Idea #1: Suppose a company can issue its own version of the bitcoin concept as "stocks" (bitstock?). I know this has been talked about on other threads as well. What would be the implications of high-frequency trading on the infrastructure borrowed from bitcoin? For example, we trade thousands of stocks at a rate of thousands of messages per second (i.e. not all messages result in trades). We deal in terabytes of data per day. Is it even reasonable to consider a proof-of-work blockchain in this context? How would this disrupt the trust mechanism for resolving conflicting claims (e.g. could I send some "bitstock" shares to one person, but then change my mind an instant later by sending the same bitstock to another recipient, and then trying to convince the rest of the network that the second transaction was the valid one)?
Yes, a highly interconnected, high bandwidth network -- such as those already used by HFT'ers -- could support a proof-of-work chain at such rates. You're looking at about 600,000 - 1,000,000 transactions per 10-minute block, I'd say.
The main hurdles will be efficient TX broadcasting, and trying not to be CPU-bound doing ECDSA signature verification.
Also, the proof-of-work algorithm would need to
not regenerate its mining block on every TX, but upon every $N TX's.
Idea #2: What if bitcoins could be used as an internal tip system to help associates track performance? When one associate wants to thank another one anonymously, the first could drop bitcoins in the second's tip jar. At the end of the bonus period, tips are amplified by actual group performance and bonuses paid out. Since there are no transaction costs, everyone wins and individual performance gets a little bit of measurement. Is there any reason we should consider a point-based system rather than use bitcoin?
If you're talking about using the main block chain, that would be fine, albeit it costs you money to allocate points.
If you're talking about a totally separate block chain, then you must consider how much you wish to investment in the "strength" of the block chain. A tiny chain would be easily vulnerable to double-spend attacks, compared to the main chain, if some naughty HFT trader decides to plunk down $100,000 to game the system.
Idea #3: What if our company could provide a "forex" marketplace for BTC/USD? This has certainly been done already (MtGox, etc.), however it seems there is still a lot of barrier to entry for many participants. How might a big player help? Would it hinder bitcoin's progress in any way?
I cannot see how this would cause problems. It would greatly benefit bitcoin... go for it!
Idea #4: Does bitcoin need a market maker in its exchange markets? Market makers usually help narrow the spread between the "bid price" and "ask price" by taking some of the risk in moments when there are no natural market participants (e.g. if you want to sell, but at this moment no one is willing to buy, you either have to lower your price to gain attention, or wait a while for more buyers to show up). My sense is that bitcoin is too young to need a market maker, and perhaps does not yet have enough volume to make the role worthwhile. What are your thoughts?
You are correct, there is very little volume in bitcoin's current exchange markets, as compared to any "real" market. I guess bitcoin is roughly analagous to a super-thinly-traded penny stock, without a single market maker.
A player that narrows spreads would be a welcome addition, IMO, as long as the market maker(s) policies and actions are open and transparent.
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