Topic: market specialist (Read 1181 times)
This will be a very fun market to watch because there will be so many amateur market participants. This has to be one of the most accessible markets to the public outside of sports gambling.
A stock-market company of the same size as Bitcoin now, would have a market-specialist overseeing an orderly market. This chap would be able to go long/short on considerable margin and be free of immediate delivery requirements.
A normal trader woud have to make good on his short positions and deliver borrowed stock on the settlement day.
If the market became too volatile, or one side of the market became illiquid (eg a lack of supply), the specialist would be quite capable of physically closing the market until a more balanced order book could be produced. It's quite common for major SP500 stocks to not open for several hours (or sometimes whole days) whilst the specialist exercises his god-like powers to restore a balanced order book.
Bitcoin's behaviour from here is unique in that there will never be an official, centralised specialist with these powers. The result is likely going to be increased volatiltity.
A normal trader woud have to make good on his short positions and deliver borrowed stock on the settlement day.
If the market became too volatile, or one side of the market became illiquid (eg a lack of supply), the specialist would be quite capable of physically closing the market until a more balanced order book could be produced. It's quite common for major SP500 stocks to not open for several hours (or sometimes whole days) whilst the specialist exercises his god-like powers to restore a balanced order book.
Bitcoin's behaviour from here is unique in that there will never be an official, centralised specialist with these powers. The result is likely going to be increased volatiltity.
Which part of Bitcoin do you see as analogous to a "stock market company"? To my mind, the core network (providing payment/settlement services) is more akin to CSDs/Custodians in the securities market.
By contrast, the likes of mt.gox, etc., are the analogue to exchanges. And there's nothing to stop a wannabe market maker entering into a "Bitcoin borrowing" arrangement with a large passive holder of BitCoins and then setting up on mt.gox to sell (these borrowed coins) into other people's buy orders, and vice versa. Sure... this requires a large passive pool of Bitcoins that can be borrowed on demand but would serve the same function, no?
Quote from: CliffordM
Modern Capitalism is some way from the laissez-faire ideal
You can say that again!
I have said before that Bitcoin needs to have a crossing-network to manage the larger blocks on a daily/weekly basis
There are currently a couple bulk sellers who will help match up large buyers with their supply. But you are correct, if that supply is already accounted for or is insufficient to meet the buying demand there's inefficiency when one day a big buy occurs causing a spike and the next a big sell occurs causing a selloff. When the two could have been matched (had they known about each other) that would cause better prices for each and much less of a disturbance to the market.
CoinLab is going after this:
Quote
- Foreign Exchange Liquidity Provision
- Large Transactions
- Custom Orders / Standing Orders
- Large Transactions
- Custom Orders / Standing Orders
- http://coinlab.com/liquidity
A stock-market company of the same size as Bitcoin now, would have a market-specialist overseeing an orderly market. This chap would be able to go long/short on considerable margin and be free of immediate delivery requirements.
A normal trader woud have to make good on his short positions and deliver borrowed stock on the settlement day.
If the market became too volatile, or one side of the market became illiquid (eg a lack of supply), the specialist would be quite capable of physically closing the market until a more balanced order book could be produced. It's quite common for major SP500 stocks to not open for several hours (or sometimes whole days) whilst the specialist exercises his god-like powers to restore a balanced order book.
Bitcoin's behaviour from here is unique in that there will never be an official, centralised specialist with these powers. The result is likely going to be increased volatiltity.
There is nothing fundamentally wrong with this, and it is really quite uncharted territory. There are very good arguments against modern day specialists which say that they have excessive power to manipulate prices.
Modern Capitalism is some way from the laissez-faire ideal (where the market finds its natural levels) due to an incredible amount of regulation and central-authority approved manipulation.
Bitcoin is a breath of fresh air, and a hint at what a purer form of capitalism might produce.
This roller-coaster will get a lot more exciting yet. Enjoy the ride.
I have said before that Bitcoin needs to have a crossing-network to manage the larger blocks on a daily/weekly basis and this is something that MtGox needs to think about providing -- no-one else at this stage has the liquidity to make anything like this viable right now.
A normal trader woud have to make good on his short positions and deliver borrowed stock on the settlement day.
If the market became too volatile, or one side of the market became illiquid (eg a lack of supply), the specialist would be quite capable of physically closing the market until a more balanced order book could be produced. It's quite common for major SP500 stocks to not open for several hours (or sometimes whole days) whilst the specialist exercises his god-like powers to restore a balanced order book.
Bitcoin's behaviour from here is unique in that there will never be an official, centralised specialist with these powers. The result is likely going to be increased volatiltity.
There is nothing fundamentally wrong with this, and it is really quite uncharted territory. There are very good arguments against modern day specialists which say that they have excessive power to manipulate prices.
Modern Capitalism is some way from the laissez-faire ideal (where the market finds its natural levels) due to an incredible amount of regulation and central-authority approved manipulation.
Bitcoin is a breath of fresh air, and a hint at what a purer form of capitalism might produce.
This roller-coaster will get a lot more exciting yet. Enjoy the ride.
I have said before that Bitcoin needs to have a crossing-network to manage the larger blocks on a daily/weekly basis and this is something that MtGox needs to think about providing -- no-one else at this stage has the liquidity to make anything like this viable right now.
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