[UPDATED] MTGox and dark pool

[MagicalTux]

This is a poll about the MTGox dark pool.

The original goal of the dark pool was to allow people willing to trade large quantities of bitcoins to avoid having a too large impact on the market.

While it seems indeed that dark pool orders have none to little impact, this has caused a big reduction of orders visible to people, reducing the visibility and trust of the market. Additionally, mixed orders (dark+normal) makes it impossible for someone to trade while having a full visibility of the market.

So, before I take any decision, I'll try to get some feedback first, and I guess I'm at the perfect place for this. This poll is just to see what you, as users, think, and it's not because option X or Y wins that it will happen. You are also encouraged to discuss the possibilities, and even give options that are not listed here. The poll is set to end in 7 days (around April 15th depending on where you live).


So, here are the various possible options:

Keep the dark pool as is

I guess I don't need to explain much about this one. It'll still include some bugfixes.

Keep the dark pool, but make remove "dark+normal" option

The main point here is to avoid dark pool orders from hitting normal orders. This'll allow normal traders to not have to fear they'll hit some invisible order while trying to buy or sell bitcoins.

Keep the dark pool and implement iceberge orders instead of "dark+normal"

See more details on nanotube's post:

http://bitcointalk.org/index.php?topic=5564.msg83075#msg83075

Remove the dark pool

This would mean completly removing the dark pool. All orders placed there will be automatically cancelled, and users will be free to either place orders again on the normal pool, or withdraw their funds/bitcoins.

Limit it to specific users

Limiting the dark pool to users under specific conditions might be a good option too. The idea would be to define a set of restrictions (e.g. must have at least 2500$ funds in usd/btc, request access and explain motivations, be identified, etc) and advantages (less transaction fees?)


Anyway please provide some feedback. The goal is to improve everyone's trading conditions. I might be worrying for nothing since I likely only get feedback from worried people, so feedback is welcome.

[1714884970]

1714884970

[1714884970]

1714884970

[1714884970]

1714884970

[1714884970]

1714884970

[1714884970]

1714884970

[kiba]

The dark pools does not complete it objectives, therefore it is unnecessary.

[BitterTea]

7 people already voted remove it in 30 minutes? Why? I'm suspicious.

I say leave it as is. If you hit a dark order while trading on normal, you're not going to be any worse off, and you might actually get a better deal than you thought.

edit... I can't seem to change my vote, I accidentally voted for "remove dark+normal".

The dark pools does not complete it objectives, therefore it is unnecessary.

In order to make this statement accurately, you would have to know that the market would not have been more volatile without dark pools.

[FreeMoney]

If you go to accept the lowest ask or highest bid and a dark pool grabs you instead won't it always be as good or better than you expected? What is the problem?

I do see the loss in terms of making the market look thinner.

For a small price and a little time it is possible to figure out where dark offers are, but not how deep. You could save people this hassle and enlighten those who didn't know how by marking where the lowest dark pool ask and highest bid are.

Of course then the next move for the darkies is to not make the bid/ask and use a robot.

[LightRider]

I voted Keep it, but I wouldn't mind any of the top 3 options. The fourth option I think is not at all in the best interests of anyone trying to encourage the use of bitcoins, in my opinion. If we start trying to be gatekeepers to a system often boasted as being "open and anonymous" then we really kill some of the better aspects of the idea, not to mention that begins opening yourselves up to legal attack in the future, not to mention the potential to open yourselves up to conspiracy theorists and the like. The avoidance of both, I think, were probably major reasons for the system's creation in the first place.

But I understand that it is a privately run market, so it shouldn't be limited to my, or any other outside person's opinion.

[jgarzik]

IIRC, one of the goals of the dark pool was to eliminate the need to to write bots that accomplish the same end result as the dark pool (reducing visibility).

Thus, it sounds like people may choose to reduce their visibility regardless of the absence or presence of the dark pool.

I voted "keep it as is", purely because that seems the simplest approach.  But I would be just as happy if the dark pool disappeared, and the market was 100% transparent.

[mjsbuddha]

I think keep it but RAISE its fee, to discourage its frivolous use.

[dust]

Voted to remove.

The only reason I see in keeping dark pools is that their functionality can be partially emulated by a trading bot or script, and having the functionality built into the exchange would even the playing field to some extent.

[jkminkov]

fyi I don't use the exchange, yet.

voted keep it, because I see that feature as a lever to compete with bots

[Keefe]

I can't decide between leaving it as is, and removing dark+normal. There have been times I've been frustrated by the fact the market looks thinner than it may actually be, but I realize that serious traders are going to write a bot to substitute for the dark+normal functionality if removed. Raising the fee for dark+normal is an interesting idea, but again, a serious trader may write a bot to save money. I've used dark+normal orders to beat the annoying just-.000001-better bots, so I can see the usefulness also.

I have no problem at all with dark-only orders, as that's just like a separate exchange, just built on MtGox infrastructure and trust.

[fetokun]

Sorry for my ignorance, but I still don't understand what the Dark Pool is.

"The Mt Gox dark pool allows you to buy or sell large quantities of BTC without moving the market"

What exactly does "moving the market" means? Means that these dark trades won't affect the price of  the BTC? Does it mean that these trades are untraceable ?

[killerstorm]

What exactly does "moving the market" means? Means that these dark trades won't affect the price of  the BTC?

They will ultimately affect the price of the BTC through demand/supply rules. But there will significantly less immediate effect on the market comparing to normal, visible order, so this helps to combat short-term volatility.

Please check depth of market and megachart on mtgox to see what we're talking about (http://mtgox.com/trade/history).

Now to see how it works, consider that you want to buy a lot of USD for BTC. Let's say 5000 BTC which is more or comparable to sum of current bids.

If you'll try to buy it at market price going through current bids starting from highest you will fill a lot of bids and thus drive the highest bid down. So it is not a very good idea. Even you do this gradually, still highest bid will decrease over time from your activity, people will notice this and will put both their bids and asks lower, thus you're losing again.

If you do not want to buy at a huge premium you can try to buy at fixed price. Let's say lowest current ask is 0.79. Then you can put your ask at 0.78. Then, in theory, people who sell at market price will eventually fill your order without driving price down.

But the problem is that others see your ask order and its size and they will anticipate drop in price of BTC through demand/supply balance. Besides that there are other people who want to buy and they will try to put their asks lower than yours, e.g. 0.7799 < 0.78 to get their orders filled before yours by market orders. (As there is no chance that anybody can buy at better price in near future.)

Thus again, price is going down and you're not buying anything until some huge-ass sell order will appear.

Dark orders are kind of solution to this problem -- you're still buying something but people do not see your orders so they cannot anticipate whether market goes up/down before you do.

In dark+normal situation it is like a normal order but it is invisible. People will see that something happens -- ask orders are not filled at market, or are not filled as fast as they should, but they will not know what is your price and how much volume is left. So they cannot anticipate drop in price and drop it before that.

