Suggestions for an Orderly MT. Gox Market

[Enochian]

If Mt. Gox ever rises from the ashes, there are some simple things it can do to avoid unrestrained market volatility.

1. Shorten the trading day. 

There is really no need for a Bitcoin exchange to trade 24/7.  It would be perfectly satisfactory to execute trades only between 10AM and 4PM Eastern, while letting people enter orders at any time.  This would create periods during which trading doesn't take place, allowing analysis of market conditions offline, and the entry of stabilizing orders by those making a market in Bitcoin.  With multiple exchanges, there would probably be somewhere you could trade any time of day, but trades on a given exchange should be limited to business hours in some chosen locale.

2.  Circuit breakers.

It is absolutely absurd that the Bitcoin price was allowed to crash from $17.50 to $0.01 on Mt. Gox.  It would be far better to automatically suspend trading for two hours on a 10% price change, and until the next business day on a 25% price change.  This wouldn't place any limits on Bitcoin value long term, but it would preclude someone from suddenly manipulating the price by trading enough Bitcoin to wipe out the existing buy or sell orders completely.

What do you think?

   

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[Batouzo]

There is really no need for a Bitcoin exchange to trade 24/7.  It would be perfectly satisfactory to execute trades only between 10AM and 4PM Eastern, while letting people enter orders at any time.  

Yeah, entire world is USA, USA Estern 10:00-16:00 is very good for libertarian cross boundary world wide currency trading platform.

Fuck your arrogant US of A A-hole.

FBI, USA time trading, next we should grant USA power to settle any disputes over bitcoin trades, controll it, take tx list not just from mtgox but for other sides too, and allow to revert blockchain, yey )

Seriously.
If anything, there should be separate submarkets with say 3 main timezones and an 24/7 one (or for each trade set in which hours it should be active).
That could be a good idea.

[dennis_sweden]

Nr: 2 is a very good idea and which all major exchanges have in place, although I don't know the exact numbers. But as you state, it would not affect the long-term value of Bitcoin, but it would stop a riddiculous event taking place again. Surely if Mtgox survives this one it users would abandon it if the price drops similarly in the future. However, it isn't as simple as it may seem to be. 1 week ago when prices elevated to $27 or $30 in a couple of days to decrease in a similar value in the next few days. What could be done in such a scneario, as there is little evidence to support the notion that bitcoins were ever worth $27 or $30?

[carbonc]

There is really no need for a Bitcoin exchange to trade 24/7.  It would be perfectly satisfactory to execute trades only between 10AM and 4PM Eastern, while letting people enter orders at any time.  

Yeah, entire world is USA, USA Estern 10:00-16:00 is very good for libertarian cross boundary world wide currency trading platform.

I like this idea.  In fact, all non-American IP's should be blocked and DDoS'ed by the bitcoin network (once that functionality is added).
Lolz... er um.  (kidding)

A single point of failure is always an option.  
 

[TraderTimm]

Let the trading newbies storm the castle. It won't matter in the long run. The market should be 24/7. Circuit breakers actually contribute to anxiety, not relieve it. (Ever been stuck on a limit market just wanting to get filled? It isn't a good feeling.)

Let the stupidity flow for 24 hours before the market returns to its usual inexorable grind-and-fill upward.

[Grant]

If Mt. Gox ever rises from the ashes, there are some simple things it can do to avoid unrestrained market volatility.

1. Shorten the trading day. 

There is really no need for a Bitcoin exchange to trade 24/7.  It would be perfectly satisfactory to execute trades only between 10AM and 4PM Eastern, while letting people enter orders at any time.  This would create periods during which trading doesn't take place, allowing analysis of market conditions offline, and the entry of stabilizing orders by those making a market in Bitcoin.  With multiple exchanges, there would probably be somewhere you could trade any time of day, but trades on a given exchange should be limited to business hours in some chosen locale.

VERY bad idea, part of the advantage we have here over everything else is that we can execute trades 24/7.

2.  Circuit breakers.

It is absolutely absurd that the Bitcoin price was allowed to crash from $17.50 to $0.01 on Mt. Gox.  It would be far better to automatically suspend trading for two hours on a 10% price change, and until the next business day on a 25% price change.  This wouldn't place any limits on Bitcoin value long term, but it would preclude someone from suddenly manipulating the price by trading enough Bitcoin to wipe out the existing buy or sell orders completely.

What do you think?

   

Not under those conditions. It would halt every 2 mins because of the volatility BTC gets, perhaps a setting of 50% down / 100% up could work. (and make it halt for just 15 mins, 2 hours is WAY to long it would kill trading)

[Piper67]

Let the trading newbies storm the castle. It won't matter in the long run. The market should be 24/7. Circuit breakers actually contribute to anxiety, not relieve it. (Ever been stuck on a limit market just wanting to get filled? It isn't a good feeling.)

Let the stupidity flow for 24 hours before the market returns to its usual inexorable grind-and-fill upward.

Heh... when a tsunami is coming, you can either stand on the beach and yell "Thou shalt not pass", or you can buy a really big surfboard!

[Timo Y]

but trades on a given exchange should be limited to business hours in some chosen locale.

Or how about this?  Exchange opens every second Tuesday of each month between 9:15 am and 9:45 am, and every third Thursday between 4:00 pm and 4:30 pm (Tokyo time). Closed for vacation in the months of July and August.

It is absolutely absurd that the Bitcoin price was allowed to crash from $17.50 to $0.01 on Mt. Gox.  

This was the equivalent of your local supermarket running out of beer on a Saturday evening, because somebody threw a huge party and bought up the entire stock.   That doesn't mean there won't be any beer on Monday or that you can't find beer in the neighbouring town's supermarket (for the normal market price).

If bitcoin traders are too stupid to grasp this then quite frankly I've lost faith in humanity and think that humanity doesn't deserve bitcoin.

[Desu]

That's plan idiotic.

[NO_SLAVE]

The best plan is further security measures.  Everything else is regulation, which leads to more regulation and beaurecrats. (been there done that! )
Let the market determine the pricing, just make the platform good enough.  Were long from there yet.

[Desu]

Don't hate on the OP for suggesting point 1. I would rather rephrase it: only keep the exchange open when you can staff it and monitor it. It may suck to have a closed exchange, but arguably it sucks much worse to suffer an attack or security issue with no competent admins to contact. If a site has the resources to let their 'personnel' do 24/7 shifts, there's not really a good reason to close the site.

Good point, if someone stayed linked in, watching for "Fishy" behaviour it wouldn't be a problem.
+1

[Enochian]

This was the equivalent of your local supermarket running out of beer on a Saturday evening, because somebody threw a huge party and bought up the entire stock.   That doesn't mean there won't be any beer on Monday or that you can't find beer in the neighbouring town's supermarket (for the normal market price).

If bitcoin traders are too stupid to grasp this then quite frankly I've lost faith in humanity and think that humanity doesn't deserve bitcoin.

Fiat currencies have value because they can be used to buy things, pay debt, and be used as a long term store of value.  Bitcoin doesn't really do the last two things well yet, so its value relies mostly on the fact that people can use it to purchase things in Internet commerce.

If mainstream merchants are ever to be encouraged to take Bitcoin, its volatility needs to be constrained.  Otherwise, it will forever remain a currency that can only be used to purchase niche items like Funny Socks and Alpaca Cigarettes. 

The EFF bailing the minute Bitcoin got a little unfavorable publicity is nothing compared to the distance vanilla merchants will put between themselves and Bitcoin if some order can't be introduced into the market.