Chain Attacks and Short Selling

Projects
1

Hello,

There was some discussion prior about the possibility of someone taking out a short position and then attacking the chain and profiting from the collapse in prices. I think some of the aspects to this attack are not well understood. I drew out a diagram showing how Short Selling works at the market level. For most consumer-level investors, the brokerage firm packages up the risk and sells you a derivative of the short sell. But sell a client a short position and then to attack the chain would be totally counter-intuitive, leaving only the FUD motive.

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-jmz

2

It does pose another interesting risk though. The short seller could be evil and pretending to take a short position, borrow the shares and then attack the block chain with them- losing the price of the instrument(and their credit rating). In this case they don’t profit per se but have a low cost attack vector. It’s perhaps possible to coordinate this sort of lending with the Coin Age measurement to prevent this problem.

-jmz