With dark-only situation you'll be trading among other dark-poolers (people with huge orders). So it will be invisible to normal market, but affect it because there are less volume flowing through it. Dark-poolers will probably use current market price as a reference for their orders.

So this stuff is unnecessary if there is huge volume in trading and so individual orders do not move market much. But it looks like it is not a case with bitcoin exchanges so far because there are different players with different capacities.

[fetokun]

What exactly does "moving the market" means? Means that these dark trades won't affect the price of  the BTC?

They will ultimately affect the price of the BTC through demand/supply rules. But there will significantly less immediate effect on the market comparing to normal, visible order, so this helps to combat short-term volatility.

Please check depth of market and megachart on mtgox to see what we're talking about (http://mtgox.com/trade/history).

Now to see how it works, consider that you want to buy a lot of USD for BTC. Let's say 5000 BTC which is more or comparable to sum of current bids.

If you'll try to buy it at market price going through current bids starting from highest you will fill a lot of bids and thus drive the highest bid down. So it is not a very good idea. Even you do this gradually, still highest bid will decrease over time from your activity, people will notice this and will put both their bids and asks lower, thus you're losing again.

If you do not want to buy at a huge premium you can try to buy at fixed price. Let's say lowest current ask is 0.79. Then you can put your ask at 0.78. Then, in theory, people who sell at market price will eventually fill your order without driving price down.

But the problem is that others see your ask order and its size and they will anticipate drop in price of BTC through demand/supply balance. Besides that there are other people who want to buy and they will try to put their asks lower than yours, e.g. 0.7799 < 0.78 to get their orders filled before yours by market orders. (As there is no chance that anybody can buy at better price in near future.)

Thus again, price is going down and you're not buying anything until some huge-ass sell order will appear.

Dark orders are kind of solution to this problem -- you're still buying something but people do not see your orders so they cannot anticipate whether market goes up/down before you do.

In dark+normal situation it is like a normal order but it is invisible. People will see that something happens -- ask orders are not filled at market, or are not filled as fast as they should, but they will not know what is your price and how much volume is left. So they cannot anticipate drop in price and drop it before that.

With dark-only situation you'll be trading among other dark-poolers (people with huge orders). So it will be invisible to normal market, but affect it because there are less volume flowing through it. Dark-poolers will probably use current market price as a reference for their orders.

So this stuff is unnecessary if there is huge volume in trading and so individual orders do not move market much. But it looks like it is not a case with bitcoin exchanges so far because there are different players with different capacities.

Thanx a lot for your explanation.
You made it sound really important and hard to live without =D

[MagicalTux]

Thanx a lot for your explanation.
You made it sound really important and hard to live without =D

That was the original idea. However the result is not exactly what was expected... maybe? (hard to tell what would have happened without the dark pool)

[slush]

I voted for 'keep it as is'. I believe that most of dark pool haters don't really understand what DP is and they are simply scared by unknowns.

Writing custom bots for trading large amounts is ugly workaround, DP solve that nicely. I simply don't see the reason why to remove it.

Disclaimer: I didn't used DP yet, so I'm not following my own interests .

Edit: OK, I see one reason why DP is bad - market then looks thinner and people are affraid of trading because it looks like trade will be filled for worse price.

[fetokun]

I like the idea of charging a fee

[da2ce7]

I like the idea of charging a fee

Either you have dark pools free and available to anyone, eg.  don't limit to 1000BTC/$ +
Or don't have them at all.

[Cusipzzz]

keep it as is..dark pools are effective even if most people can't see the value.

[Alex Beckenham]

I voted for 'keep it as is'.
I didn't used DP yet, so I'm not following my own interests .

Likewise.

[grondilu]

After some hesitation, I voted "remove it".

Not that I think dark pools are a bad thing or that it should be forbidden.  I just don't think it's necessary and I'd rather see as many orders as possible.


But I really think it's only up to you.  MtGox is your business, not ours.

[killerstorm]

That was the original idea. However the result is not exactly what was expected... maybe? (hard to tell what would have happened without the dark pool)

Is there some statistics on volume of transactions in dark pool vs normal transactions?

[imanikin]

Whenever possible, for reasons i've stated in numerous ways in other threads, i will avoid dealing on Mt Gox again, as long as the dark pool exists there...  

[S3052]

I voted for 'keep it as is'. I believe that most of dark pool haters don't really understand what DP is and they are simply scared by unknowns.

Writing custom bots for trading large amounts is ugly workaround, DP solve that nicely. I simply don't see the reason why to remove it.

Disclaimer: I didn't used DP yet, so I'm not following my own interests .

Edit: OK, I see one reason why DP is bad - market then looks thinner and people are affraid of trading because it looks like trade will be filled for worse price.

Agree 100%.

Stopping dark pool will in all likelyhood increase the spreads = making buying and selling bitcoins more expensive for most people.

[ColdHardMetal]

As near as I can tell after having thought about this for awhile a dark pool will never hurt you pricewise. Assuming the dark pool is inside the visible spread you'll always get to buy at a lower price or sell at a higher price than you expected. The only real problem is the lack of visibility in terms of the depth of market as mentioned above.

With that thought in mind would it make sense to incorporate a "dark depth" number or something that tells you the depth of the market between the spread but doesn't tell you the prices? Or would that just make a dark pool useless?

[Grinder]

I voted remove it, because I think a higher volume would make people take bitcoins more seriously.

[Keefe]

What exactly does "moving the market" means? Means that these dark trades won't affect the price of  the BTC?

They will ultimately affect the price of the BTC through demand/supply rules. But there will significantly less immediate effect on the market comparing to normal, visible order, so this helps to combat short-term volatility.

Please check depth of market and megachart on mtgox to see what we're talking about (http://mtgox.com/trade/history).

Now to see how it works, consider that you want to buy a lot of USD for BTC. Let's say 5000 BTC which is more or comparable to sum of current bids.

If you'll try to buy it at market price going through current bids starting from highest you will fill a lot of bids and thus drive the highest bid down. So it is not a very good idea. Even you do this gradually, still highest bid will decrease over time from your activity, people will notice this and will put both their bids and asks lower, thus you're losing again.

If you do not want to buy at a huge premium you can try to buy at fixed price. Let's say lowest current ask is 0.79. Then you can put your ask at 0.78. Then, in theory, people who sell at market price will eventually fill your order without driving price down.

But the problem is that others see your ask order and its size and they will anticipate drop in price of BTC through demand/supply balance. Besides that there are other people who want to buy and they will try to put their asks lower than yours, e.g. 0.7799 < 0.78 to get their orders filled before yours by market orders. (As there is no chance that anybody can buy at better price in near future.)

Thus again, price is going down and you're not buying anything until some huge-ass sell order will appear.

Dark orders are kind of solution to this problem -- you're still buying something but people do not see your orders so they cannot anticipate whether market goes up/down before you do.

In dark+normal situation it is like a normal order but it is invisible. People will see that something happens -- ask orders are not filled at market, or are not filled as fast as they should, but they will not know what is your price and how much volume is left. So they cannot anticipate drop in price and drop it before that.

