Just recently, WSJ has come out to acknowledge the presence of automated digital programs that manipulate cryptocurrency prices. These programs are highly advanced and work at faster rates than compared humans. Thus, in a short time, the programs can have a tremendous effect on the market.
How bots manipulate the cryptocurrencies?
Typically, the programs have two modes of operations. First, the applications can trick cryptocurrency systems into entering fraudulent transactions into their systems, which the programs later cancel. This has the effect of triggering reactive market behavior leading to abnormal price fluctuations. Secondly, the bots can inflate the prices of the cryptocurrencies artificially leading to relevant market changes, which users can then take advantage.
The issue of bots manipulating digital currencies reignites the debate about the security behind the technology supporting cryptocurrencies. This has been a concern among many users of the currencies. Surprisingly, the legitimacy of the practice of using bots remains debatable in many jurisdictions. Few countries around the world have come up with laws to curb the vice. This is mainly due to a lack of comprehensive understanding by regulators of how digital currencies work. The absence of such laws makes it difficult to protect the currency users from the malware.
So what should governments around the world do to address the issue? The answer to this question, based on expert views around the world, is equally surprising. While others propose the conception of laws based on the current understanding of the systems, others advocate for a free market.
The latter hold the view that everyone should be given access to the bots to use as they like. This will eventually pave the way for the market forces of economics to kick in, which will then invalidate the effects of the bots. Many are watching with speculation to see the strategies that counties around the world.
Some countries, however, are not leaving anything to chance. The EU, for instance, has placed digital currencies under applicable laws that govern digital money transfer. This implies that the use of bots remains illegal in their member countries. Sadly, no one has been so far arrested for the crime.