Quote from: chodpaba on May 23, 2011, 08:14:45 PM

Quote from: creighto on May 23, 2011, 06:22:45 PM

Quote from: wb3 on May 23, 2011, 05:34:09 PM

Interesting perspective and rational. Game Theory works good in groups, until you apply the Prisoner's Dilemma.

This is assumed to be true, but the prisoner's dilemma was recently put to the test and the results were mixed. Not all users will only do what is in their own best interests, even if they don't know the others and they are forever anonymous. Game theory is just what it says, it's a theory.

Even in the worst case scenario for a high exchange rate (all members of a cartel defect) there will still be a variety of views on what the future exchange rate will be and those members will continually bet against each other, providing a nice bubbly marketplace where traders can arbitrage.

Your Cartel scenario might not be far off. Right now there is basically ONE. But lets look a little south and see what happens when multiple Cartel's deal in the same product, they will tear each other apart at the cost of the community. This is happening with miners, it will start to happen with Exchange's as soon as there isn't a basic monopoly. However, collusion usually comes into play at first but then degrades into straight up competition as users move away.

To be frank, currently the competition is for the USD BTC. Without the USD volume, BTC is not worth much. Much like drugs, hmm...