Author Topic: BitAsset Market Manipulation Security  (Read 8618 times)

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Offline biophil

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Back to the original topic:

Do you mean data price feeds from the exchanges that list BTSX? And then using a median or average of the price? If so, doesn't this put a lot of control in the exchanges hands? Like what if they were to collude and manipulate price together?

I think any time you have price feeds that humans can exert influence on, you'll have the risk of some group out there colluding for profit. Like big banks manipulating LIBOR to make fractions of percentage points on their intraday loans... you probably just can't get away from it. However, gross feed accuracy should be relatively easy to regulate: delegates will be able to tell if someone is misreporting by percentage points and simply exclude the manipulated data.

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Offline GaltReport

There are different qualities that make up a good delegate in my opinion and they are not all required.  For example I, like many in this field, am tech savvy but have limited knowledge of advance finance.  Therefore as a delegate I am comfortable being a good player and making sure my server is secure, reliable, and cost effective.  As far as picking feeds I could probably make an educated guess.


However what would work for me, and those like me, would be a reasonably extensive list of feed sources that the users could vote on much like they vote for delegates.  Or perhaps the delegates could vote on (weighted by approval?).  This would take the task of me, and my limited economic acumen, from having to source out a feed from whole cloth.
 
I am pretty much in the same boat as you.  More of a techie and didn't know delegates had anything to do with data feeds so the simpler  it is to choose and use a feed, the better.


Offline bytemaster

There are different qualities that make up a good delegate in my opinion and they are not all required.  For example I, like many in this field, am tech savvy but have limited knowledge of advance finance.  Therefore as a delegate I am comfortable being a good player and making sure my server is secure, reliable, and cost effective.  As far as picking feeds I could probably make an educated guess.


However what would work for me, and those like me, would be a reasonably extensive list of feed sources that the users could vote on much like they vote for delegates.  Or perhaps the delegates could vote on (weighted by approval?).  This would take the task of me, and my limited economic acumen, from having to source out a feed from whole cloth.

I think you will find that many people will provide you with feeds and that all a delegate has to do is identify which feeds are solid and point their client at them.  So your job as delegate is only to evaluate trustworthiness of feeds and not the value of the feed or economic analysis.    Eventually we will make it easy for delegates to simply use the moving average as their feed.
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clout

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Offline Riverhead

There are different qualities that make up a good delegate in my opinion and they are not all required.  For example I, like many in this field, am tech savvy but have limited knowledge of advance finance.  Therefore as a delegate I am comfortable being a good player and making sure my server is secure, reliable, and cost effective.  As far as picking feeds I could probably make an educated guess.


However what would work for me, and those like me, would be a reasonably extensive list of feed sources that the users could vote on much like they vote for delegates.  Or perhaps the delegates could vote on (weighted by approval?).  This would take the task of me, and my limited economic acumen, from having to source out a feed from whole cloth.

Ggozzo

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Perhaps an ATR could be used. Average True Range. Put caps on ATR at; ATR*200% and ATR*-200%

Of course the percentage could be changed. A cap based off ATR would be defined and less volatile over time.
« Last Edit: July 28, 2014, 06:26:22 pm by skyscraperfarms »

Ggozzo

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What other sources? I was assuming that bitUSD would be pegged to BTSX since the path to liquidity is through BTSX in one form or another.  In this system the only way in and out is through BTSX.

Are the bitAssets going to be able to be sold on external exchanges?

I believe what BM is referring to, is the fact that there will be some arbitrage between the exchanges, as always. And prices on BTSX are likely to follow, not lead, however if BTSX becomes too big, then following is no longer relevant.

I just don't see any other sources for data feeds in pricing besides the exchanges. Otherwise Delegate XYZ could choose an arbitrary number on what they think the price should be, which would not go over well and result in firing. So I was trying to figure out what other feed than that of the exchanges. I don't think exchanges would collude and act shady, but you never know. This industry is full of surprises.

Offline bitmeat

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What other sources? I was assuming that bitUSD would be pegged to BTSX since the path to liquidity is through BTSX in one form or another.  In this system the only way in and out is through BTSX.

Are the bitAssets going to be able to be sold on external exchanges?

I believe what BM is referring to, is the fact that there will be some arbitrage between the exchanges, as always. And prices on BTSX are likely to follow, not lead, however if BTSX becomes too big, then following is no longer relevant.

Ggozzo

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Back to the original topic:

Do you mean data price feeds from the exchanges that list BTSX? And then using a median or average of the price? If so, doesn't this put a lot of control in the exchanges hands? Like what if they were to collude and manipulate price together?

Then it would be up to the delegates to post feeds from other sources or to simply ignore the exchanges and rely entirely on maximum price changes in the BitAsset.   If the exchanges are able to manipulate the prices by 50% then regular market participants will be deceived.  Until BitAssets are big enough to DRIVE the price they are always subject to the price feeds traders use on a day-to-day basis to decide when to buy or sell.

What other sources? I was assuming that bitUSD would be pegged to BTSX since the path to liquidity is through BTSX in one form or another.  In this system the only way in and out is through BTSX.

Are the bitAssets going to be able to be sold on external exchanges?

Offline santaclause102

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merockstar has it right.

To be more specific...
I do not know of any laws that a delegate could be accused of violating.
...that is crazy. What about AML / SAPs (terrorist financing/tax-evasion)/ KYC, before we even touch the entire world of SEC / Treasury / FED regulations?