With dark-only situation you'll be trading among other dark-poolers (people with huge orders). So it will be invisible to normal market, but affect it because there are less volume flowing through it. Dark-poolers will probably use current market price as a reference for their orders.

So this stuff is unnecessary if there is huge volume in trading and so individual orders do not move market much. But it looks like it is not a case with bitcoin exchanges so far because there are different players with different capacities.

FWIW, I think you have bids and asks confused. EDIT: My mistake. I didn't catch that you were talking about buying USD and *selling* BTC.

Current bids on the order book (Depth of Market) represent other buyers waiting for sellers, and asks represent sellers waiting for buyers. When you want to buy immediately, you clear/fill asks, driving up the best/lowest ask. When you want to sell immediately, you clear/fill bids, driving down the best/highest bid.

Dark-only orders don't directly affect the visible bids or asks, nor any normal orders.

Dark+normal bids support (hold up) the price invisibly, absorbing immediate sells without showing that they are going to do so, nor how strongly. When they are filled partially or fully, the trades do show in the trade feeds (such as the #bitcoin-market irc channel), so one can see the effect of their existence. Dark+normal asks provide invisible resistance (holding the price down) in a similar manner.

[Jered Kenna (TradeHill)]

I think it hurts the appearance of legitimacy.  I understand why they're there and why they should work and because of that I'm not 100% decided.
I also realize bots are basically going to be doing the same thing.
I'm curious how much trading is being done DP vs in the open? Is it a 50/50 split or really tilted one way?
I think we would all like to see more volume and I don't think DP really goes with the openness of bitcoin.

I'm voting no but to be honest I'm not 100% sure what is best.

[killerstorm]

FWIW, I think you have bids and asks confused.

Current bids on the order book (Depth of Market) represent other buyers waiting for sellers, and asks represent sellers waiting for buyers. When you want to buy immediately, you clear/fill asks, driving up the best/lowest ask. When you want to sell immediately, you clear/fill bids, driving down the best/highest bid.

Yep, you're right. But it doesn't matter much if we're talking about currency exchange -- if one sells bitcoin you can as well say he is buying USD and vice-versa.

[Keefe]

FWIW, I think you have bids and asks confused.

Current bids on the order book (Depth of Market) represent other buyers waiting for sellers, and asks represent sellers waiting for buyers. When you want to buy immediately, you clear/fill asks, driving up the best/lowest ask. When you want to sell immediately, you clear/fill bids, driving down the best/highest bid.

Yep, you're right. But it doesn't matter much if we're talking about currency exchange -- if one sells bitcoin you can as well say he is buying USD and vice-versa.

I apologize. I didn't catch that when you said buy, you were actually referring to selling BTC and buying USD. Given that at MtGox the term Buy refers to buying BTC, it might be best to follow that convention so as to not confuse someone possibly less experienced with currency trading.

[slush]

I voted remove it, because I think a higher volume would make people take bitcoins more seriously.

DP does not affect volume; historical volume shows also DP trades. So that's not good reason for disabling DP.

[Grinder]

DP does not affect volume; historical volume shows also DP trades. So that's not good reason for disabling DP.

Then there haven't been any DP trades the last 24 hours, so I suppose it wouldn't make very much difference if they were open.

[S3052]

I voted remove it, because I think a higher volume would make people take bitcoins more seriously.

You are wrong here.
The dark pool trades are all part of all the trades you see on bitcoincharts.com

hence, only the dark trade offers are invisible, while the resulting trades are treated in the same way as other orders. Net, dark pool do not mask any volume.

This is based on what I heard from the owners of MtGox. If this is confirmed, dark pools have only positives.

[S3052]

DP does not affect volume; historical volume shows also DP trades. So that's not good reason for disabling DP.

Then there haven't been any DP trades the last 24 hours, so I suppose it wouldn't make very much difference if they were open.

No, you're not getting it yet.

All trades, no matter of dark pools only, dark pools + normal and normal only are visible. You can ask the exchange owner if they can provide you with an analysis how much % of the last 24 h trades were ingnited by dark orders.

[Psychoactive]

I like the idea of charging a fee

Either you have dark pools free and available to anyone, eg.  don't limit to 1000BTC/$ +
Or don't have them at all.

Voted to remove it. But I understand bots are able to emulate the same behaviour as dark pools so... In all cases, I agree with da2ce7, if you keep it, it should be open to every trader, rather than limited to 1000btc+.

[jed]

imanikin: can you point to the threads explaining what you don't like about the DP?

The DP definitely reduces volatility. It is hard to buy a sell a lot of BTC otherwise.

The only other complaint I've heard about it is that it makes it hard for speculators to know how much they will move the market with an order. But the only reason to worry about this is if you want to do tricky things like dump a bunch of BTC to lower the price and then buy it back plus some. But I'm not sure this is such a bad thing.

I tend to think it is fine how it is but the limit should be raised so it is really just very large orders.

[imanikin]

imanikin: can you point to the threads explaining what you don't like about the DP?

I think a lot of the pros and cons, including mine, were covered in this thread:

http://bitcointalk.org/index.php?topic=3772.0

[mndrix]

I voted "keep it as is".  Because bots can simulate dark pools, removing dark pools doesn't really change the market any.  It just creates a slight barrier to entry for dark pool use. (Although I suppose bots do surface the "tip of the iceberg", so the book might look healthier without official dark pool support).

[jed]

imanikin: I get your point that dark pools seem like an unfair advantage to bigger investors. But I would argue that the market has a very different reaction to when a big investor places an order than to when a small one does. For example, if a small investor places a bid for 50BTC above all the others there will probably be 0 reaction. But if a big investor places a bid for 5000BTC above all the others the market definitely reacts. Specifically tons of people jump in front of his order.  Probably his order is never filled since the price will just move above it.

There is also the unfair fact that 1 big trader is more valuable to the market than 1 small one since a big trader provides more liquidity. So an exchange has more incentive to keep the big guys happy.
 
I'm actually a bit curious what would happen if the order book wasn't shown at all. I suppose it would make trading less interesting. 

[Stephen Gornick]

For example, if a small investor places a bid for 50BTC above all the others there will probably be 0 reaction.

That's not what I've seen.  When I want to do a trade but only if the order is filled at about the current best offer, I'll jump in front of the current best offer by a tiny amount.  Then often a bot or another trader will often jump in front of mine.

When Mt. Gox supported websockets, this tool http://www.thenewsh.com/~newsham/x/mtgox/ showed the bots in action.  It was quite entertaining watching that display when another bot or another trader would walk the first bot higher or lower and then snag an order at a better price.

As far as offering a dark pool, I'm in favor.  There are numerous tools used in finance.  I don't know why we would want to hobble Bitcoin by discouraging the use of one of the more valuable tools.

[cypherdoc]

you should get rid of the dark pool.  it is inherently breeds suspicion and contributes to mkt obscuration.  as one who trades stocks i can tell you it is just part of the Wall St corruption/fraud scandal.

