The cost of artificially pumping a low volume altcoin: pumping the alt markets by yourself with the BTC/LTC “pump machine” strategy

For this article we regard ALL prices in crypto-crypto units, and unless otherwise noted, denominated in units of BTC. Therefore bitcoin costs 1, LTC (today) costs ~.009 BTC/LTC, etc…

I have noticed there is a way to burn bitcoin in order to raise the price of an altcoin, assuming low volume, and assuming there is a secondary market, such as LTC, on which the coin is trading. I call it the pump machine. It goes as follows:

Method of spending BTC to temporarily pump the bitcoin price of a low volume coin, which will be denoted SHT:

1) Suppose you only have 1 BTC

2) Buy as much SHT as you can with 1 BTC

Problem seeing this image? Try https://i1.wp.com/i.imgur.com/NasRLSj.png

It doesn’t matter what coin SHT represents in this example, but I choose DRK because I will soon describe trading coins which reach price parity with LTC, and why that can be very good.

3) Go to the LTC/SHT market and sell all the SHT for LTC. Now you have a bunch of litecoins.

https://i0.wp.com/i.imgur.com/XNdOLf0.png

Casually sell the SHT for LTC.

4) Go back to the BTC markets – this time, the BTC/LTC trading floor. Take the LTC and sell it for BTC. You’ll now have a bit less than 1 BTC (most likely).

https://i0.wp.com/i.imgur.com/4Ghz3Ww.png

Get bitcoin back…

5) Now that you hold BTC (perhaps a bit less than 1) go back and pump SHT! Buy .9887 BTC worth of SHT, rinse and repeat.  If the markets are dull enough, you can make it seem, for a while, like more bitcoin than you could possibly spend on SHT is buying the SHT up.  In the end you’ll pay for this deception, but in the short term, it’s a pump machine.

6) Continue the cycle. Watch your bitcoin stash go melt away slowly as you literally pay to pump the price. It’s a bit like a carnot engine.

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Coming soon: the advantage of trading an alt which has reached price parity with LTC. Complete with math.

tytyvm.

http://www.phys.ufl.edu/~majewski/

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Posted in Bitcoin, Electronics and Engineering, Physics and Mathematics, Stuff
2 comments on “The cost of artificially pumping a low volume altcoin: pumping the alt markets by yourself with the BTC/LTC “pump machine” strategy
  1. I think it boils down to transactions sizes… If you shift say $ 1 000 000 …. it would be better to wait for at least 6 to 7 confirmations as a merchant. The risk

    is just that much lower, if you wait it out. It would be ridiculous to wait 6 to 7 confirmations for say $1 purchase. If you compare this with other payment

    methods out there, 10 minutes will not be an issue for bigger amounts. If you want zero confirmations, use off-chain payment services.

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