Topic: Decentralised trading (not what NXT/Ethereum or anyone is doing at the moment) (Read 5046 times)

In the real exchanges, orders have a choice to be routed to an exchange.  Furthermore, if I recall, every exchange must post is best bid and lowest ask price to allow orders to be routed to the appropriate exchange. 

right on! ive been saying this for months. once its distributed, everyones order book looks different.

* liquidity has to be "centralised". this is because orderflow is time-ordered. if you have order_1, ...,order_N, then each depends on the other. this is completely different than the blockchain for most (not all) goods. on the blockchain the tx (tx_1, ..., tx_n) are largely independent of each other (otherwise the block mechanism would not work!). arbitrage insures that liquidity flows to the most efficient pool, which is going to be "central" (although might be distributed in a different sense).

I am in Europe and I would not trust that SEPA transfers are irreversible at all. There are cases every few weeks in the German subforum that support this claim. Even if they are irreversible, your bank account still will get locked up sooner or later as soon as someone sends you money from a phished account.

jubalix, you seem to have some good understanding of the issue, and raise some important points.

All people currently involved in these "exchanges" know next to nothing about how they work (sorry folks). Anyone who has worked in this area for long enough would be able to tell. The model of the future is going to be very different than most currently imagine. having said that those in traditional institutions have no idea what's coming and are generally completely ignorant of the potential.
 
There are several major reasons why the current P2P-EXC models are flawed:

* liquidity has to be "centralised". this is because orderflow is time-ordered. if you have order_1, ...,order_N, then each depends on the other. this is completely different than the blockchain for most (not all) goods. on the blockchain the tx (tx_1, ..., tx_n) are largely independent of each other (otherwise the block mechanism would not work!). arbitrage insures that liquidity flows to the most efficient pool, which is going to be "central" (although might be distributed in a different sense).

* clearing. seriously, authors of current schemes don't even know what that means. without clearing, you don't really have trading of assets. and for clearing you need a lot of infrastructure, which will take years to build, and nobody hasn't even started. there are so many complicated issues. for example if you know how complex the stock market in its relation to the legal system is, you'll know what I mean.

* laws. assets are rooted in a legal system, which grants rights to asset-holders. without those rights, most assets are really worthless. no investor would be so stupid to invest in virtual shares, without these rights, because loss is almost certain. the idea of launching a "stock market" on top of the blockchain is just ludicrous. nobody wants to lose money, when the counterparty just runs away with the money. those who believe an investor can live without rules, just hasn't invested any real money. how do you properly measure sales and income without fraud? what does rights does an equity holder have in case of bankruptcy vs a bond holder? how are dividends treated? etc.etc. not that the current system is that good, but we have exchange laws, GAAP, IFRS, and so on.  these matters are highly non-trivial. I'm not saying laws as they have existed should exist in the future. but again, if you have serious money on the line, you want protection of your rights.

The community will be better off in thinking more deeply about why institutions exist. it takes much more profound understanding of the mechanisms, which you basically only know if you've studied economics deeply. having said that, new models are possible, but it will require more serious work, instead of amateurs working on it. the problem is that it requires deep technical knowledge of several fields (technical and economical). you can't just ignore the economic side.

You have to use bank transfer types which are irreversible SEPA in europe for example. See: https://en.bitcoin.it/wiki/Payment_methods

No you can't.

We both put up 50 BTC, I send you a couple dozen self-printed 500€ bills and claim the post man switched them. Heck, I can even take pictures and whatever you want of me putting in real money beforehand. If you want to, I'll even make a video, uncul, of me stuffing 100% real money in an envelope, sealing it, writing your name on it and handing it in at the post office, no problem. You'll still receive ony fake money and after some time our 50 BTC each will either have to be returned or destroyed. I still have proof and go to court, also your reputation on that exchange is destroyed.

Also I could send real money. With the GPS tracker from the last bank robbery still inside (or not, doesn't really matter if the serial numbers are tracked).

