[ajuc]

Isn't bitcoin easily manipulated? Let's say I have 1% of all bitcoins. I sell half of them, wait for the price to fall, and buy back to have 1.1% of all bitcoins.

Repeat each few weeks, and let's say there's 20 people that realized this and have enough bitcoins for this to be feasible.

End result = currency that's mostly owned by a few people. And when everybody realize this - bubble collapses.

At least that was my train of thought when I first learnt about bitcoin and now I hate myself for being too risk averse :)

[KGZotU]

You might working with an oversimplified model of the market. If you have 1% of all bitcoins, you're not going to be able to sell them all at the highest standing offer-to-buy (OTB).

If the highest standing offer to buy is at $700, it's not going to be an offer to buy all 120,000 of your BTC. It might be an offer to buy 100BTC. So you sell 30BTC at $700 and then move on to the next lowest OTB, which might be 20BTC@$699.95. You walk down a line of highest OTBs and the new market price is the highest OTB that you didn't manage to exhaust. The price is lowering as you sell out.

Similarly, you're not going to be able to buy in with your entire pot at the lowest standing offer-to-sell (market price). You'll exhaust the lowest offer-to-sell, then move on to the next highest offer-to-sell, etc. The price is rising as you buy in.

Assuming that the market is efficient, the decrease in price as you sell out and the increase in price as you buy in will be perfectly balanced against each other, and any extraneous gain or loss will reflect changes in market information that occurred while you were executing. Of course the market is not in practice perfectly efficient, but that applies to any other traded commodity.

[fat0wl]

heh so then how come when Bitcoiners are quoting the price of the ecosystem they always take the number of BTC * the highest standing OTB...

i know thats kindof a tangent but.... seriously, i'm curious

[pfisch]

That is how every commodity market in the world works....

How do you think an exchange rate between say USD->EUROS is decided? By the last trade price....

[fat0wl]

Yeah but nobody insists

last trade price multiplied by number of units in circulation = total value of ecosystem

Bitcoiners do this CONSTANTLY

[pfisch]

No, this is what everyone does for all equities. It is called the market capitalization, you probably hear it called market cap usually though.

http://en.wikipedia.org/wiki/Market_capitalization

[fat0wl]

a proxy for the public opinion of a company's net worth

vs.

current trading price of something with no intrinsic value

[anopows]

I'm no expert in these fields.

But I guess it wouldn't work because if you sell a lot of bitcoins you couldn't sell all at the same price.

Eg. you want to sell 10k Bitcoins. The price is 750$ and the first 50 Bitcoins you can sell for 750$. Now after that there are not enough limit orders anymore available for that price category. So you would sell a lot of bitcoins for much less than the price was originally when you started selling.

And vice versa if you buy them. So I would doubt that you make a profit (because you can't sell/buy at price x and then afterwards the market price reacts. The market price reacts already while buying/selling in large quantities).

As I see it it's the same principle as if you own a large part of a stock, there you could argue the same.

[fat0wl]

There are actually common market manipulation trading tricks (will get you busted immediately in the stock market) that people use regularly in Bitcoin.

Read the section in this article titled Enter the tape-painting “Shark Squad”. I've seen a few similar articles that document how simple it is to do market manipulations in Bitcoin that would get you immediately cuffed on Wall St. And it doesn't even take that many parties to pull them off! Because Bitcoin is actually transacted sooooo little.

I can't say for sure though. There are a lot of debates about transactional volume but impossible to tell because some of the big money Bitcoin holders just buy/sell to heighten the perception of its popularity.

http://falkvinge.net/2013/09/13/bitcoins-vast-overvaluation-...

[qnr]

To see how absurd this logic is, start with buying bitcoins first:

1. Buy 1% of bitcoins

2. Price increases

3. Sell your bitcoins for more than you bought them

4. Goto 1

[fat0wl]

yeah but people shouldn't be getting involved with a currency just because it's so scammable.

I commend you for not getting involved. I think Bitcoin speculators are immoral. Someone is going to end up footing the bill and it will ruin many lives.

[coconutrandom]

Don't invest what you cannot afford to loose.