[theymos]

People will do it anyway with bots, so I don't see any reason to remove it.

[imanikin]

There is also the unfair fact that 1 big trader is more valuable to the market than 1 small one since a big trader provides more liquidity. So an exchange has more incentive to keep the big guys happy.
 
I'm actually a bit curious what would happen if the order book wasn't shown at all. I suppose it would make trading less interesting.  

The point is also that dark pools distort price discovery and the commodity's market price, at any given moment...

I think one of the main reasons Bitcoin and its successors have a bright future, is because in the existing financial system, zillions of small guys are really sick of being bent over by all types of entities “to keep the big guys happy.” There are far more small guys than big guys...  

If the books were completely closed, my bet is that eventually an insider trading gang will form around whoever does have access to the books, and will be able to distort and manipulate the price even better than now...

I get that the free-market cheaters and hypocrites will continue to devise ways to cheat the fundamental market forces and be hypocritical about it, because it's profitable to them, and well-worth the complex, technical rationalizations and self-delusions. I am just not willing to partake in such places anymore. I am sure the happy big guys won't miss my small money... So, have fun, jed!

[BitterTea]

lol, this again...

If there was no dark pool, big traders would most likely still not publish their buy/sell intentions in the order book, they would use trading bots. There is absolutely nothing wrong with this. I am not obligated to announce my economic intentions to the world, just because I disagree with state intervention in markets.

[NghtRppr]

I have no opinion on whether dark pools are "good" or "bad", whatever that means, but as the operator of a market, my number one goal is transparency. When people place an ask or bid, I want them to be confident that they have all the information that is currently available. Whatever asks or bids are placed later are a different story. I can't control that. The bots are welcome to do their thing but out in the open.

[S3052]

People will do it anyway with bots, so I don't see any reason to remove it.

thanks for your perspective!

Great

[Psychoactive]

lol, this again...

If there was no dark pool, big traders would most likely still not publish their buy/sell intentions in the order book, they would use trading bots. There is absolutely nothing wrong with this. I am not obligated to announce my economic intentions to the world, just because I disagree with state intervention in markets.

Then I shouldn't be forced to publish my economic intentions to the world, even if I have less than 1000BTC. Dark pool should be open to everyone or not at all.

The argument that bots can simulate dark pool applies to small traders : they can use a bot to simulate dark pool behaviour, so we may just as well allow dark pools for them too. There is no reason why dark pool should concern only big orders.

No dark pool or dark pool available to everyone.

As someone else imagined, we could also have only dark pools and make completely blind bids, with no information on others' bids. Anyhow, I'm not sure we'd like that, dark pool bidders included, because their bids are based on bids in the normal pool. The idea of the market is precisely to give you information on general economic intentions. This is why I think the dark pool should be removed. Even if bots are able to simulate it, at least you can analyse their behaviour and try to recognize bids placed by bots and other bids. And at least you'll have to work  to have it. + 'dark' sounds terrifying

[killerstorm]

The point is also that dark pools distort price discovery and the commodity's market price, at any given moment...

Price discovery? In last 48h price went from 0.72 to 0.80 then back to 0.73 then up to 0.76.
Is this a price discovery?

What fundamentals changed in last 48h?

I think this is a volatility caused by large orders. Check volume and price charts alongside, looks like it is.

There are simply not enough large players on the market -- market-makers, arbitragers, speculators -- who could smooth out effect of these large orders moving the market. You can see that eventually price recovers, so this is clearly a problem of depth.

In can be shown that dark pool orders work towards stabilizing current price. Thus it is good for the market because volatility is the biggest problem.

I think one of the main reasons Bitcoin and its successors have a bright future, is because in the existing financial system, zillions of small guys are really sick of being bent over by all types of entities “to keep the big guys happy.” There are far more small guys than big guys...  

If the books were completely closed, my bet is that eventually an insider trading gang will form around whoever does have access to the books, and will be able to distort and manipulate the price even better than now...

I get that the free-market cheaters and hypocrites will continue to devise ways to cheat the fundamental market forces and be hypocritical about it, because it's profitable to them, and well-worth the complex, technical rationalizations and self-delusions. I am just not willing to partake in such places anymore. I am sure the happy big guys won't miss my small money... So, have fun, jed!

This is just a piece of FUD. You cannot explain how dark pools are bad for you and so you resort to emotions about "big guys" and "bending over".

If you will compare situation with dark pools and without, dark pools will be strictly superior as long as dark trading volume is a small fraction of total trading volume.

Note that in dark-only case people could just trade OTC and just using mtgox price as a reference. It is not your business to tell other people where and how they should trade.

[S3052]

The point is also that dark pools distort price discovery and the commodity's market price, at any given moment...

Price discovery? In last 48h price went from 0.72 to 0.80 then back to 0.73 then up to 0.76.
Is this a price discovery?

What fundamentals changed in last 48h?

I think this is a volatility caused by large orders. Check volume and price charts alongside, looks like it is.

There are simply not enough large players on the market -- market-makers, arbitragers, speculators -- who could smooth out effect of these large orders moving the market. You can see that eventually price recovers, so this is clearly a problem of depth.

In can be shown that dark pool orders work towards stabilizing current price. Thus it is good for the market because volatility is the biggest problem.

I think one of the main reasons Bitcoin and its successors have a bright future, is because in the existing financial system, zillions of small guys are really sick of being bent over by all types of entities “to keep the big guys happy.” There are far more small guys than big guys...  

If the books were completely closed, my bet is that eventually an insider trading gang will form around whoever does have access to the books, and will be able to distort and manipulate the price even better than now...

I get that the free-market cheaters and hypocrites will continue to devise ways to cheat the fundamental market forces and be hypocritical about it, because it's profitable to them, and well-worth the complex, technical rationalizations and self-delusions. I am just not willing to partake in such places anymore. I am sure the happy big guys won't miss my small money... So, have fun, jed!

This is just a piece of FUD. You cannot explain how dark pools are bad for you and so you resort to emotions about "big guys" and "bending over".

If you will compare situation with dark pools and without, dark pools will be strictly superior as long as dark trading volume is a small fraction of total trading volume.

Note that in dark-only case people could just trade OTC and just using mtgox price as a reference. It is not your business to tell other people where and how they should trade.

Agree with you.

Also, the poll should only be open to registered users of MtGox. It is about satisfying current customers, rather than given people a right to vot who has absolutely no clue about trading.

[imanikin]

In can be shown that dark pool orders work towards stabilizing current price. Thus it is good for the market because volatility is the biggest problem.

This is just a piece of FUD. You cannot explain how dark pools are bad for you and so you resort to emotions about "big guys" and "bending over".

As i mentioned, i've already explained elsewhere why dark pools are not for me, and detrimental to Bitcoin imho...