The bank transfer(s) can be reversed after the BTC are released. Alice Will steal Eve's bank data, send 1k USD to Bob, pocket the BTC and then Eve gets Bob in trouble. This happens often enough on both localbitcoins and bitcoins.de already right now (since that's the exact same system these are operating under).

The bank transfer network is the third party in that scheme and it sucks compared to Ripple for example, since transactions between banks are reversible. It would only work with cash-in-mail and even then you need to trust the postal services.

Also if BTC prices fall more than 10% until the BTC are sold, Bob is better off never releasing the coins. Using this system is like shorting BTC on reversible bank transfers no less. Good luck with that.

I agree, but with the Nash equilibrium solution posted here, you don't need to trust the banking system. You can perfectly send cash money by snail-mail.

The bank transfer(s) can be reversed after the BTC are released. Alice Will steal Eve's bank data, send 1k USD to Bob, pocket the BTC and then Eve gets Bob in trouble. This happens often enough on both localbitcoins and bitcoins.de already right now (since that's the exact same system these are operating under).

The bank transfer network is the third party in that scheme and it sucks compared to Ripple for example, since transactions between banks are reversible. It would only work with cash-in-mail and even then you need to trust the postal services.

Also if BTC prices fall more than 10% until the BTC are sold, Bob is better off never releasing the coins. Using this system is like shorting BTC on reversible bank transfers no less. Good luck with that.

Here is a solution using collateral to build a system for trust-less fiat-btc trading:
https://bitcointalksearch.org/topic/bank-run-p2p-fiat-bitcoin-exchange-462236

This "decentralized trading" idea can only work with digital assets (e.g. blinded Bitcoins...), not fiat money. There is no way to "digitalize" a dollar bill without introducing a third parts (called bank, escrower, gateway, exchange...).

Maybe? There would be much demand in China right now as well as in Russia I assume.
But I am not sure if a solution provided by a company (assuming jed's is that style) will be really the solution in a pure P2P sense? A free open source project would be more suitable (like Bitcoin, dark wallet, bitmessage ...).

jed's new secret bitcoin project could be it.

Decentralised trading, means no need for gateways.

With a true Decentralised trading platform A bank would not be able to tell you are sending funds, or that your funds came from the Decentralised trading platform. To the bank it would just look like another transaction, or international wire.

NXT will again rely on gateways to get Fiat in and out.

A true Decentralised trading  structure will consist of

[1] a decentralised core trading systems,

[2] Plugins that can interface with various banking systems, individuals in various countries will write these for local requirements

it really gets me all the big schemes for decentralised trading when gox went down last April reams of typing and grand schemes but not one came to fruition and now there is talk of decentralised trading that is nothing of the sort, when it misses [2] completely.

I also remember the "reams of typing", as you put it, post-April. I think a critical error in those discussions was conflating two entirely different goals: (1)peer to peer exchange of fiat currencies for crypto assets and (2) real time decentralised trading of crypto assets. The reason for the conflation was that people saw the failure of Mt Gox in both areas and wanted solutions to both.

(1) and (2) are both very hard goals, but (2) is by far the easier, as long as you're prepared to sacrifice some performance to achieve the decentralization. Many people made grand claims about having solved (1) and (2) when actually they only had partial solutions to (2); partial in the sense that they were either not real time, or not decentralized. Purported inclusion of (1) into these architectures were dubious at best, usually involving a peg between a crypto and a non-crypto asset, but without accounting for clearing and settlement properly. Such pegs are to my mind fatally flawed.

Personally I am not very interested in (2), although better and better models will come along.

I am much more interested in (1); while conceivably there is an optimistic scenario where regulations get more and more lax and it will be less and less important to worry about on-ramps from fiat to crypto, I find it much more likely that regulations will get stricter and the absence of a private, decentralised, online mechanism will end up being a major throttle on cryptocurrency development.

That's why I spent a lot of time (and still do) on the ideas that were discussed here. Only cryptographic proof of bank balances and transfers allows semi-automated and distributed arbitration required to transfer value between fiat and crypto without bank involvement.

What do you mean it doesn't have prices in the orders?

http://blockscan.com/order.aspx