Before proposing a solution, maybe you should go back a step and define the following:
What is the problem you are trying to solve?
To stabilize the value of the BitCoin versus other currencies and goods/services
Then look at your solution and determine:
1. Does it solve the problem?
2. What's the cost of that solution?
3. Is 2 worth the benefits of 1.?
1) There is no solution, only measures that can be taken towards the goal of stability. Nothing ever has 100% stability, why would BitCoin be any different?
2) The cost of generating the bot, since in greater than 99% of instances, the bot will never make a purchase or sale. So, next to nothing.
3) Is it worth a small amount of investment to move towards stabilization of a market I would like to see stabilize? It seems like a good idea to me.
Until you can answer those questions there's no real point looking at the details of implementing your solution as it may either:
1. Not solve the problem.
2. Solve a problem that isn't really a problem anyway.
3. Cost so much to implement (in terms of opportunity cost and risk) that it's not worth doing anyway.
1) It is doubtful the problem can be "solved", only addressed.
2) price instability is the primary cause merchants have trouble adopting BitCoin as a standard of exchange, so I would call that a problem
3) It costs next to nothing for an individual to contribute to the bot's pool for the combined effect of greater stability, which in general protects the value and long term potential of BitCoin
You appear to be proposing either setting a minimum price on BTC (in $) (what your solution would achieve)
yup
OR pegging the BTC vs the US$ in a narrow range (what you talk about wanting to achieve). I'm not seeing how either of those is desirable.
Like it or love it, the BitCoin is currently pegged to the USD, just not well enough to do it any good. Until it stabilizes to the point where it can be used as a currency, it will only be a speculation commodity. Once the value has stabilized versus the USD, then merchants can begin offering prices for goods or services in BitCoin, and at that point the bot becomes redundant - since there is now a real market value for BitCoin besides the price in dollars.
I already discussed your apparent confusion between price and value in the newbie forum - so I'll ignore that for now. But here's a few questions for you:
As it currently stands, the BitCoin's primary value is it's price compared to USD - that's why it is so unstable, it's a speculation market.
What is the benefit of artifically trying to peg the BTC to the US$?
Do you not accept that the BTC should have its own value (and price) rather than being pegged to the US$?
On the contrary, it needs it's own value. What road will get us there? Letting it sit as a speculation market with no hope of enough stability to be used as a currency? Or trying to stabilize it to facilitate it's use as a currency with real consistent value determined by the market? How will we make it stable enough for businesses and John Q Public to accept it's use as a currency? By saying it's value should be allowed to fluctuate by a factor of 20% daily?
If the US$ falls dramatically vs other fiat currencies is it really your belief that people using those other fiat currencies should also see a fall in the value of their BTC (expressed in their local currency)? And vice-versa of course.
The bot is not tied to the USD, GBP, EUR, CNY, or JPY - with slight modification from my basic outline, it can accept any fiat currency the exchange will accept. It is merely a method of contributing purchasing power (in the form of local fiat, wherever you may be) towards the goal of setting a bottom boundary for the price. Assuming the purchasing power of fiat will decrease, the bot will adjust the location of the floor accordingly. This doesn't change the value of BitCoins, only the price.
Are you by any chance someone with a ton of early-mined BTC who would love a minimum sell price set so you could dump all your BTC at a fixed price?
I wish! I only found out about BitCoin about a month ago (after the 30$ spike and drop) If I had been an early miner, I would have saturated the market at $18 and set the floor myself at $3.
I don't believe the instability of the exchange-value of the BTC is best addressed by trying to price-fix it. The right solution is for non-speculative use of BTC to increase so that the majority of BTC use (and hence it's perceived value and price) is no longer driven by speculation/hoarding.
I agree. But here is our catch-22: Without increased stability, there is no way to accelerate adoption by businesses. Without adoption by business, there's no way to increase stability. My theory is that we can communally aggregate funds towards the goal of stabilization without removing funds from the hands of the individual, thereby lowering the amount of fluctuation in the market and accelerating merchant adoption. Until it stabilizes, speculation will be it's primary use.
If you can think of a
better way to make the BitCoin stable enough to make it simple for a business to utilize it, please, share it here.