Put simply: If US senators start complaining, what then? Of course the NSA will know the physical location of the delegates' computers.

Dpos certainly has a powerful regenerative force, in that delegates 101 through 200 can just just step up and keep the system moving, but (I argue) the entire value-proposition of Bitcoin was that there would be nothing for an attacker (government / moral or otherwise) to shut off. It was LibertyReserve without a target. 100 people is smaller than most organizations...if a few executives from a-Canadian-bank-that-allowed-individuals-to-withdraw-money-from-InTrade can be arrested while vacationing in the USA and face 5 years in prison, so can essentially anyone.

Ok.. you can be accused of anything.   But so far we have seen it ruled that Bitcoin is not a security so neither is BTSX.   Bitcoin is not a legal entity and neither is BTSX.  Delegates are merely timestamp servers.  They have no executive authority.   

101 people may be small, but these are 101 people spread all over the world with different jurisdictions. 

All of that said, if it becomes a legal issue then we can adapt.  Let people do it from countries where it is OK.  Run it from behind TOR.  Increase delegate compensation to cover risk.
Wouldn't it make sense to have that checked by a lawyer at least for the US?I guess the US would be the first state to take action here and others would follow. AGS showed that it makes sense to check the legal stuff before and that it is much cheaper in terms of potential harm. 

Apart from that is there any of the below that is not due to holding funds of customers? Delegates dont hold funds....
Quote
What about AML / SAPs (terrorist financing/tax-evasion)/ KYC, before we even touch the entire world of SEC / Treasury / FED regulations?

Offline bitmeat

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Then it would be up to the delegates to post feeds from other sources or to simply ignore the exchanges and rely entirely on maximum price changes in the BitAsset.   If the exchanges are able to manipulate the prices by 50% then regular market participants will be deceived.  Until BitAssets are big enough to DRIVE the price they are always subject to the price feeds traders use on a day-to-day basis to decide when to buy or sell.

Bytemaster, I would like to propose a self-adapting solution which I only wish to discuss over phone/skype, going back and forth on the forums will take too long. Set aside 15 minutes of your time. I'd PM but I'm sure you don't have time to read those.

Offline bytemaster

Back to the original topic:

Do you mean data price feeds from the exchanges that list BTSX? And then using a median or average of the price? If so, doesn't this put a lot of control in the exchanges hands? Like what if they were to collude and manipulate price together?

Then it would be up to the delegates to post feeds from other sources or to simply ignore the exchanges and rely entirely on maximum price changes in the BitAsset.   If the exchanges are able to manipulate the prices by 50% then regular market participants will be deceived.  Until BitAssets are big enough to DRIVE the price they are always subject to the price feeds traders use on a day-to-day basis to decide when to buy or sell.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Ggozzo

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Back to the original topic:

Do you mean data price feeds from the exchanges that list BTSX? And then using a median or average of the price? If so, doesn't this put a lot of control in the exchanges hands? Like what if they were to collude and manipulate price together?

Xeldal

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keep max 101 ACTIVE delegates (not more) but rotate them with the top X stand-by delegates (x variable,depended on market cap,x higher when market cap is higher).
How is this different from X ACTIVE delegates?  currently we rotate between 101 delegates, if after those 101 take a turn, we're rotating in some number, say 101 standby delegates.  That's the same thing as just saying there are 202 Active delegates.

What am I missing?


Offline luckybit

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merockstar has it right.

To be more specific...
I do not know of any laws that a delegate could be accused of violating.
...that is crazy. What about AML / SAPs (terrorist financing/tax-evasion)/ KYC, before we even touch the entire world of SEC / Treasury / FED regulations?

Put simply: If US senators start complaining, what then? Of course the NSA will know the physical location of the delegates' computers.

Dpos certainly has a powerful regenerative force, in that delegates 101 through 200 can just just step up and keep the system moving, but (I argue) the entire value-proposition of Bitcoin was that there would be nothing for an attacker (government / moral or otherwise) to shut off. It was LibertyReserve without a target. 100 people is smaller than most organizations...if a few executives from a-Canadian-bank-that-allowed-individuals-to-withdraw-money-from-InTrade can be arrested while vacationing in the USA and face 5 years in prison, so can essentially anyone.

Ok.. you can be accused of anything.   But so far we have seen it ruled that Bitcoin is not a security so neither is BTSX.   Bitcoin is not a legal entity and neither is BTSX.  Delegates are merely timestamp servers.  They have no executive authority.   

101 people may be small, but these are 101 people spread all over the world with different jurisdictions. 

All of that said, if it becomes a legal issue then we can adapt.  Let people do it from countries where it is OK.  Run it from behind TOR.  Increase delegate compensation to cover risk.

So we have already admit that is better that we have more individuals (separated in different country's) that take the delegate role to reduce risk ... As it is right now it is max 101 individuals, and if we want to be honest it will be only a percentage of the 101 active delegates because some individuals will manage to control more than 1 delegate at a time... So I bring back again the idea to: keep max 101 ACTIVE delegates (not more) but rotate them with the top X stand-by delegates (x variable,depended on market cap,x higher when market cap is higher). You can even use less delegates when transactions volume get higher than y% of average volume (for the last hours)  to ensure that very high volume transactions get signed from high end servers that are more trustworthy...

These are some intriguing ideas.
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