Currency pegs have been tried again and again: ask any Argentinian for details. Any time you have a central bank trying to use its reserves to buoy up a peg, you have the opportunity for gaming. You'll recall that George Soros masterfully ran the reserves of the Bank of England down, simply by knowing their strategy. In this case, everything is happening on a public blockchain, using a fixed algorithm, with full visibility, while the true price is being set elsewhere through informed buy and sell orders.
ZOMG THIS DUDE IS AWESOME
I want him to write for Merril Lynch.
Currency pegs have been tried again and again: ask any Argentinian for details. Any time you have a central bank trying to use its reserves to buoy up a peg, you have the opportunity for gaming. You'll recall that George Soros masterfully ran the reserves of the Bank of England down, simply by knowing their strategy. In this case, everything is happening on a public blockchain, using a fixed algorithm, with full visibility, while the true price is being set elsewhere through informed buy and sell orders.
In my opinion, this is holy shit bad.
"Arbitrageurs" in this case being the guys who understand how to squeeze money out of the guys who communicate in memes via risk-free exploitation of the inefficiencies of a market.
An open-source market.
A 40-lines-of-code market.
Nothing quite like giving a script kiddie a $140m incentive.
Bancor's current implementation is open to a simple front-running attack. A miner, upon seeing that someone is submitting an order to buy from Bancor, would squeeze his own buy order ahead of the user's. He would thus always get a rate from the Bancor market maker that is better than what the user gets. Every time.
Fucking hell. Found the $140m script kiddies.