Trolls manipulate Bitcoin prices by placing lots of orders they never follow through on?
Interesting. It's kind of like in the real world financial markets, where the trade is made on paper, and then when it "clears" a few days later, that's when the funds and securities actually change hands. It's a neat idea. But as another post points out, how to ensure people follow through funding their trades? (and most important, ensure that they follow through on the losing trades as well as the winning ones
People are free to pull out of any trade at any time they like - people can already do this on mt.gox, just by cancelling the order if they see a shift in the market they don't like, or change their minds.
Once the order is confirmed on the block chain the exchange will credit the account of the bitcoin seller in fiat.
The mechanism of the trade would be dealt with automatically by the browser/software linked to the exchange - the exchange would still hold the fiat currency (which they can hold much more safely than bitcoins). They would use the block chain to confirm the trade has occurred.
If the trade hasn't occurred, then it's the same as someone cancelling an order in the orderbook just before the trade takes place.
The seller could attempt a double spend - but this would be akin to someone simply cancelling the order. They'd only have a few seconds to make the decision anyway.
After 6 confirmations - the trade would be fully initiated by the exchange. At zero it would be assumed to have occurred, but held in a pending state.
The software and exchange would need to manage the orderbook to prevent 2 people selling bitcoins simultaneously to the same buyer - but they already have to do this.