No need to take my word for it though. Those on both sides of the ocean, who “have a clue about trading”, don't seem to agree with you or S3052 or the rest of the dark-pool dwellers regarding dark pools and their effect on price discovery, volatility, or liquidity:

http://cachef.ft.com/cms/s/0/f2f7e53c-e343-11de-8d36-00144feab49a.html

It comes from this CFA Institute report:

http://www.cfapubs.org/toc/ccb/2009/2009/13

Here is another useful snippet:

http://www.ft.com/cms/s/0/d5f8b10c-0f70-11de-ba10-0000779fd2ac.html

All you have to do is google “dark pools currency exchange distortion” to  find out more about the way "happy big guys" are riding the rest of us... 

[S3052]

I know these sites, but dont agree with their view.

Having observed the bitcoin market for 6 months on a daily basis, my only point is that the bitcoin trading has become smoother since the introduction of dark pools.

anyway I am not the decision maker, and accept either decision.

[nanotube]

Here's my take on the issue of dark pools.

There are two parties that need to be considered when thinking about the 'fairness' of dark pools. One party is the prospective buyer or seller coming in and placing a market order. For this party, the existence of dark pools presents no disadvantage, since the at-market transaction only stands to be executed at a price that is strictly better than the bid/ask spread posted in the open order book. Thus far, this is the only party that has been considered in the discussion.

The second party, is the people who place limit orders - namely the outstanding open bids and asks. When a party comes in, looks at the open orders, and places a limit order accordingly, it has expectation that say, given that a trade in amount X comes in on the buy or sell side, his order is going to be filled. If there is a hidden dark pool, however, he is operating on incomplete information when placing his order, and stands to get his order filled slower, or not at all. This is a clear disadvantage to the limit order placing parties.

Thus, the dark pools in their current implementation, essentially take from the limit order placers and give to the market order placers and the dark pool order placers. This amounts to a 'taking' from one party to give to another, and is in my opinion not a good, or fair, thing to do.
   
I think the proper way to do dark pool orders is to use "iceberg orders", wherein a dark pool order entry gets two inputs, the total order quantity, and a display quantity. This is how it is currently done on exchanges that support dark pool liquidity in addition to open order book. I quote from the wikipedia article on dark pools, http://en.wikipedia.org/wiki/Dark_liquidity

Iceberg orders generally specify an additional display quantity, smaller than the overall order quantity. The order is queued along with other orders but only the display quantity is printed to the market depth. When the order reaches the front of its price queue, only the display quantity is filled before the order is automatically put at the back of the queue and must wait for its next chance to get a fill. Such orders will therefore get filled less quickly than the fully public equivalent, and they often carry an explicit cost penalty in the form of a larger execution cost charged by the market.

Note the defining feature of this style of dark pool: the dark pool order user gets the same priority as the other limit order placers, and once his display quantity is filled, he goes to the back of the queue. This way, there is no taking from the limit order placers. The fact that this type of order would fill slower than a fully-open order, would encourage people to put larger parts of their order into the open (as would the extra charge by the exchange, if it is instituted.)

One final note: the current implementation of dark pools is NOT equivalent to what one could do with a bot, contrary to has been stated a couple times in this thread. When using a bot to continually maintain a smaller display order, one's whole order quantity is NOT prioritized over all outstanding limit orders. Rather, before the bot can react to replace the display quantity, any market orders coming through would be filled by other outstanding orders. In fact, you may notice that the activity that is achievable by a bot is exactly equal to the "iceberg orders" described above. Thus, those who would like to achieve equivalence to what could be done via botting, should vote to remove the current dark pool implementation and replace it with the "iceberg" order type.
   
These comments only apply to the dark/light order type, since the full-dark order is effectively completely separated from the rest of the market, I have no opinion on whether to keep it or do away with it, I think it is irrelevant.
   
Therefore, following from the reasoning above, I vote for the removal of the current style of dark/light order type, and its replacement by a proper iceberg-style order type, which does not take from the limit orders and give to the dark and market orders.
   
Given the available poll options, I chose the second option, namely, "keep it, but remove the dark/normal option". If there were an option to say "change dark/normal to a standard iceberg order" I would have voted for it, but there isn't.
   
I ask all participants in this poll to consider the above, and vote for either option 2 (remove dark/light, keep full-dark), or option 3 (remove both), if you agree.

[Keefe]

That's an interesting concept. I hadn't heard of iceberg orders before. It seems like the functionality is exactly like a bot with no latency. I see it as a way to bring such bot functionality to everyone, possibly for a higher fee, instead of only to those skilled at coding and with access to a reliable server.

I'm not sure it will satisfy all current dark+normal order users though, since they could miss out on large market orders that are placed in one piece. But that's the cost of hiding one's size. It seems fair enough.

[toffoo]

First off, let me thank you for posting this interesting and important topic here for the community to discuss.  I'm glad to see you thinking deeply about making any change to the dark pool option and using this forum as the mechanism for ideas and feedback.

When I first saw this topic posted, I thought about it pretty deeply but couldn't think of an ideal solution so I voted "leave it as it is".

Now that I've read about nanotube's iceberg order idea, I think that it is the best compromise and if it were one of the offered options I would vote for that.  

Let me raise a few points here that I didn't see posted previously...

First, Mt.Gox is by far the best and most liquid BTC/USD exchange in existence at the moment and provides a crucial function to the community and an increasingly important role in the future growth of Bitcoin.  We should all be cognizant of how it got to this position and should not take the decision lightly to change it.  To some extent, "if it ain't broke, don't fix it".

Second, the question of yes/no/how to dark pools has already pretty much been answered by existing electronic financial markets in the world.  We should learn from them, what they have done and how they have implemented it.  The bottom line is that pretty much any electronic market in the world has a dark pool of some sort, and if they don't, third-party off-exchange dealers quickly offer them.

Third, thinking for a moment what is best for Mt.Gox the exchange, rather than for the community of buyers, sellers, and traders, if we were to shut down the dark pool, what's to stop somebody else from opening another one?  Given that Mt.Gox's complete order book and trade history are totally public information in real-time, what would stop me or anybody else from opening a 'darkmtgox.com' to offer dark pool trading based around Mt.Gox's publicly posted prices?  As long as some traders feel dark pool trading is useful, it's almost a certainty this would happen.  I don't think this would be good for Mt.Gox or the community in general to fragment the most liquid market we have.

Fourth, I think the most pressing issue with the BTC/USD market at the moment is the volatility of the exchange rate and lack of liquidity for large trades.  If Bitcoin is going to make it big, we cannot continue to have weeks where the value of a Bitcoin drops (or jumps) by 50% or where orders of 10k BTC take out all the posted bids on the exchange.  If this is the most pressing issue, why are we considering removing something that clearly increases liquidity and decreases volatility?

As mentioned earlier in this thread, the way to increase liquidity and dampen volatility of any electronic exchange is to encourage the participation of more market-makers, arbitrageurs, and speculators.  These are generally limit-order traders and, as rightly pointed out by nanotube, are really the only group who are hurt by the existence of dark pool orders.

