re. FUD- it would be perhaps possible to attack the chain while the cryptoassets are low in price(early on in their lifecycle), and the attack would soil the reputation of the issuer, making it difficult to attract investors. This might be an effective strategy for market competitors. Checkpointing could help solve those problems.
-jmz
Thanks for the discussion.
An scenario to show one can choose other factor to limit loss of long position: A small company issues peershares. It has a good business prospect. The attacker realizes many share holders don’t open their peershares clients. On long holidays only 10% shares take part in minting. The attacker buys 20% of total share on the secondary market over some time. He sets aside 5% of his shares for shorting and 15% shares to generate an attack when the network minting power goes down to 10%. With 60% of total minting power, the attacker causes a short term share price dive during thin trading hours. The attacker stops his attack after closing his short position at lowered price. Many share holders start to mint regularly after the attack so the attack is regarded as one-off. Share price recovers quickly. Actually the attacker knows that the price will recover because the company he selects has limited down side risk. This might be simplifying but the main elements are there for a short attack.
in modern markets there are exotic situations like Naked Short Selling that can only exist when you have complex credit arrangements.
Maybe not that extotic very soon. Once cryptoequity is abundant and big money of real economy rolls in, it will become common. Traders like price fluctuations. FUD is their friend. These days exchanges own cryptocoin prices. They will want to own cryptoequity prices.
Hi Mhps,
Have a look here: Cryptoblog - notícias sobre bitcoin e criptomoedas!
I don’t think you’re fully grasping my point. Short Sells have special considerations because all the holders of the cryptoequities must have a long position. For someone to take a short position, they must be SOLD that short position by someone with a long position. For Naked Short Selling you need a lot more things in place.
thx,
-jmz
[quote=“mhps, post:22, topic:2032”]Thanks for the discussion.
An scenario to show one can choose other factor to limit loss of long position: A small company issues peershares. It has a good business prospect. The attacker realizes many share holders don’t open their peershares clients. On long holidays only 10% shares take part in minting. The attacker buys 20% of total share on the secondary market over some time. He sets aside 5% of his shares for shorting and 15% shares to generate an attack when the network minting power goes down to 10%. With 60% of total minting power, the attacker causes a short term share price dive during thin trading hours. The attacker stops his attack after closing his short position at lowered price. Many share holders start to mint regularly after the attack so the attack is regarded as one-off. Share price recovers quickly. Actually the attacker knows that the price will recover because the company he selects has limited down side risk. This might be simplifying but the main elements are there for a short attack.
in modern markets there are exotic situations like Naked Short Selling that can only exist when you have complex credit arrangements.
Maybe not that extotic very soon. Once cryptoequity is abundant and big money of real economy rolls in, it will become common. Traders like price fluctuations. FUD is their friend. These days exchanges own cryptocoin prices. They will want to own cryptoequity prices.[/quote]
[quote=“jmzeidner, post:23, topic:2032”]Hi Mhps,
Have a look here: http://www.peercointalk.org/index.php?topic=2714.0[/quote]
I didn’t want to open another thread since this could be relevant to the topic – if short attack is relevant will checkpointing roll back help?
Nice graphic that you made. I think the our differences are 1) I think having the confidence that the price will go down and selling the share with the intention to buy back later after the price does go down is shorting. In this case the attacker is a short sheller in my definition. His counter party is anyone on the market who happens to buy his shares from him. The motivation of the buyer is irrelevant – he may be long the shares due to company prospect, or a speculator, or a fund manager… 2) I agree that the attacker does loose value in his long position (his 15% shares in my post) during the attack. But the key is that he has his risks covered because he chose a company with good foundamnetals so the share price will bounce back later after the attack.
[quote=“mhps, post:24, topic:2032”][quote=“jmzeidner, post:23, topic:2032”]Hi Mhps,
Have a look here: http://www.peercointalk.org/index.php?topic=2714.0[/quote]
I didn’t want to open another thread since this could be relevant to the topic – if short attack is relevant will checkpointing roll back help?
Nice graphic that you made. I think the our differences are 1) I think having the confidence that the price will go down and selling the share with the intention to buy back later after the price does go down is shorting. In this case the attacker is a short sheller in my definition. His counter party is anyone on the market who happens to buy his shares from him.[/quote]
ok.
he just sold his shares to some other party.
who has the minting power at this point in time?
-jmz
[quote=“jmzeidner, post:25, topic:2032”]ok.
he just sold his shares to some other party.
who has the minting power at this point in time?
-jmz[/quote]
Did you actually read my post? The example scenario is that he acquires 20% shares of a small company and use 5% of it for shorting and 15% for POS attack.
[quote=“mhps, post:26, topic:2032”][quote=“jmzeidner, post:25, topic:2032”]ok.
he just sold his shares to some other party.
who has the minting power at this point in time?
-jmz[/quote]
Did you actually read my post? The example scenario is that he acquires 20% shares of a small company and use 5% of it for shorting and 15% for POS attack.[/quote]
You don’t appear to understand how short selling works. How do you ‘use 5% for shorting’? To short something you must BORROW shares, then you must sell the shares. You don’t actually own the shares.
you other 15% shares are a LONG position and this would cancel out any short position you have. I think you should review what I wrote about how short selling works, that’s why I made the graphic.
-jmz
You don’t appear to understand how short selling works. How do you ‘use 5% for shorting’? To short something you must BORROW shares, then you must sell the shares. You don’t actually own the shares.[/quote]
Are you simply saying you don’t agree calling the practice having the confidence that the price will go down and selling the share with the intention to buy back later after the price does go down shorting? If you don’t that is fine because it’s only a matter of terms although according to e.g. wikipedia practically shorting is just the opposite of going long.
you other 15% shares are a LONG position and this would cancel out any short position you have. I think you should review what I wrote about how short selling works, that's why I made the graphic.
His long position has its downside risk covered due to … I am a bit tired of writing it again… due to that the attacker intentionally picked a up-trending company to be the victim.
Beyond academic terms, could you have comment on the scenario I presented ? Is the scenario feasible and low risk (as the attacker mostly has a long position in a good company)?