Topic: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange (Read 5766 times)

To keep the party going please see the following announcement introducing TradeYourBitcoin.com:

https://bitcointalksearch.org/topic/ann-tradeyourbitcoincom-the-decentralized-exchange-88181

 

The major value to me of this thread is that when there are a lot of people who have their own IRL P2P Bitcoin networks (whether they transact through computers or not), the trading of bitcoin will be much more difficult to suppress.  The expectation in this article that any kind of ban will be ignored is one that the BTC community will want to help realize.  Setting up your own network is a way to do that.

I wonder if alternate currencies will catch on quickly enough to help very many people as fiat currencies harm them.  Having access to wealth with a key locked inside your brain and no evidence that you command that kind of wealth is remarkably powerful, and it's an ability everyone can have - but first they have to work hard to earn that wealth, and find the technology (BTC is only one example) that will support such a "personal off-shore bank".

Yes, that is when you need the major exchanges but the whole point of this thread is to develop trusted trading partners with whom you can trade with away from the centralized exchanges so that you never have to go there.

What?  You realize that you can use a centralized exchange AND your friends, right?

I think calling this "P2P" is a bit confusing.  When I see that, I think about my computer communication with a bunch of other computers, not "person to person."  Maybe it should be "How and Why You Should Set Up Your Own IRL P2P Bitcoin Currency Exchange"

Because I may need more Bitcoins or more dollars as any given point.

An additional comment: My trusted trading partners and I become friends and we don't charge each other commissions to make change.

There's nothing wrong with people making change as a business for a fee. My goal is to go beyond that as described above. Both can coexist - it's not one or the other.

I agree, it's not for everyone but it is not impossible. For my trading partners and I it is profitable (by way of convenience - not commissions) to provide liquidity to each other and make a market for each other. The ultimate goal, of course, is to arrive at the point where most people carry a bitcoin balance and the stranger next to you (or the local shopkeeper) can make change.

I think it is impossible to have that kind of situation, unless the other guy is a market maker and is making profit with the deal, eg. selling above market price or buying below market price. Or then he/she wants privacy from banks and other electronic forms of payments, since  he/she would get better deal and less hassle exchanging the coins online.

If you really are able to call your contact whenever you want/need, and able to conduct business at market rate with him/her, it doesn't sound very sensible from the other guys viewpoint.

I think a better question is "why would I want to rely on centralized exchanges thousands of miles away that require the use of the banking system, ID, blood type and first born in order to make a trade?".

Exactly my point. It's not worth it to the average person as a business model to make 3, 4 or even 10 dollars on the average exchange when it costs that much in gas (and time) to meet the other person in the first place. The idea is to build up your own network of trusted trading partners so it becomes as simple as picking up the phone and making the deal. I already have trusted trading partners with whom I can close the deal for thousands of dollars over the phone and settle up via mail, bank deposit, or in person the next time we meet.

Hmm, how are you not relying on those things already, if you use bitcoins? After all, if there is no demand for bitcoins, traditional exchanges will stop working as well.

Cash exchanging is probably not for everyone. But there are some advantages over exchanging with the real exchanges - you don't need bank accounts, no need for papers etc, better privacy, etc.

Btw. with localbitcoins.com you can determine your price dynamically with equation, for example: USD_24h*1.05 or mtgoxusd_close*0.95. Values are updated each 5 minutes.

Why would I want to rely upon other people's needs for BTC or dollars to determine my own ratio of BTC to dollars?

It isn't sustainable business model, but many different businesses are not sustainable in the longer time. However, meanwhile they are still making money _now_. It is stupid to evaluate businesses by sustainability, you should evaluate them how much you can make buck over the lifetime of the business model.

For example: business is sustainable, and makes 10 dollars a week + inflation = sustainable but bad business

Business is unsustainable, makes this year 10 millions, next year 100k usd and third year -50k usd = unsustainable business, but might still be really good business

Saving money is the same as making money. When you build a local network of exchange partners willing to trade the fees go down. I predict the exchange fees will practically evaporate, or become negligible, over time.

I don't see exchanging as a sustainable business model for the average person. As it says in the article, I believe making exchanges will eventually be as easy as changing a twenty dollar bill.

BTW, great job kangasbros!

That sums up the problem with BitCoins. Too many geeks and not enough business men. The world dont give a flying rats ass about how awesome crypto-currencies are, how secure they are or how decentralized they are. The world only care if they can make money from it. Just show the world that their is money to be made and watch the flood of people to it.

So, after getting inspired from the original article, I actually started competing service to BTC Near me: http://localbitcoins.com

Also I write similar guide, but with more practical and less philosophical focus: http://localbitcoins.com/cash_exchange_howto

Any feedback and suggestions welcome!

Well, I don't want to imply that you are a communist or anything like that, you took it way too personally

I mean that especially cash exchanges are not going to work without market makers. That means people, who are accessible, charge a little, and make the system work. I guess most people see the benefit of cash exchanges, but usually there are many kind of people with different goals - some just want the bitcoins fast and without hassles, others are willing to wait and save on exchange fees. The ones who can serve the impatient ones, can make a little money in the process.

I don't see how setting up a decentralized network like is presented in the OP is anything like a centralized - Statist - system like Communism.

I am not a communist. That doesn't mean that I look at every situation and relationship I encounter ( especially involving family, friends, neighbors etc. ) as a potential way to make money.  

I seem to recall etotheipi, the developer of Armory, speaking eloquently on why he wants to keep his client free...  Perhaps you could seek out his words if you are still unclear on the concept of being more interested in the good that systems like bitcoin can do for everybody - or at least those communities that one feels a part of - and not just for oneself on a financial level alone.  

I have nothing against making money, but I am sure I am not alone in feeling that it is not the most important thing in life.

Even if one is only interested in making money there are still positives, for oneself, that come from things like philanthropy, and charitable and generous ways of conducting oneself and doing business.  

Also it is best, I feel, not to think in either/or terms.  I am not suggesting that there be only exchangers that don't charge fees and operate in the way the OP gets into. There is room for a lot of alternatives, giving each individual as many choices as possible for a system they feel comfortable in using and supporting.  

So basically you mean that it is better that there is no cash exchanges, than the alternative where there are cash exchangers who charge fee.

Communism was a nice ideology, but it doesn't work in practice

That goes against the view expressed in that article, "Don’t charge an exchange fee."

I agree with that view and not the view you express, which would tend to make the exchanger look like he is more interested in making a buck then in
helping the community he is a part of.