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Elwar
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April 03, 2013, 06:46:47 AM
 #1

I know this flies in the face of most people here, including myself. But I am wondering how this would fare..

Set up a group of people who have large holdings and interest in Bitcoin and have them use their large holdings to stabilize the price of Bitcoin.

Bitcoin may have a $1 Billion market cap but it is mainly the amount traded on MtGox that determines the price. Something that could be easily controlled with just a fraction of the full Bitcoin economy.

If the group were to set huge ask and bid walls around a set number, while still raising or lowering on a regular basis as market trends indicate (much like the Fed board meeting to set interest rates), then we could have a bit more stability and we could avoid huge swings either way.

Of course, if the market is too heavy either way and they underestimate the market pressure they could lose one of their walls and lose money so it would be in their interest to follow the market closely and rise and fall at a sustainable rate that the market is calling for.

It could even be advertised that the rate will be going up or down at X% per day so people could plan accordingly. If a major event occurs the rate can be changed.

Judging from some of the walls, a half million dollars worth on each side would probably help to lead the market and hold off on any major wall falling.

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April 03, 2013, 06:59:36 AM
 #2

I know this flies in the face of most people here, including myself. But I am wondering how this would fare..

Set up a group of people who have large holdings and interest in Bitcoin and have them use their large holdings to stabilize the price of Bitcoin.

Bitcoin may have a $1 Billion market cap but it is mainly the amount traded on MtGox that determines the price. Something that could be easily controlled with just a fraction of the full Bitcoin economy.

If the group were to set huge ask and bid walls around a set number, while still raising or lowering on a regular basis as market trends indicate (much like the Fed board meeting to set interest rates), then we could have a bit more stability and we could avoid huge swings either way.

Of course, if the market is too heavy either way and they underestimate the market pressure they could lose one of their walls and lose money so it would be in their interest to follow the market closely and rise and fall at a sustainable rate that the market is calling for.

It could even be advertised that the rate will be going up or down at X% per day so people could plan accordingly. If a major event occurs the rate can be changed.

Judging from some of the walls, a half million dollars worth on each side would probably help to lead the market and hold off on any major wall falling.

History suggests such an endeavour would be doomed to failure, even if its aims were desirable.

What you describe sounds very much like the European Exchange Rate Mechanism in the 1990s - and the UK's ignominious exit in particular:

http://en.wikipedia.org/wiki/Black_Wednesday

Ultimately, something is worth what people are willing to pay... not what some people (insiders or others) would like it to be worth.

A promise to keep a currency trading between certain bounds is only credible if everybody believes those making the promise can and will do whatever it takes to maintain those bounds.   Sadly, as the UK learned and Bitcoin holders attempting the same thing will learn, is that your promise isn't credible if it depends on having access to unlimited amounts of gold (or Bitcoins).

I guess such a scheme could help smooth over fluctuations caused by illiquidity (some sort of market-making function) but an attempt to manipulate levels outside that narrow function just isn't going to work in the long term, IMO.
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April 03, 2013, 07:02:53 AM
 #3

Set up a group of people who have large holdings and interest in Bitcoin

There is already a group of Bitcoin gods and for them this little project is not about merely making money.

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April 03, 2013, 07:15:31 AM
 #4

There is already a group of Bitcoin gods and for them this little project is not about merely making money.

Rather, you mean making truckloads of money ?!
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April 03, 2013, 07:23:26 AM
 #5

It sounds like “price manipulation” to me. Are you sure that this is what Bitcoin needs?... Smiley


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April 03, 2013, 09:51:12 AM
 #6

It sounds like “price manipulation” to me. Are you sure that this is what Bitcoin needs?... Smiley



I would rather have the bit coin value flat line at 100 dollars for atleast a few months for stability.
While that happens we can get more vendors  to accept bit coin.
Therefor make  it unlikely it will ever dip below 90 dollars per bit coin if it were to crash.


I want to leave & return 4 years from now, and see it aleast 90 dollars per coin.
That won't happen with this crazyness.



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dyseac
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April 03, 2013, 11:24:32 AM
 #7

It sounds like “price manipulation” to me. Are you sure that this is what Bitcoin needs?... Smiley



I would rather have the bit coin value flat line at 100 dollars for atleast a few months for stability.
While that happens we can get more vendors  to accept bit coin.
Therefor make  it unlikely it will ever dip below 90 dollars per bit coin if it were to crash.