With these points in mind, I think the only sensible change to make is to look into nanotube's iceberg order idea.  It is a good comprise that balances the interests of both large traders and liquidity providers, while avoiding any disruption or damage to Mt.Gox's current success.

If we make any change at all, it should be that, and the next question becomes the details of the implementation...

[MagicalTux]

At this point, votes are:

Keep it as is    19 (29.7%)
Keep it, but remove "dark+normal" option    7 (10.9%)
Remove it    35 (54.7%)
Limit it to specific users    3 (4.7%)

I'm resetting the votes and adding an option for nanotube's "iceberg order".

[imanikin]

Will the iceberg option "carry an explicit cost penalty in the form of a larger execution cost charged by the market"?

[imanikin]

Please correct me if i misunderstood: if the iceberg option is implemented, the dark-pool-only option will still exist. That means that the MtGox Bitcoin price will still be distorted, because some of the largest funds will be able to skirt the fundamental forces of supply and demand in the price discovery at Bitcoin's main exchange.

Then my vote is still to remove the dark pool, and keep things simple in Bitcoin's natural style. One of the main reasons Bitcoin was invented was to give people an alternative to the corrupt manipulated monetary and exchange system that exists - not to become just another fancy extension of it, with all of its underhanded, hypocritical tricks and double-standards...

From the Main-Street perspective, imho, the biggest concern and impediment to widespread adoption is not the Bitcoin market volatility; rather it's a question of trust and suspicion that Bitcoin's market value is being distorted and manipulated by the same traditionally crooked entities we all know so well...

As already stated, dark pool artists and other large cheaters have plenty of resources to open dark exchanges, create bots, and find innumerable ways to cheat the markets and the rest of us. (Bernie Madoff – one of the founders of NASDAQ – proved that for all times...)  Let them do it in their own dark and shady places...

Let the Bitcoin price discovered at MtGox – Bitcoin's flagship exchange – be free of dark pool's distortion, beyond suspicion and reproach. 

[BitterTea]

Wow, spoken like a true politician. Lots of fear mongering, no facts.

[Psychoactive]

At this point, votes are:

Keep it as is    19 (29.7%)
Keep it, but remove "dark+normal" option    7 (10.9%)
Remove it    35 (54.7%)
Limit it to specific users    3 (4.7%)

I'm resetting the votes and adding an option for nanotube's "iceberg order".

MagicalTux, to whom will the iceberg order be open ?

[Cablesaurus]

There is no reason to remove something people can just accomplish with bots. That simply would further the gap between the extremely tech savvy and the "general public."

The Bitcoin community should be fast realizing that the relationship with technically inexperienced business owners, investors, and consumers should be nurtured if the currency is to prosper.

[toffoo]

Well, now we can get into the discussion of the details of the implementation of iceberg orders...

MagicTux, I'm glad to see that you've reset the poll and added the iceberg order option, but it seems you've assumed that it should just replace the "dark+normal" option and presumably the "dark only" option would remain as-is if this option wins?  Would people be happy with that?  Should the "dark only" option remain independent of the iceberg order option or should it be done away with entirely so that all orders must show at least "the tip of the iceberg" to the public order book?

One point to make that could potentially explain the initial blast and ongoing popularity of the "Remove it entirely" option in the original poll is that, as pointed out by nanotube, it is limit-order traders who are the only ones really hurt by the "dark+normal" option.  As potentially more frequent and more sophisticated traders, they are probably more likely to be following this thread carefully and voting, than the casual, occasional trader.  Also, the very casual, perhaps politically-inclided voter, who maybe has very little understanding of what a dark pool is and how it works, is probably also most likely to have voted for the "Remove it entirely" option.

In the original poll, I disliked the "remove dark+normal, but leave dark only" option for two reasons.  First, if public orders cannot interact with the dark pool only orders, the possibility exists for the two markets to become decoupled from each other.  For example, the best bid/offer in the public market might be 0.71-0.73 and the dark pool could be 0.75-0.80.  Since trades couldn't take place between the two, this situation could remain for some time, and most of the market wouldn't even be aware of it, because the crossed market is "in the dark".  Second, from the perspective of the large dark-only order placer, it would probably be pretty annoying to see trades printing on the public book thru your dark limit price, potentially thousands of BTC, and not participate in any of that volume because your order was left as "dark".

How often are "dark only" orders currently used?  Apart from MagicTux we cannot really be sure, but to put some data to this discussion, I ran a screen of the publicly available Mt.Gox trade reports.  Assuming that for a "dark only" order to get done, a trade report of at least 1000 BTC will have to be printed.  (Of course public, non-dark trades of 1000+ BTC and "dark+normal" trades could also occur, so these results are only potentially "dark only" trades.)  For the first three months of this year, I found about 1000 reported Mt.Gox trades of 1000 or more BTC, with many reports of exactly 1000 BTC and the largest being about 17,000 BTC.  So, I think it's fair to say that the "dark only" option is probably currently being used and is responsible for a reasonable portion of volume.

I personally think that it would probably be okay to leave the "dark only" option along side the iceberg option.  Neither casual market-order traders nor sophisticated limit-order traders would be helped nor hurt by the existence of the "dark only" orders.  Large traders would have the option to use "dark only" orders, with their potential downsides mentioned above, or iceberg orders.  Likewise, as long as iceberg orders are an option, I wouldn't be too bothered if "dark only" orders were eliminated entirely.


Now, as for the implementation details of iceberg orders, I have a few ideas:

First, for them to work properly I think we first need to fix the "minimum tick size" for Mt.Gox orders.  In fact, at the risk of getting side-tracked, if I was in charge of Mt.Gox development, I think this would be the order of my current priority list:

1. continue improving/automating bank transfers, PayPal, money movement, etc.
2. fix the floating point issues with USD and BTC balances and implement a minimum tick-size for orders
3. re-implement the WebSockets (or other real-time push) interface for bid/offer/last and market depth
4. figure out what to do with the dark pool
5. margin trading, options, etc.

As the wikipedia description points out, an important aspect of the iceberg order is this concept of the "queue" and price/time order priority.  In the current state of Mt.Gox, I do not really see various limit-orders queueing up in time order at fixed prices.  Because the minimum order tick size is so small, or undefined (is it 0.0001 or 0.000001?), limit orders currently stack in front of each other almost exclusively in price order.  If iceberg orders were implemented without changing this, it would still allow iceberg traders to step in front of limit-order traders and "penny" (or "teenie", if you're really ol' skool) them just like with "dark+normal" orders.

I propose a minimum tick size of 0.001.  This would allow ten spots for orders to queue up between the standard "big figures" of say 0.72-0.73 that we are used to seeing.  Implementing this would actually solve two problems.  It would allow for iceberg orders to function properly and also prevent the problem of bots or other speed traders from "pennying" limit-orders.

Will the iceberg option "carry an explicit cost penalty in the form of a larger execution cost charged by the market"?

What this means is that you'll be less likely to get your entire order done at a given price if you select the iceberg option because other public limit-orders will get a chance to participate at that given price (if a minimum tick size is implemented, and they are queued up there).  This encourages large order traders to leave a greater portion of their order "in public" and prevents them from "robbing" (entirely) limit-order traders.


