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Author Topic: The invisible hand of the market  (Read 1115 times)
Luckybit
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April 16, 2013, 11:13:47 PM
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It's an arms race between high frequency traders who want to game the system and those who want functioning Bitcoin exchanges for price discovery. If Bitcoin cannot win the algorithms arms race it's over for Bitcoin.

Here is an article below which highlights the problem which exists in traditional markets and which came to Bitcoin when Bitcoin went mainstream.

http://theconversation.com/out-of-our-hands-the-hidden-dangers-of-high-frequency-trading-3750

Most of us remember that as soon as the so called "big money" and "big boy" players got involved with Bitcoin then suddenly there have been DDOS attacks, high frequency trading, and other hostile algorithm based manipulation. The only solution is to come up with algorithms to prevent hostile algorithms but that enters us into the domain of whitehat vs blackhat. The blackhats currently are turning Bitcoin into a speculative game to test out their new trading algorithms.
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Jutarul
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April 16, 2013, 11:20:11 PM
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It's an arms race between high frequency traders who want to game the system and those who want functioning Bitcoin exchanges for price discovery. If Bitcoin cannot win the algorithms arms race it's over for Bitcoin.

Here is an article below which highlights the problem which exists in traditional markets and which came to Bitcoin when Bitcoin went mainstream.

http://theconversation.com/out-of-our-hands-the-hidden-dangers-of-high-frequency-trading-3750

Most of us remember that as soon as the so called "big money" and "big boy" players got involved with Bitcoin then suddenly there have been DDOS attacks, high frequency trading, and other hostile algorithm based manipulation. The only solution is to come up with algorithms to prevent hostile algorithms but that enters us into the domain of whitehat vs blackhat. The blackhats currently are turning Bitcoin into a speculative game to test out their new trading algorithms.
The per-order fee is already a huge barrier to high-frequency trading.

The failure of Mtgox seems to be their trading algorithm. However, the other exchanges are not doing any better. It's what you get when you let computer experts write market making software: rollercoasters. Of course it's gonna be exploited by people who know how to ride them.

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BitDreams
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April 16, 2013, 11:46:55 PM
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Except there is no invisibility with bitcoin - at least not the type Wall Street likes - there are no dark pools, no hidden volume. Everyone sees everything or nobody sees anything.
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April 17, 2013, 12:21:21 AM
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Except there is no invisibility with bitcoin - at least not the type Wall Street likes - there are no dark pools, no hidden volume. Everyone sees everything or nobody sees anything.

AFAIK The math guys on Wallstreet focus, among other things, on how to move large shares through the market without letting others know that you're doing it by using algo's. This could be practically copied over to BTC if it wasn't for the fees.

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Luckybit
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April 17, 2013, 12:25:20 AM
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Except there is no invisibility with bitcoin - at least not the type Wall Street likes - there are no dark pools, no hidden volume. Everyone sees everything or nobody sees anything.

AFAIK The math guys on Wallstreet focus, among other things, on how to move large shares through the market without letting others know that you're doing it by using algo's. This could be practically copied over to BTC if it wasn't for the fees.

What makes you think a small fee would stop them from doing it? It's not big enough of a fee to work.
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April 17, 2013, 12:30:36 AM
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Except there is no invisibility with bitcoin - at least not the type Wall Street likes - there are no dark pools, no hidden volume. Everyone sees everything or nobody sees anything.

Ummm... no.

There are dark pools, and plenty of hidden volume.  It wouldn't surprise me at all to find that hidden volume was greater than that on the exchanges.

Dankedan: price seems low, time to sell I think...
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April 21, 2013, 07:41:18 PM
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Correct me if I'm wrong, we may not know the owner of a wallet but we can know if the wallet is reduced in size?
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