I want to leave & return 4 years from now, and see it aleast 90 dollars per coin.
That won't happen with this crazyness.


I agree linear progression would help the acceptance.. but as noted above. You can't force a free market.. only time will tell  Undecided
Razick
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April 03, 2013, 12:32:39 PM
 #8

I know this flies in the face of most people here, including myself. But I am wondering how this would fare..

Set up a group of people who have large holdings and interest in Bitcoin and have them use their large holdings to stabilize the price of Bitcoin.

Bitcoin may have a $1 Billion market cap but it is mainly the amount traded on MtGox that determines the price. Something that could be easily controlled with just a fraction of the full Bitcoin economy.

If the group were to set huge ask and bid walls around a set number, while still raising or lowering on a regular basis as market trends indicate (much like the Fed board meeting to set interest rates), then we could have a bit more stability and we could avoid huge swings either way.

Of course, if the market is too heavy either way and they underestimate the market pressure they could lose one of their walls and lose money so it would be in their interest to follow the market closely and rise and fall at a sustainable rate that the market is calling for.

It could even be advertised that the rate will be going up or down at X% per day so people could plan accordingly. If a major event occurs the rate can be changed.

Judging from some of the walls, a half million dollars worth on each side would probably help to lead the market and hold off on any major wall falling.

I considered this myself, but the issue is they would likely use it to their own benefit. That being said, there is nothing to stop someone with say $25,000,000 from doing this independently, although I suspect they would fail eventually. I really think that even given the current market volatility, the free market will eventually do quite well for Bitcoin.



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April 03, 2013, 01:25:59 PM
 #9

This is actually the biggest danger for bitcoin: Its price can rise to whatever level you can not imagine and no one can stop it

In order to stop a price bubble, you need to increase the supply of bitcoin, but that is not possible. The best effort is to reduce the fiat money supply, but unless all the world central bank tighten at the same time, one country's tighten action will just raise its currency exchange rate and hurt its own export, so most possibly no one will tighten, and added money supply just get sucked into bitcoin daily

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April 03, 2013, 02:24:28 PM
 #10

I believe this all goes against the spirit of bitcoin.

Let the market determine the rate. If it crashes, this is good.

Bitcoin is decentralized currency owned by the Internet.

The LAST thing we need is something like a Bitcoin Reserve Board.

That kind of manipulation only ends up enriching the people who control the board, and fuck up the balance of the currency.

IMHO TL:DR the B.R.B is the worst idea I have read all week.
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April 03, 2013, 04:57:14 PM
 #11

relax, it will stabilize when we hit 100,000 - this isn't a bubble.
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April 03, 2013, 08:49:59 PM
 #12

The open market is your price discovery tool.  We don't need organized price controls in place.  Most of us want to get away from that model and try something new.


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April 03, 2013, 10:38:41 PM
 #13

Fiat money is evil . . . lets copy every idea they've tried.
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April 04, 2013, 01:11:32 PM
 #14

Instead of trying to guide the market, some legitimate group could create a floor to the market which could add some stability (but it would also rapidly increase the price short term).  For example, if a Bitcoin Reserve Board guaranteed that they would exchange $30 USD for any BTC right now then flash crashes would theoretically be lessened since there would be less panic that the price could drop to 0.  The entity would have to be highly trusted and they'd probably never have to pay anything out since the individual markets would create their own walls at their guaranteed price knowing that the guarantee exists.  Their guarantee wouldn't have to be high for it to have an impact and a guarantee by a trusted organization would also provide a response to claims that "Bitcoin isn't backed by anything".

If someone or some group with very deep pockets wanted to assist stability, I think this would be the way to do it instead of attempting to fully control the market.

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April 04, 2013, 06:47:33 PM
 #15

bitcoins may be volatile until there's more market capitalisation but as long as the price averaged upwards as we all expect it to, would it really put off vendors?
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April 04, 2013, 07:09:50 PM
 #16

I don't think the community would appreciate this, especially calling it "Reserve Board".

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April 04, 2013, 07:27:08 PM
 #17

I soundly believe that the BTC is on it's way up to $100k or even $1 Million USD per bitcoin.

You'd stop it at $100 because it's more CONVENIENT?

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