Topic: Decentralised trading (not what NXT/Ethereum or anyone is doing at the moment) - page 3. (Read 5073 times)

Someone still has to clear those transactions. It's going to be a bank/gateway. Unless you propose that every single online exchange will initiate an EFT/SWIFT/etc.. Even then, I cannot see how this is possible in a decentralized way. How can you prove an account owner approves of a transaction without some centralized authority that is authorized to do so for you? There isn't a decentralized block chain with a PKI that allows you to interface directly with clearing houses...

I've also been disappointed by the apparent lack of progress on this issue. As you say, there were lots of designs being floated around earlier in the year. However, my hope is that there are people working on such platforms, just not ready to go public with their offerings yet.

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.

Possible or not, until this happens there is no true decentralised exchange.

There maybe one way of doing it now

10000's of people open bankaccounts that include a special number in the reference to signify this money goes to the distributed exchange. When the bank finds out the account is terminated perhaps, but there are 9999's other such accounts and list of account number are on a pirate bay style listing.

So banks give up as there are too many people doing this all the time.

What port do I connect to to supply my bank account and ID numbers?

What you are asking for is not (yet) realistic. The Canadian MintChip thing has been recently brought up here: https://bitcointalksearch.org/topic/canadas-government-is-printing-its-own-digital-currency-424205. It is possible that this device would enable the exchange of fiat/digital currency without a gateway. But without something like that, I don't see how it can be possible.

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, and t local banks it just looks like another bank account at another bank

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.