Quote from: ChuckOne on August 22, 2014, 10:46:15 PM

Quote from: CoinHoarder on August 22, 2014, 10:34:45 PM

It works much the same that it does in any free market. Manipulators are taking a risk by manipulating the market. The manipulators are taking a risk that the public recognizes the manipulation and the market immediately corrects, causing the manipulator to lose a considerable amount of money. If they do not recognize this manipulation and see it as a normal market movement, then they stand to profit from it.

You question as to what would someone stand to gain from manipulating the bitUSD market is exactly why I think bitassets will work, because there is really no incentive at all. Unlike Bitcoin being traded in the free market, people can easily look up exactly what the value of the US dollar (or Btcoin, gold, etcetra) is relative to BitsharesX by comparing the current market value of the BitsharesX/USD (or BitsharesX/BTC/USD) trading pairs on other exchanges. It will be much easier to detect manipulation of a bitasset when you know almost exactly what that asset is worth in the real world markets from thing like data aggregators and market feeds.

You cannot prevent manipulation in the gold, Bitcoin, Or FIAT markets, but the fact it will be so easy to tell if bitassets do not equal the current value of a real world commodity is the reason why I think it is unlikely to be manipulated. Manipulation will likely be very unprofitable in bitassets due to the obvious value of the commodities traded which people can get from many 3rd party services and data feeds which come directly from those markets. Therefore, bitassets will closely resemble the value of their real world counterparts.

Ah, wait. You are talking about manipulation... Let me get this straight:

1) bitUSD is pegged to the USD basically means that traders are encouraged to trade bitUSDs according to the prices of real-world goods and services in USD

2) corrections are done by: traders simply agree on how much a bitUSD should be worth by looking at the prices of those real-world goods and services in USD

3) therefore, speculators speculating on higher or lower prices of bitUSD are not able to bring down or up the price BECAUSE the honest majority of the traders simply agreed on a fixed price

=> there will be huge sell and buy wall right below and right above the agreed upon price

Is that correct?

Yes, that seems correct. That is how the correct value of a bitasset is determined, and is likely to resemble the true value of that asset in the real world.

There is another layer on top of that though, as people can bet on the price rising or falling relative to the value of BitsharesX, and make money that way as well. So, it is not only for determining the value of an asset in the real world, but it is also for people whom would like to profit on market movements.