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The upside is that it doesn't matter if its just one guy trading with himself, what matters is liquidity and you can't fake that (except if you are the owner of
by nathias 5y ago
The upside is that it doesn't matter if its just one guy trading with himself, what matters is liquidity and you can't fake that (except if you are the owner of centralized exchanges, but those are terrible anyway).
- vlovich123 5y agoI don't follow. > the liquidity of a given token is a function of the number of buy and sell orders on the books By trading with myself it looks like there's a lot of liquidity, no?
- nathias 5y agoIf you are actually trading with yourself it doesn't look like there is a lot of liquidity there is a lot of liquidity.
- vlovich123 5y agoIf I create my own coin which only I trade and I have two wallets. Wallet A places a buy for 1 coin at 1 cent. Wallet B fills the order. Wallet A places a sell order for 1 coin at 2c. Wallet B buys it. Rinse repeat and suddenly the coin is trading at 10k USD. Spin up more wallets and you suddenly make it seem like there’s liquidity except there isn’t because you’re not buying anyone else’s coins. This is literally how Scamcoin worked. - you could buy the coin but there were no buyers to offload your coins onto.
- nathias 5y agoIn this case you aren't really faking liquidity, you are faking the price, the liquidity is real (ie, you are spending for tx fees, the amount of x traded for y is really happening) vs a centralized exchange where the price is real and the liquidity is fake. There are scams on every turn, but liquidity pools kind of solve this specific problem, so you can have trust in the price even if there was just one guy doing all the exchange.