Really interesting article. I wonder what % of trade volume is from the bots. I read before that up to 80% of stock market volume is bots, but who knows for sure? In any case it makes me want to learn more about programming.
The stockmarket has been a botfest and increasing everyear.In the Bitcoin exchanges there are bots too. In Poloniex you can see it easily , how everytime you put an order, new orders come up for +1 satoshi.
The typical argument is that bots are good, and provide liquidity. I tend to disagree. All this money they extract comes from somewhere, it isn't just created out of thin air. The stock market functioned fine for many years without bots. I don't know what the typical scheme is for bitcoin markets, but in the stock exchanges it basically boils down to front running, and would be clearly illegal if it was not done with a computer. Some how electricity and the magic of the internet makes it ok.
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The bots trading the stock market sometimes get out of control. There was a micro crash years ago when all the prices plunged to the ground, then returned to normal in less than a second. They said it was due to the bots but nobody understood how or why they had done it. I don't like the thought that bots might start doing the same micro crashes in bitcoin markets.
That's the first time I heard of that.
Do you have a link to any articles regarding the crash?
I recall something on this too. It was in the news recently, authorities were blaming it on some British day trader ostensibly using illegal practices. Here are a few links:
http://www.forbes.com/fdc/welcome_mjx.shtml
http://www.newyorker.com/news/john-cassidy/the-day-trader-and-the-flash-crash-unanswered-questions
http://www.nytimes.com/2015/04/22/business/dealbook/trader-in-britain-arrested-on-charges-of-manipulation-that-led-to-2010-flash-crash.html?_r=0
