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Author Topic: mtgox and other exchanges proposals  (Read 1173 times)
snowboard789
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June 14, 2011, 04:31:23 PM
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Hi,

1)I want to propose a system with circuit breakers as they have in Wall Street to prevent sudden downfalls and market manipulators.
It is nothing technically, and has too many advantages.

2)The second proposal is one of security. If a bank gets compromised and has money stolen from it, it has this money secured and can pay back customers. If mtgox is hacked for a substantial amount of money (dont ask technically how, its irrelevant) he cannot pay for the lost coins->chaos.
Mtgox is an exchange, but it also acts like a bank if you leave money there for a long period of time as many do waiting for the right price to buy/sell.
Securing the money is obviously difficult because it must be secured in another currency, and also mtgox has to increase its comission to include a security scheme.
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nereer
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June 14, 2011, 07:01:51 PM
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1. you are proposing a Plunge Protection Team for bitcoin? That conspiracy theorists will have a field day! Seriously: you are talking about a central authority, which is not going to gain much traction in the community as it is pretty much opposite to the philosophy of bitcoin.

2. I think you are right, or at least I think it would be 'better' if there was some kind of guarantee in the case of massive hack. I think it would be a really different type of company though, think about it: if there were a security breach then users would have to be identified before they could be paid their 'compensation', that means that the users would have to be officially identified by the MtGox company, using proper ID etc. There are many MtGox users that would not like that.

As you quite often hear around here, why not set up an exchange and try to provide the protection you describe above?

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hazek
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June 14, 2011, 09:40:59 PM
 #3

I have a potentially better idea. How about if mtgox limits people from dumping as many or more Bitcoins on the bids that would move the price for 5% or more. Same goes for jumping on asks.

So let's say someone wants to dump 1000btc on bids but yet there are only 900btc in bids in the price range from spot to 4.99% below and mtgox simply doesn't accept his order. He can still place it at spot but he can't single handendly crash the price beyond 5%. And if 5% is too little, then how about 10%?

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June 14, 2011, 10:32:53 PM
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Price limits, circuit breakers, these things don't stop market forces, only delay them. Just let the market trade, you know - without regulation. Bitcoin should be traded as freely as the currency itself.

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hazek
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June 14, 2011, 10:49:53 PM
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That's kind of why I thought my idea could be beneficial. I was watching what happened this weekend live and the speed and fierceness with which the crash happened probably contributed a great deal towards a larger and more volatile swing.

My idea is of course not suppose to stop the market forces from working but at least it can slow them down just a bit so people have more time to react.

I don't know.. Naturally I'm not for any type of forced regulations but exchanges can experiment with different type of rules. Just like they allow partial depth table to be seen and dark pool orders they can come up with order placing rules and let the market decide what it likes and what it doesn't.

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Findeton
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June 14, 2011, 11:04:04 PM
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If ancaps don't want this, then they should stay in the rest of exchanges, I would very much like a decent bitcoin exchange.

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imperi
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June 14, 2011, 11:17:57 PM
 #7

Price limits, circuit breakers, these things don't stop market forces, only delay them. Just let the market trade, you know - without regulation. Bitcoin should be traded as freely as the currency itself.


I agree for the most part, however also consider that exchange rate volatility is a strong disincentive to creating online stores.
snowboard789
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June 15, 2011, 05:18:13 PM
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1. you are proposing a Plunge Protection Team for bitcoin? That conspiracy theorists will have a field day! Seriously: you are talking about a central authority, which is not going to gain much traction in the community as it is pretty much opposite to the philosophy of bitcoin.

what are you talking about?
read this first
http://en.wikipedia.org/wiki/Trading_curb

it does not need a team of dictators, this is an auto market process and very very simple.
if value drops < 10% for example, stop tha market and continue tomorrow when the panic-for-no-reason-selling is over.

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