Second, I propose that anyone can use iceberg orders, the commission structure is the same (no additional fees), and the minimum order size for an iceberg order is 500 BTC.  (i.e. the first 500 BTC "tip of the iceberg" will be shown on the public order book and anything beyond 500 BTC would be hidden)  Why 500 BTC?  In my experience this is about the size that begins to "move" or get a reaction out of the public order book.  And it would allow more traders to use the iceberg option than the current 1000 BTC minimum dark pool option.

[MagicalTux]

The idea so far in case of implementation of "iceberg"-type orders would cause dark orders to stay completly separate from the rest of the market, and iceberg orders to appear.

The things that I'll have to define are:

• The extra fee for iceberg orders
• The minimum visible part (in %)

The idea is that there will be no minimum for placing iceberg orders, so anyone will be able to place one. The dark pool would then be something totally unrelated.

[nanotube]

There is no reason to remove something people can just accomplish with bots. That simply would further the gap between the extremely tech savvy and the "general public."

The Bitcoin community should be fast realizing that the relationship with technically inexperienced business owners, investors, and consumers should be nurtured if the currency is to prosper.

the current implementation of the dark/open order cannot be accomplished with bots. see my post above.

[nanotube]

toffoo, addressing some issues you raise.

re: dark-only orders being separated: indeed, they are completely separate, basically equivalent to bitcoin-central being separated from the OTC market and each being separated from mtgox. so indeed prices could drift between them, no different as they can drift between exchanges. my point is that since dark-only is essentially a separate exchange... there's no reason for me to even worry about what goes on there, if i don't want to use it.

re: minimum price increment: the front-stepping by tiny fractions of a cent, using bots, is an issue that is exactly equivalent, whether we are talking about regular limit orders, or iceberg orders. hence, it is, IMO, something to be discussed separately, outside of the dark pool thread.

re: extra cost of iceberg orders: i have no problem if in addition to the 'implicit cost' of forgoing priority for the dark portion of your order, the market raises the fee for the iceberg order type by a few tenths of a percent. together with the implicit cost, this should serve as sufficient discouragement from use of dark pool without good cause.

[Keefe]

FYI: The current dark-only or dark+normal minimum is $1000, not 1000 BTC, for both buying and selling.

[toddbethell]

I would like to change my vote to REMOVING Dark Pools. Iceburg trading looks appealing and thoughtful, but Bitcoin is different. At this point of a fragile market I prefer to see trading based on fundamental utility, supply and demand.
Dark pools are clearly to the advantage of large professional traders who want to have their cake and eat it too. In my situation I would use it to try and prevent a precipitous price fall for the sake of my customers. Keep in mind that Bitcoin will be subject to credibility attacks. If dark pools or Icebergs remain I can foresee a government entity or NGO tasked with causing illogical market swings to slow down Bitcoin appreciation with countercyclical behavior (this seems visible in the charts now). It only takes one from some obscure agency in any number of countries who would have an interest in making Bitcoin appear unstable. Of course in the face of genuine consistent global demand, they would run out of Bitcoins eventually and get run over by the market (lets hope so). And we all know, (THEY CAN'T PRINT MORE).

[Vandroiy]

Nanotube is correct.

Also, Iceberg orders should be added for a simple reason: they can be achieved by using bots anyways!

Thus, NOT having iceberg orders is actually a current weakness of mtgox. Independent on the whole dark/semi-dark discussion, the feature should be added.

[imanikin]

Wow, spoken like a true politician. Lots of fear mongering, no facts.

Unlike you, i've already cited my facts earlier in this thread, and showed you where to find more. You're the one being a peanut-gallery, soundbite politician, but from another party – the Wall Street Party.

We all yet again saw in 2008 how unpolitical that party is: during the good times “get the government out of the way so we can rape and pillage. ...no, we meant create investor value.” 

When the crap hit the fan the same too-big-to-fail artists ran right to the politicians to save their big fortunes at taxpayer and small investor's expense...

The same arrangement is already appearing in Bitcoin. Now that times are reasonably good, the same large professional investors want the latitude to hoodwink the small amateur ones via manipulation tools such as dark pools.

If Bitcoin ever comes under attack, the same dark pool dwellers are already making plans to ask the same small investors to mine Bitcoins “at a loss to protect the network” (and their large fortunes...) 

[nanotube]

<snip>

i understand your concern... but trying to prevent dark pools is like alcohol and drug prohibition - it sounds good on paper, but it'll never work. every trade on bitcoin-otc is a 'dark pool' trade. every time someone buys on bitcoin4cash, it's a 'dark pool' trade - inasmuch as the bids and asks aren't visible, nor are trade amounts. so the "full dark" pool on mtgox is really nothing different - it is a separate market, like any other direct p2p exchanger.

further, the iceberg-style orders, are exactly what can be achieved with a trading bot. so in fact, rather than giving an advantage to the big player, they spread it to the small player. since normally, only the large player would find in worthwhile to invest in running a bot, but the iceberg order type opens this strategy up to everyone, including the small players, iceberg in fact levels the playing field. so if your goal is to level the playing field between large and small players, you should in fact be in favor of the iceberg orders.

the only really problematic order type, imo, is the current dark/light implementation, since as i describe in my earlier post, it disadvantages regular limit order placers. and i personally advocate for it to be removed (and replaced with iceberg).

[imanikin]

i understand your concern... but trying to prevent dark pools is like alcohol and drug prohibition - it sounds good on paper, but it'll never work. every trade on bitcoin-otc is a 'dark pool' trade. every time someone buys on bitcoin4cash, it's a 'dark pool' trade - inasmuch as the bids and asks aren't visible, nor are trade amounts. so the "full dark" pool on mtgox is really nothing different - it is a separate market, like any other direct p2p exchanger.

Well, if the Bitcoin world is already full of dark pools, and the one at MtGox is such a trifle, whose functionality will be duplicated by bots according to others here, then MtGox can only gain in trustworthiness by abandoning it.

It can say, “Look at that dark pool world out there! Here at MtGox, we have a completely clear, well-lit pool!”

The reason so many dark-pool dwellers want it to remain, is because it's not really a trifle that you present it to be, and is not as you put it “essentially a separate exchange." That's clear from the fact that a separate exchange would have its own pre-trade volume and bid/ask metrics, which would not be aggregated into post-trade MtGox metrics.

The dark pool is designed specifically to obfuscate those metrics, and allow dark pool dwellers to avoid the lumps of price discovery participation taken by open traders, yet get its full benefits, as if they are trading outside MtGox. As toffoo said, those metrics  would be “decoupled” from MtGox metrics pre-trade, and would only be aggregated into the metrics post-trade.

That's a classic, definition, real-time price discovery distortion of the pre-trade information at Bitcoin's main exchange.

