Bitcoin Forum

This would be a US-based bitcoin market maker, adds liquidity to the order books of both the currency and futures and options market.

Needs a lot of capital for such a venture, any interest in this? This is something I mainly want to organize and begin discussions on, because there is a need for this.

Bitcoin trading volume is at a low as of time of writing. Larger market participants are unable to consider bitcoin with its low trading volume, thin order books, lack of liquidity and lack of hedging capabilities.

For a direct comparison, CBOE - Chicago Board of Options Exchange would be the model this company would be like.

Ideally this would be a market maker for existing exchanges, but the company would seek a maker-taker liquidity rebate model, that does not exist on any current bitcoin exchange.

This company could do its part in solving some of the growing pains of bitcoin by adding liquidity.

Anyway, I hope to open a discussion on it at the very least, to refine a potential offering.

You cannot even come up with your own tagline?

could, but how does that make you feel

Sounds interesting, but do you have any ideas on how you plan to implement this?

Yes, getting exchanges to switch to a maker-taker rebate model would require discussion with Mt. Gox and BTC-E, with the promise of added liquidity and larger orders.

Upcoming exchanges in the United States would be easier to get to come out of the door with this model and liquidity efforts will shift to them.

This company will practically always be receiving the liquidity rebate for being a market maker. And the orders will be placed algorithmically.

API based trading algorithms are an asset STS Limited already possesses. In this case, this Bitcoin Market Maker company will only seek to get rebates once that infrastructure exists. These won't be fake walls, and it will take both sides of the order book to tighten spreads.

It will also be adding liquidity to currently non-existant options markets, making them large enough to give the company an ability to hedge its holdings

We should try the OTC board instead, CBOE is too big

Makes it look like you see ASICMINER and go "hmm I want something as successful as that". Not necessarily bad, but not being blatantly unoriginal helps.

Interesting idea.. I think something like this would be a good for getting some additional major players involved in BTC trading.

Good luck with your project! Wish I had the BTC required to make this happen.

Ian

Its something people can relate to, thanks for your input

Thank you

You mean Abraham Lincoln.

If you can secure a serious discussion with Mt. Gox [or CoinBase for the U.S] and BTC-E (obviously they'd have to verify your business plans), then yes, I would be interested in this.

Maybe you can answer this, but why in the world would any exchange be interested in something like this?



Ah yes, the same trading algorithms you tried to market to us before (https://bitcointalk.org/index.php?topic=182685.0)? Seems you've fallen off the map a bit there.. I can only imagine why ::)

Also, what's STS Ltd's CRD# or SEC#?

Exchanges would be interested in this because it attracts liquidity from other exchanges. This is how NASDAQ, ARCA, EDGE, NYSE and other larger exchanges operate. They make larger commissions from market orders and anything removes limit orders from the order book, and give a smaller rebate to orders that add liquidity to the order book.

The High Frequency algorithm fund would also accomplish similar goals but more so in the interest of the fund than actually providing a service to the bitcoin economy. What reasons exactly do you think I or that thread have "fallen off the map" for? I've been pretty active here actually if you have capacity for less cynicism. One of the main criticisms previously was that my bitcointalk account was young.

Trading algorithms are not that complicated, a series of subroutines (methods, if you are familiar with object oriented programming) that may instruct an algorithm to buy and then sell when volume rises above X average can easily be altered to buy at bid and not sell. This is based on the same system that can also make high frequency orders, the profit model is different in this venture. In a fast market the existing algorithm can adjust its bids and asks in fractions of a millisecond.

Programs that enter orders are not required to file disclosures nor are their programmers required to hold any licences with FINRA, unlike humans that trade on behalf of others. This is not an investment advisory service that conducts auto-trades for subscribers. Similarly, market makers are not brokers. STS Ltd would therefore not be in the brokercheck system, just like most corporations, partnerships and LLCs are not in the brokercheck system.

Dunno about the rest of the OP and pretty sure I am just a poor Joe six coiner but I plan to help by selling 10BTC weekly.

Nice thread title.  :D

Right, I know how market makers work, but I don't see how they'd be able to succeed in Bitcoin..simply because the trading volume isn't terribly high, not to mention pricing can be insanely volatile. With the amount of money required to start something like this to provide 'true' liquidity (e.g. more flexible than Mt. Gox at this time), you're better off manipulating the markets than trying to take over the bid/ask gap.


Cynicism is seemingly bred here in Bitcoin as the "Trust No One" mantra rings true day after day. You choose to remain anonymous while asking for thousands of Bitcoins for your various ideas ..history has taught us that this scenario doesn't work out in the investor's best interest.

some people have met me and I have a rep thread. there are plenty of quite arbitrary methods of validity in this community that do nothing to actually quell the trust concerns that you all should be focusing on, and refining the business ideas themselves.

He is probably Ian Bakewell, We all know that we are just having fun with him on this thread.

thanks

This is a bad idea for a couple of reasons. What you are essentially saying is, you want a lot of money to force what you think the spread should be. Real market markers learned the hard way this doesn't usually workand nowadays people stick to HFT, naked short selling, and jumping in front of people's trades. If you want to follow down that road you will either ruin yourself and your money or you will become dirty like them. Even the quants themselves don't like being quants. They even made a movie about it. It's called Quants. (https://www.youtube.com/watch?v=ed2FWNWwE3I)


There is a solution to all this, but people around here won't like it very much. It's also being worked on. By several groups. And it's considered a highly secret thing. The group that comes out with the solution will become millionaires overnight, future billionaires, and will control the bitcoin economy. I guess we will see where they take us, although I do wonder if anyone is interested in a community solution I do not think the community is really ready to work together on an idea like that.

Well this market making system is based on an algorithm that can do HFT. Basically the fact that it can determine orders to create and route to/from exchanges in nanoseconds. Obviously it will be milliseconds due to the locations bitcoin exchanges, but there is nothing technical limiting it. TL;DR this is an HFT. The difference between this, and the fund I wanted to set up using HFT is that this is not looking to make a profit from aggressive order placement, and hunting out people's orders. This instead is looking to receive liquidity rebates, all day, every day.

I would like to point out to skeptics that HFT was novel in 2005 and this is 2013, 8 years later. Despite what sensational Forbes articles might say, there is really nothing special about dark pools and the "secrecy" behind HFT. Program trading contributed to the flash crash on Black Monday in 1987. And now, there are bitcoins exchanges which all use modern API's, broadcast for free. (Nasdaq data feeds are $6000/month, for example, trickled down to Direct Market Access participants for about $80/month... and the FIX protocol is antiquated shit)

In a direct example, 65nm die processes were novel in 2006 and now every factory in Shenzhen can do it and make ASICs for the price of 1btc. Anyway this algo's core code has been co-located on systems in datacenters alongside exchanges in New York. It judges networks latency as well as a factor in decisions.

What is the solution you are talking about, being worked on by several groups. I thought you were going to say what that was in that paragraph.

... go on?

sound check... where is this project now?  I don't think there are any market makers in the works yet...