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Author Topic: Exchanges should raise their fees!  (Read 792 times)
Piper67
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July 05, 2011, 06:27:28 PM
 #1

I know, this isn't a popular move, but think about it for a second: with fees as low as they are (Mt. Gox at zero percent post-hack and the others having to lower theirs to compete) there is little disincentive to manipulating the market by just bouncing the same 2000-4000 BTC around between two accounts that belong to the same person.

It is the one aspect where bitcoin's anonymity is a serious hindrance. The only barrier to it is fees that, when taken cumulatively, can impose a financial penalty on anyone attempting to manipulate the market. If they lost 1% on each side of each trade, soon they'd have to find another tactic.

Just sayin'
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GeniuSxBoY
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July 05, 2011, 06:29:39 PM
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Agreed, If I pump $100,000 into the system, the arbitrators will just siphon it out of the system. They lose nothing by playing two markets.
hugolp
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July 05, 2011, 06:34:55 PM
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If you rise the fee you are making it more difficult for people to go into Bitcoin.

All this conspiracy about moving up and down the market its fun, but take it with distance. People that try to move the price sometimes win and sometimes looses. If it were as easy as you say everybody would be doing it.
GeniuSxBoY
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July 05, 2011, 06:39:59 PM
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Fees that are too low will ruin the market the same way fees that are too high do.

There is a fee that is "just right"
SlipperySlope
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July 05, 2011, 06:41:01 PM
 #5

There is a slight risk that some other party will take the other side of the trade because the exchange computers perform the order matching.  Thus, fooling around with dummy trades in a trending market could expose the dummy trader to the trend - its not entirely risk neutral.  So I expect that such dummy traders have been burned in the recent Mt Gox downdraft and either liquidated - if thats where they want to be, or holding current positions - if thats where they want to be.  To put it another way, by conducting dummy trades that have a chance of non-dummy fills, the dummy trader takes the unintended risk of real trading.

Actual market markers are not trading with themselves and their market-making behavior is more efficient when there are zero commissions, as is the case with the conventional FOREX (foreign exchange) market.  I applaud the lower and zero commissions at Mt Gox.
HideousBeastManGuy
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July 05, 2011, 06:42:24 PM
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Even if your plan works, you kill liquidity.  Larger spreads often make more arbitrage opportunities, although not necessarily, and they certainly allow for larger profits for market makers who know how to talk to the exchange owners and negotiate.
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July 05, 2011, 06:50:53 PM
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Without fees, mtgox wouldn't have been able to afford to replace what was stolen in the hack. I think fees are virtual insurance for if anything goes wrong, too.
skyhigh
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July 05, 2011, 06:51:13 PM
 #8

Fees overall should and will be lower in time.

Mtgox 0 fee is just temporary and for very small number of their users. Some users that are on temp 0 fee, tried to scalp, but because majority is clueless how it should be done, gave up. This has no effect on the price of bitcoin. I'm sure they don't even represent 2% of daily mtgox volume.

Raising fees would only mean GREED by exchange owners and would only work on a very short period of time before NEW better exchanges would appear. If mtgox won't rent a real coder and completely rewrite the whole code, basically make a new system, they will die in time and will soon be forgotten. Like WebCrawler or AltaVista search engine not to mention Archie.

WebCrawler was only 6 years before Google came and I'm sure 80% of todays internet population has no idea what WebCrawler was/is since its still active.
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