In this thread i have already provided data that the majority of CFA Institute surveyed professionals (70%)  - both in Europe and US - consider dark pool operation “problematic” for both price discovery and market volatility. They operate in a world of exchanges where iceberg pools already exist.

[AbeSkray]

I would like to change my vote to REMOVING Dark Pools.
...
In my situation I would use it to try and prevent a precipitous price fall for the sake of my customers. Keep in mind that Bitcoin will be subject to credibility attacks. If dark pools or Icebergs remain I can foresee a government entity or NGO tasked with causing illogical market swings to slow down Bitcoin appreciation with countercyclical behavior (this seems visible in the charts now).

I understand the argument against dark+normal, but I don't understand the argument against pure dark pools. The argument for dark pools is that they help keep market prices more stable -- large buy/sell orders can be placed without causing the market to swing up or down in reaction.

Maybe I'm not connecting the dots, but I don't understand how a government entity could cause market swings using dark pools on Mt Gox. If Mt Gox decided to remove dark+normal trading and keep dark pools, wouldn't normal trades and dark pool trades be separated into two different markets? Could someone please elaborate or explain the potential attack vector?

[wb3]

Ok, I'm a little late to the subject but here are my thoughts.

DarkPools will exist. It is natural and IRL companies use them through an ECN to exchange stocks, bonds, etc... But they don't exist on the main public exchange and are separated and for good reason. They keep the "Exchange" honest and provide a level of Trust to the customers.

Imagine if an Exchange had advance knowledge of these DarkPools and no one else did, even the DarkPoolers. No one would ever know or even be able to compete with this advance knowledge. Not making an claims of MagicalTux's honesty or his future employees, but when one has an advantage usually with time one takes advantage.

Now when more than 1 (ONE) exchange becomes common place, then we can talk about DarkPools but until then keep them off of the 1 (ONE) and only good exchange that has volume.

As far as DarkPool referencing the current rate for their orders, yes they will but to get a lower price than what is being traded. If you are going to Buy 10,000 BTC or 56,000 USD worth of BTC, you want a Prime Rate. The Seller also wants to offload at a set price with out driving the price down. DarkPools have an advantage that others don't.

Lets assume you have bought the 10K BTC at $5, now instead of offloading it all and driving the price down, you slowly trickle the amount out at MTGOX Last of $5.6 as the order-book fills.

This will at least net you 11% in a couple of days at current volume. It will also give the impression of the market being stable when actually one order is doing it.

Once cashed out, you have $62,160 - $56,000 = $6,160 profit. and do it again. Once this is done about 4.5 times, your original investment is safe, and you are now working with Other Peoples Money.

Off course, some other DarkPooler, will be doing this and cut profits a little. However, there is at-least ONE who can see all of it. And most don't even know who 'HE' is.

If this much trust is expected from others, and even talk of "identifying" for DarkPools, it is time for MTGOX to "Identify", properly register the LLC in Delaware, and properly have a Registered Agent. At least for U.S. business, but without that, there is no MTGOX.

Again, my intent is not to disparage but to try and convey that if the BitCoin is to survive in an Exchange, that Exchange will have to be OPEN. It is to MTGOX's advantage to be open because people are loosing lots of money. This always brings lawsuits. It is time to get in front of the curve.

Best Regards,

[cablepair]

At this point I do not trade at a level where I would really use DP, but it does not look good to people who do not understand it, and when it comes to trying to win over the public on this whole bitcoin thing DP is going to make it more difficult.

I have read several bad press items reviewing bitcoin in a unfavorable way, they were all incorrect and misinformed, but features like dark pool trading make the whole thing even less easy to swallow by your average joe.

[BitterTea]

At this point I do not trade at a level where I would really use DP, but it does not look good to people who do not understand it, and when it comes to trying to win over the public on this whole bitcoin thing DP is going to make it more difficult.

I have read several bad press items reviewing bitcoin in a unfavorable way, they were all incorrect and misinformed, but features like dark pool trading make the whole thing even less easy to swallow by your average joe.

Dark pools are not something unique to Bitcoin. http://www.forbes.com/2009/05/18/dark-pools-trading-intelligent-investing-exchanges.html

[cablepair]

im aware of that

however your average joe does not need to trade on the stock market in order to use the USD
and that average joe will never get exposed to DP

but at least at this point in time if that average joe wants to get involved in BTC he is going to need to trade it and going to be exposed to DP at some time or another.

I personally have nothing against it, but people seem to be automatically against anything they dont understand (unfortunately) and DP is one of those pseudo ugly things that will make it difficult.

[BitterTea]

im aware of that

however your average joe does not need to trade on the stock market in order to use the USD
and that average joe will never get exposed to DP

but at least at this point in time if that average joe wants to get involved in BTC he is going to need to trade it and going to be exposed to DP at some time or another.

I personally have nothing against it, but people seem to be automatically against anything they dont understand (unfortunately) and DP is one of those pseudo ugly things that will make it difficult.

It is not necessary to use MtGox to exchange USD for BTC, and it will be increasing less necessary as time goes on.

[cablepair]

ok

let me put it this way

as of the way things are right now, if you want the best trading price (and the best trading experience IMO) and if your 95% of most people who are just getting into mining right now and want to cash out some btc.....


your going to use MtGox

no its not 100% necessary but we are talking about likelihood here and we are not talking about the future we are talking about right now

my only point is as miners and traders we have to sell this whole BTC thing to the world. Its each and every one of our jobs, and in my humble opinion dark pool trading is one of the things that is going to turn people off...

and BTC has been getting a lot of bad press lately so I just think that getting rid of dark or converting it to iceberg is a great idea little things like this are going to make the world more accepting especially at this time in the game where to really be engaged you in the BTC world you need to be engaged in trading of some sort. (even for the average joe like me)

[cypherdoc]

dark pools should be removed.  they violate completely the objectives of the btc community

[BitterTea]

dark pools should be removed.  they violate completely the objectives of the btc community

You're projecting your subjective value judgements onto everyone else.

What are these supposed objectives and in what way do dark pools violate them?

May I also remind you that MtGox is a private enterprise and you are free to not use it if you do not agree with the way it engages in business.

Fucking authoritarians.

[wb3]

dark pools should be removed.  they violate completely the objectives of the btc community

You're projecting your subjective value judgements onto everyone else.

What are these supposed objectives and in what way do dark pools violate them?

May I also remind you that MtGox is a private enterprise and you are free to not use it if you do not agree with the way it engages in business.

Fucking authoritarians.

Absolutely correct, He is a Private "Enterprise", he is using an LLC to exchange funds from currencies. He is now subject to "Laws of the Land", congratulate him on his success. However, he is now a business, not some guy conducting a service for a fee in relative anonymity. Regulations will be imposed on him, if not buy the Law then by "others".  Do you honestly believe people will put 50K or more into this service without "some" knowledge. Does everyone have the same knowledge?  No, the time is approaching where we will see the true intentions. Either full open public disclosure, or cut and run. The cut and run would cause irreparable harm to BTC, so lets look for the prospectus sort of speak.