Quote from: nicoin on June 20, 2013, 03:36:45 PM

Touche - some element if wishful thinking from my part

And you are right at the moment liquidity is not great with markets shutting down left and right, that is probably the biggest risk.

But... there is a difference between agressive trading and manipulation also called cheating. I can't call a banker friend and set the BTC exchange rate, as we have seen in the libor, and seems to be happening with gold and forex. If I have a lot of coins I can try a big dump, small trades to influence price, etc. But it's all in plain sight and anyone doing so takes risk. So I think I meant 'central' manipulation. The equivalent in BTC world would be someone setting up a trojan in the bitcoin source code to skew the algorithms for private gain. Highly unlikely given open source nature.

The only thing I fear is HFT - I hope the community finds a way to ban or control it. Perhaps exchanges should enforce a minimum time between transactions (but very fast transaction execution), or offer a separate exchange with no limitation for the battle of the trading bots. Otherwise bot become a transaction tax as they work on both sides of the spread.

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Very liquid and without mass market manipulation - you're joking right ?

No need to fear bots. HFT in traditional markets has two components that make it nasty:
1. Algorithms are allowed to place orders with no intention to allow them to fill. In fact, if an order comes in that would fill them, they are given time to pull the order. As a human, it is illegal to place an order without the intention to allow it to fill. This is possible because of:
2. Algorithms have direct access to the actual orderbook, whereas retail traders only have access to a order queue. These orders will eventually hit the market, but the algorithms get to peak at them ahead of time and even make trades before they hit.

I don't yet see either of these problems in bitcoin. Nobody but the exchanges has access to orders before they hit the book, and any order placed is capital at risk. Playing both sides is what traditional human market makers have done for centuries and is certainly not without risk (consider what happens when the market trends in one direction). However, it is these players that provide the liquidity you so clearly desire.