Bitcoin Forum

I just had this stupid idea

Imagine a new type of BTC exchange. It's a big company backed by some serious money, maybe some government.
It has reserves of, say, 1000000BTC.
It sells its BTC for fixed price, which in turn is made up of currency prices all over the world, 10% USD 10%EUR 10%CHY 10%RUB.. (7-10 different currencies)
So that if value of USD drops, it would affect price on the exchange by very little amount.

It will sell until their reserves run down to 0.95% (950000BTC) and stop buying if it gets to 105%(1050000BTC).
It will sell their BTC for 101% of the fixed price and will buy for 99%.
Only way to sort queued buyers and sellers would be the amount of transaction fee they have decided to spend. Could be even auctioned by 5 minute intervals
Wanna sell faster than others? Set yourself a higher fee.

If the price on other exchanges goes up or down too much - it's not their problem, they just offer their service parallel to the market.
Provided with big enough stock of BTC they start to affect price, and lure in more people.
If prices on a market and that exchange suddenly differ too much, imagine the flood of transaction fees.
Thing will balance itself eventually.

What's the difference between that and a regular exchange where you can set a higher "transaction fee" in the form of a higher bid or lower ask?

The idea of linking it to a global basket of currencies could be interesting if it led to stability but really it just sounds like Ven (http://"http://www.hubculture.com/"), except with competing exchanges which would probably drive the size of the transaction fees.

Voting for "I hope you're high  ;)"

That way we could have some sort of stability and those transaction fees would be awarded to the miners, while lowest ask simply lowers price for everyone on your typical exchange, and his loss is a single person gain, and everyone's loss.

1) Enjoy the trip !
2) I think you mean 95%, not 0.95%.
3) Don't think it would work.  Imagine if you were only a small-timer and you had set the price at $ 1 a few years ago.  Your company would basically be doing nothing for years.  If you were bigger you might keep prices in check for a bit longer, but you can't keep a lid on market forces forever.

I voted for "probably high", because I didn't want to call you stupid

The 'exchange' would need a massive amount of financial reserves to pull something like that off. If they come in with too little, either buyers or sellers will just scoop up the profits (depending on whether it's priced below or above market price) until the exchange drops below the predetermined level and then no trades would occur anymore because the price isn't right.

It could work temporarily if someone had a shit load of BTC (a few million) and a billion USD, and they didn't care about making profit...then sure they could set the price at whatever they liked for a while, but eventually their BTC would be depleted in trying to keep the price down, at which point they'd no longer have control of the price and no longer be able to gain control, as any attempt to replenish their BTC reserves would simply drive the price higher.

I said earlier that they would not sell more than 5% of their reserves at the time

yep
you're high

Ok...so what when the 5% has already sold and the price is continuing to rise?

I think so  ;)

nothing. it simply waits like a fortress. The dumbest thing, which only confuses everyone in my post is that 95% thing. They do not need to have huge reserves, only enough to cover all possible auctions at the time.