Topic: Would it be possible to create a distributed bitcoin price stabilizer? - page 2. (Read 2009 times)
May 03, 2014, 04:37:05 AM
This exact basic mechanism is what "market making" means.
May 03, 2014, 04:12:34 AM
The price needs to naturally fluctuate such as the price of everything need to fluctuate; price control don't work, there is no substitute to market price and competition
BTW the price volatility has attracted a lot of attention and a lot of persons into buying to profit from it so it may have been a positive for Bitcoin so far
BTW the price volatility has attracted a lot of attention and a lot of persons into buying to profit from it so it may have been a positive for Bitcoin so far
May 03, 2014, 04:04:50 AM
If you had people that could invest the 2 million dollars at a time to artificially create the buy wall. But this type of price fixing doesn't seem reasonable, especially with bitcoin being able to freely be tradeable on other exchanges or person to person (which is a good thing). What would happen if the bitcoin price suddenly jumps to $1000 on other exchanges, everyone would remove their $500 buys on your exchange...or if the price dropped to $10/btc, who in their right mind would still keep a buy wall at $500?
May 03, 2014, 03:56:44 AM
I had this idea a while ago but was not sure if the incentive would be enough or whether people not using the software would have an advantage.
Basically I was thinking of a piece of distributed software with an API to the largest exchange (ie BitStamp).
The goal would be to have a huge buy and sell wall such that the price would not have huge swings during the day but a gradual move up or down. So you might have a $2,000,000 buy wall at $499.50 and a 4,000 bitcoin sell wall at $500.
So essentially, anyone buying or selling would buy or sell within that small window.
Say the sell wall starts going down because of more demand and goes down to 3,500...the price might gradually move up a penny at a time to $500.50...moving up gradually until the equilibrium is once again obtained.
The spread would be just outside of the range of the lowest exchange percentage. The advantage to the users of the software would be high volume at that rate in order to get a constant return with low risk. The advantage to bitcoin users would be a more gradual movement of the bitcoin price while still allowing the market to move the price over time.
The mechanics behind it would be that each user would be given a number to buy and sell at just outside of the fixed spread.
So user A might be given a price to buy at $499.48 and sell price at $500.01
and user B might be given the price to buy at $499.49 and a sell price at $500.02.
The software will only work for you if you set an equal amount at each price. But as people buy or sell, they will hit your prices and you will gradually make money.
The main problem I can see is people putting in their bids right above or below the price spread, though over a large volume such small bids would be minimal.
Is such a thing feasible?
Basically I was thinking of a piece of distributed software with an API to the largest exchange (ie BitStamp).
The goal would be to have a huge buy and sell wall such that the price would not have huge swings during the day but a gradual move up or down. So you might have a $2,000,000 buy wall at $499.50 and a 4,000 bitcoin sell wall at $500.
So essentially, anyone buying or selling would buy or sell within that small window.
Say the sell wall starts going down because of more demand and goes down to 3,500...the price might gradually move up a penny at a time to $500.50...moving up gradually until the equilibrium is once again obtained.
The spread would be just outside of the range of the lowest exchange percentage. The advantage to the users of the software would be high volume at that rate in order to get a constant return with low risk. The advantage to bitcoin users would be a more gradual movement of the bitcoin price while still allowing the market to move the price over time.
The mechanics behind it would be that each user would be given a number to buy and sell at just outside of the fixed spread.
So user A might be given a price to buy at $499.48 and sell price at $500.01
and user B might be given the price to buy at $499.49 and a sell price at $500.02.
The software will only work for you if you set an equal amount at each price. But as people buy or sell, they will hit your prices and you will gradually make money.
The main problem I can see is people putting in their bids right above or below the price spread, though over a large volume such small bids would be minimal.
Is such a thing feasible?
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