation Conclusions Trading
Cryptocurrency markets, while seeing a meteoric rise in popularity, are still in dire need of regulation to protect individual users from malicious activities such as spoofing on their platforms.
One consolation is that government agencies have lifted their guard and taken note of this illegal activity and have gone so far as to proceed to bring [some] online. Admirable? Yes, but there is no way for them to have complete success in these proceedings.
Inevitably, personal insight must be the regulatory framework for now when it comes to avoiding falling victims of scams like Spoofing.