We can each simulate a handful of people.   Clearly me playing a single forex trader would be silly, since I could refuse to sell anything below an absurd price.  I'd do it by playing perhaps three traders who are making reasonable, competitive moves.

Their price is sticky enough that we can assume that it'll stay constant over the amount of time we'd simulate (which would only be a few days).  The goal of the buyers would be to start with USD and buy M&Ms through RC within 10% of the USD-equivalent.  For this game, simulating them at a fixed USD value would work fine.

That's just the starting conditions.  From there we'd trade it out to a few players until the market's functioning and those players have seeded your bot with enough RC to get it running.

At any given moment you'll have a fixed floor based on how much capital the bot has access to.

Regardless, your model requires that people donate the full value of the floor, at whatever level.  The problem is that if that floor is anywhere near the current trading price, the amount of donations required would be about the BTC market cap.  That's asking for an awful lot of donations, and it's not something we can just do once: we'd have to do it on an ongoing basis to keep up if the BTC grows.

Nope.  I can make the market price fluctuate wildly, even with rational buyers just trying to do commerce.  If I corner the BTC market, I can force it to $10 per coin by limiting supply.  The M&M buyers will buy 0.2RC, purchase their M&Ms, the merchant will sell back to USD; and it can continue on in this fashion indefinitely until I release some more RC and let the price fall.  Even if the forex guys get out of the market for a bit, the M&M buyers can't trade the price down to USD$0.1, because they need to hold some value in RC at least for a little while (since wiring money to the exchange is slow so people do it well ahead of time, transactions have to confirm, the merchant may not immediately dump the coins when he receives them, etc; figure it's a 3 day cycle at minimum.), and the next buyer still needs to get his transaction going.  My three forex guys won't net any aggregate money doing this, though individuals may come out ahead or behind.

Now consider:  This isn't a contrived scenario, because this exactly what's occurring in the BTC market right now.  The majority of coins are buried somewhere and not moving.  The ones that are are circling around at high prices, mostly between forex guys, but a little bit to people who're buying high-value coins to complete their transactions.

Sure, the market will settle out at some price...  If it's above $1, your bot is irrelevant.  If it starts to drift down, your bot will act as a floor, it'll buy up some of the excess, and the market will take over again.  Unfortunately, if the market keeps wanting to drift down, you'll keep buying up more and more BTC/RC until you basically have lost most of your USD and are holding most of the BTC/RC.  If the few remaining players at that stage decide they want out, they dump the remainder of their holdings in exchange for the remainder of your USD.

  You could sell all your Coins to me, but likely I would be unwilling to pay 1:1 for them when the rest of the market clearly values them at a lower price.  Really, you would end up with no coins and maybe $20-30 USD, $60 tops.

Yes, we'd clearly have to simulate a few of each class of player, all competing, if it's going to be at all realistic.  That's why I'm a little reluctant to actually do this.  It'd require a whole lot of paper pushing. 

They can't if I've forced the price up to $10.

If I'm forcing the price high by limiting supply, the buyers will eventually buy at that price so they can complete their transactions.  Sure, I'd love to hold out for $0.10 bitcoins to buy bitmunchies...  But if I want my bitmunchies today, I have no choice but to pay $8.50/BTC.  And I will, since it doesn't affect the cost to me, which remains the same in USD.

Well, as best I understand it, you could provide something of a floor on the BTC, but it would require an unreasonably large investment: your bot would need a fund that's a majority of the market cap.  I can't imagine that you're ever going to get that much donation, short of someone very rich doing a very nice thing.  Even then it'd become irrelevant if BTC is more widely adopted, since the price will go up (you really can't prevent that), and you'd need more donations unless your floor is to become an ever-diminshing fraction of the BTC's price.


I don't agree that my theory's wrong.  I think it's clear that one of us misunderstands the other, and I do not concede that the error is on my side.