mtgox is breaking bitcoin + a proposed solution

[rebroad]

As far as I see it, Market Makers help to stabilize the exchange rate, Market Takers destabilize it. Surely, it's in mtgox's interests for the price to stabilize so that more people can adopt bitcoin and increase their customers.

The solution to this seems to me to be quite simple, and is something Intersango already implemented a while back. Simpy: reward market makers, and penalise market takers. IMHO, all exchanges would be wise to do this.

I'd actually like to see no more than 0% commission for market makers - perhaps even a negative commission considering the importance of their role. Funding from this would naturally come from the transactions made by the market takers.

I don't claim to be an expert on economics, so apologies if I'm completely missing something here. (If I am, Intersango was too, though!).

If enough people are interested in seeing this happen, and comment, perhaps mtgox will address this.

[benjamindees]

In my view the problem is a cultural reliance upon the single largest exchange.  Getting that exchange to take steps to stabilize its own market might be beneficial.  But getting the entire Bitcoin economy to be able to operate independently of that exchange is the ultimate solution.

[DeathAndTaxes]

bitfloor has already supported a  maker taker model for a long time.

-0.1% fee for adding liquidity
+0.4% fee for taking liquidity

People can vote with their wallets.

If people don't and MtGox continues to rake in record profits day after day ... why would they change?  People are by their actions (or inactions) saying "Yes I like this please continue".

[ManBearPig]

I was very vocal against Mt Gox during the height of the lag, rightly so at the time I suppose.

It has been mitigated though not eliminated but it works damn fine.

They earn every penny <- this opinion will change.

[meangreen]

In my view the problem is a cultural reliance upon the single largest exchange.  Getting that exchange to take steps to stabilize its own market might be beneficial.  But getting the entire Bitcoin economy to be able to operate independently of that exchange is the ultimate solution.

+1

[meangreen]

need to be able to short bitcoin to have a market maker. also there has to be rules on the exchange. mt gox is a pathetic boiler room operation.

[Lethn]

What you are suggesting is akin to price fixing and market manipulation, this isn't what Bitcoin is about, if you don't want an unregulated market, stick with the paper, the exchange isn't the problem either because people are either going to start new ones or find the others.

[Razick]

As far as I see it, Market Makers help to stabilize the exchange rate, Market Takers destabilize it. Surely, it's in mtgox's interests for the price to stabilize so that more people can adopt bitcoin and increase their customers.

The solution to this seems to me to be quite simple, and is something Intersango already implemented a while back. Simpy: reward market makers, and penalise market takers. IMHO, all exchanges would be wise to do this.

I'd actually like to see no more than 0% commission for market makers - perhaps even a negative commission considering the importance of their role. Funding from this would naturally come from the transactions made by the market takers.

I don't claim to be an expert on economics, so apologies if I'm completely missing something here. (If I am, Intersango was too, though!).

If enough people are interested in seeing this happen, and comment, perhaps mtgox will address this.

Bitfloor, closed down as of last night did this very thing: -0.1% (negative fee) for makers, 0.3% (positive fee) for takers. It did seem to improve stability a little, but also (this could have been caused by other factors) resulted in higher prices.

[nevafuse]

What you are suggesting is akin to price fixing and market manipulation, this isn't what Bitcoin is about, if you don't want an unregulated market, stick with the paper, the exchange isn't the problem either because people are either going to start new ones or find the others.

+1

So basically, people were using bitfloor to buy & mtgox to sell?  If every exchange started enacting this different rate, people would be even more weary of investing in bitcoins because not only is it risky...it is also more expensive to cash out.  So that would hurt the economy even more.  We want equal rates.  The same to cash in & cash out will give people more confidence & attract more people.  No wonder mtgox still dominates, these other exchanges are even worse.