Quote from: kosmost on July 29, 2014, 09:23:12 PM

Quote from: Chargin on July 27, 2014, 07:15:49 PM

To elaborate on the above re exchanges trading Karma against BTC in sets of 1000.

Exchanges: Price Karma in lots of 1,000 in Bitcoin

What does this mean?

Instead of Karma being put on the market as a single Karma it could be sold in sets of 1,000. This still means you can sell units of 0.00001 Karma, just not 0.00000001 Karma.

This is very distinct from decreasing the number of Karma via a hard fork although it has the same advantages and could be done around the same time without actually having to change the amount of Karma in existence.

The 0.00001 Karma (being the minimum tradable fraction) of Karma under the proposed change is worth approximately $0.0000000015USD at todays market rates.

When I last checked there was an actual minimum limit on Mintpal for Karma sales of around 10,000 Karma however this may be based on price and could be there as a transaction spam / exchange fee avoidance countermeasure.

Basically instead of exchanges listing Karma for sale as follows:
Amount: 0.00000000 (limit 8 decimal places)
Price per Karm: 0.00000000 (limit 8 decimal places)
Total: 0.00000000 (limit 8 decimal places)

It would be:
Amount: 0.00000 (limit 5 decimal places)
Price per 1,000 Karma: 0.00000000 (limit 8 decimal places)
Total: 0.00000000 (limit 8 decimal places)

Under sell orders/buy orders this would change from:
Price (BTC) / Karm / BTC
To:
Price per 1,000 Karma (BTC) / Karma / BTC

The amount of Karma displayed in accounts should be kept the same.

Why the change?

As at the time of writing this 1 Karma is selling for 0.00000002 to 0.00000003 Bitcoins. The smallest fraction of a Bitcoin is called a Satoshi. Karma is trading at 2 to 3 Satoshi. This means theoretically, on the spread, you can either sell your Karma then rebuy 50% more or you can buy Karma and then sell it for 50% more or similar. This will occur no matter the price of Karma, just as the price goes up the margins will get slimmer as the market becomes more granular, ie the difference between prices is less. Even at 40 to 41 Satoshi there is a margin of 2.5%, roughly 10 times more than the exchanges themselves take.

This isnt healthy for the market. The only way these orders can work is if the price is stable enough for you to both complete your sell order and your rebuy order.

This encourages people to attempt to lock in Karma between a certain price range and also encourages the creation of wall. This is because some people may be putting up a sale expecting that they can then rebuy at a fraction of the price, which may even be on alternate market, for example a Litecoin market.

When price movement is hampered there is less volume in the markets and less interest in Karma.

Benefits of change, buyers/sellers:
Can buy or sell higher at market rates without having to either wait in line or sell at far less than it would cost to buy or vice versa.

Benefits of change for exchanges:
More market activity caused by the change means more turn over and more exchange fees.

As one of the first adopters, your exchange will both have Karma for sale at cheaper rates and people will be able to sell Karma for more. This will increase volume on your market for people that want to trade at market rates and not have to wait in line for their trade to be executed a decent price.

Implementing the change may be subsidised by the Karma community.

Limitations to current countermeasures to the problem:
Under the current system alternate markets (primarily Litecoin) are being used to trade Karma at a more granular rate while the price is being locked in on the Bitcoin market.

However, this is considered by many to be an inconvenience and still only offers limited protection against sell and buy walls that form on the Bitcoin market.

Suggested implementation for exchanges:
1. Make the relevant notices to customers;
2. Suspend trading on the Karma/BTC market;
3. Back up data;
4. Make the relevant changes to the displays on the market order page;
5. Cancel all orders on the market;
6. Make changes to the order database if required; and
7. Put the buy/sell orders back onto the market to 5 decimal places instead of 8. This should result in a very small decrease to buy/sell orders on the market.

Other solutions:
Mintpal is the only major exchange for Karma that would have trouble implementing this because they have already opened the Bitcoin/Karma market. New exchanges (or exchanges without Karma markets) could implement this system without having to worry about current orders.

+1. A good suggestion. What would the downsides be to doing this?

I can both see it going very well and very bad.

Buying lots of 1000 coins could generate more trades, because of a finer granularity in price.
But at the same time generate a lot of confusion.

I'm of the opinion that we should leave it as it is.
The price will go up 10x because of the qualities of the coin network (both the technical aspects and the community).
And then we will not need buying/selling lots of 1000 anymore.