Quote from: erk on June 16, 2013, 11:26:48 AM

Marked Making instead of just matching up buyers and sellers.

Most foreign exchange trading firms are market makers, and it seems to be totally lacking in the bitcoin world.

Hi, im not an expert on the market making field, so forgive me, but i agree that anything that would increase liquidity and volatility would be great additions.

But i'm not sure im following on how it would be implemented on a bitcoin exchange, because
- if a maket maker needs to be able to offer trades 24/7 wouldnt they need to have potentially an infinite amount of money in each cryto currency?
- unlike old world exchanges, where money can be digitial and arranged through lines of credit. The properties of cryto currencies, means the exchange must have large amounts of cold coins in each currency to allows this. Then when/if one of the currency reserve is depleated it wont be able to be a market maker for that currency.

Although if the exchange then automatically added in these market making orders, couldnt they then also manipulate the market...
Or is that the point?

Technically couldn't a existing market maker make use any one of the exchanges to execute their orders, and achieve the same thing? I mean is it really the role of the exchange to do this?

What do you think?