Quote from: symbols on May 20, 2012, 11:10:24 PM

In a true market-moving demand situation, the bot's supply of bitcoin would be exhausted. A similar argument would result in exhaustion of dollars to buy with in a true market-moving supply situation. However, if the bot is colluding with the exchange, then the exchange can have effective unlimited supply/demand by 'printing money' in either mtgox usd of mtgox btc subject to avoiding a 'run-on-the-bank' and trying to balance out the accounts over time.

This scenario makes a strong argument for having exchanges operate on the bitcoin network so that at least the btc side of the exchange is subject to global auditing.

-s

Yeah, it gives the exchange an enormous amount of unchecked power. Power is so easily corrupted. We need assurance that we are not getting ripped off. In the midst of a global crisis caused by financial institutions you now have to be able to verify before you can trust. As you said the exchange could be colluding with a bot they created. Or a hacker could who got in could front-run the market. For the hacker it would be a better long-term strategy than stealing directly from accounts. Milk the cow instead of slaughtering it. And Mt. Gox as well as other exchanges have been hacked thoroughly. It's a daily occurrence now.

We need transparency. One way or another.