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Author Topic: Bitcoin Exchange - Plunge protection  (Read 1609 times)
securityguy
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April 10, 2013, 10:07:59 PM
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Like in established FIAT financial markets (currencies and stocks) exchanges have plunge protection measures so the exchange shuts down after 20-25% drop to avoid a complete crash to zero.    What is your opinion of bitcoin exchanges such as Mt Gox replicating this kind of protection measure?
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drrussellshane
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April 10, 2013, 10:14:45 PM
 #2

Let the free market decide!


If MTGOX wants to start some plunge protection scheme, that's their business. Other exchanges could do the same or could do differently.

Let it ride, this is still an experiment! The satoshi client is not even version "1" yet, and it is still experimental software.


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April 10, 2013, 10:15:41 PM
 #3

Rather than this it would be a lot better to shut down trading when they have huge delays, if the market goes to 0 then let it. Letting people place trades when they wont be executed for another 30 min on the other hand is quite bad :p
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April 10, 2013, 10:17:15 PM
 #4

Protection does not serve finding the right price. If you can't handle price drops, then don't trade on exchanges. No nannycrat rules please, it's already killing the 'normal' world.

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April 10, 2013, 10:17:58 PM
 #5

Protection does not serve finding the right price. If you can't handle price drops, then don't trade on exchanges. No nannycrat rules please, it's already killing the 'normal' world.

This.

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April 10, 2013, 10:19:56 PM
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Nope.

Bitcoin is worth what people will pay for it. If no one wants to buy it grats to the people who get in at zero.
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April 10, 2013, 10:26:47 PM
 #7

Why protect us from being able to buy cheap coins?

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April 10, 2013, 10:33:33 PM
 #8

1) There's no proof that these freezes do what they're designed to do.  What if you wanted to sell and couldn't because the market was frozen?  Wouldn't you get more panicky during those 30 minutes?

2) If you believe, like I do, that an important part of exchanges is price discovery, then shutting them down, however briefly, hinders that goal.

Like in established FIAT financial markets (currencies and stocks) exchanges have plunge protection measures so the exchange shuts down after 20-25% drop to avoid a complete crash to zero.    What is your opinion of bitcoin exchanges such as Mt Gox replicating this kind of protection measure?


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April 11, 2013, 01:35:09 AM
 #9

Like in established FIAT financial markets (currencies and stocks) exchanges have plunge protection measures so the exchange shuts down after 20-25% drop to avoid a complete crash to zero.    What is your opinion of bitcoin exchanges such as Mt Gox replicating this kind of protection measure?

Mt.Gox already does this automatically! It's not always consistent though.  Wink

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April 11, 2013, 01:37:17 AM
 #10

Protection does not serve finding the right price. If you can't handle price drops, then don't trade on exchanges. No nannycrat rules please, it's already killing the 'normal' world.

+1

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April 11, 2013, 01:40:19 AM
 #11

today I learned CampBX takes dwolla, that's where my business will be going until they prove themselves inept or something better comes along, the way it should be.

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April 11, 2013, 02:28:40 AM
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Mt. Gox is probably every bit as likely to form a 'plunge provocation team' which would suite the needs of their important customers better.

(Yes, that is baseless slander, and no, I do not believe that Krapels is a crook.  He has shown no sign of this that I've detected and I've found various of his actions (and in-actions) to be honorable.  OTOH, he's one of the few guys who can make a fortune without resorting to outright theft.)


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April 11, 2013, 03:30:13 AM
 #13

The real complaint I have here is what MtGox lag times gets to 1 hour, it can really create an exaggerated plunge as all the idiots decide to dump everything at whatever they can get. People trying to buy can't get buy orders in, the price plunges.. more people sell.

If the exchange had just worked right to start with, things would be less severe. So, if MtGox Lag time exceeds a certain amount, I would not mind seeing them suspend trading and resetting their server or whatever is neccary so things can keep moving. If the price crashes, fine, but let it crash because hte market supports it, not because of poor exchange quality.

All this said, I do like them cheap coins! But it's not good for the stability of the market and press, and more than I want to make money, I want to see BTC succeed. If MtGox had shut down today for a few mins until they fixed the lag, the other exchanges would have kept going, I bet hte price drop would have been much less severe. All that said, I certainly don't support any "requirements" or regulation, I just personally would do that if I owned that an exchange.

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April 11, 2013, 12:26:24 PM
 #14

The real complaint I have here is what MtGox lag times gets to 1 hour, it can really create an exaggerated plunge as all the idiots decide to dump everything at whatever they can get. People trying to buy can't get buy orders in, the price plunges.. more people sell.

If the exchange had just worked right to start with, things would be less severe. So, if MtGox Lag time exceeds a certain amount, I would not mind seeing them suspend trading and resetting their server or whatever is neccary so things can keep moving. If the price crashes, fine, but let it crash because hte market supports it, not because of poor exchange quality.

All this said, I do like them cheap coins! But it's not good for the stability of the market and press, and more than I want to make money, I want to see BTC succeed. If MtGox had shut down today for a few mins until they fixed the lag, the other exchanges would have kept going, I bet hte price drop would have been much less severe. All that said, I certainly don't support any "requirements" or regulation, I just personally would do that if I owned that an exchange.

They aren't idiots, when the market loses 50% of it's value, it's reasonable to suspect a crash. Don't say that if they didn't sell it wouldn't lose it's value: That's true, but are you going to lose money knowing that other people will sell and drive the market down? The line of thinking that Bitcoiners should never sell during price drops is irrational and actually harmful to price discovery. For example I think the crash was a good thing because it corrected for unreasonable price increases. (Yes, 100% over three days is in fact unreasonable and unsustainable).

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