Topic: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange - page 2. (Read 5766 times)

How to set up your own bitcoin trading network, protect your privacy and save exchange fees
http://tinyurl.com/d2zzeh4

Problem: The large, centralized bitcoin exchange services are not private (most are now requesting detailed personal information to satisfy Anti-Money Laundering regulations). It also can take time to open and fund an account and the transaction fees can add up. Not to mention, these centralized exchanges are vulnerable to targeted attack by cyber-criminals and governments.

Solution: Set up your own bitcoin trading network

Here’s how you do it:

Essentially you want to cultivate your own personal network of trusted trading partners. Make a market in bitcoin among your social network. Put the word out that you are the “go to guy” to buy or sell bitcoin. Build your “little black book” of trading partners that you can contact whenever you need to increase or decrease your bitcoin holdings.

Build your reputation as a trusted trader (Bitcoin-OTC, Forum Reputations, BTCnearme.com). Ask every trading partner to think of you first when they need to buy or sell. Point out the privacy and money-saving advantages of staying “off exchange”. Don’t charge an exchange fee.

The goals are to:

1. Help others in your personal community easily move in and out of bitcoin

2. Ensure yourself a reliable source of buyers and sellers

3. Facilitate the easy exchange between currencies which helps remove friction in the bitcoin economy

4. Avoid exchange fees

5. Preserve privacy

6. Reduce risk of attack from predators

Ideally we may someday arrive at the point where everyone is an exchanger and the process of exchanging bitcoin will be as easy as asking someone to “break a twenty”.

Just going to the city center, probably spending ~1 hour there with someone who is afraid that 3 confirmations might not be enough and I run off to double-spend his 5 BTC and the trade fees on exchanges mean that I could only do this as a hobby, not valuating my time invested. Otherwise I might earn more by sewing Nike shoes in Thailand...

Just going to the city center, probably spending ~1 hour there with someone who is afraid that 3 confirmations might not be enough and I run off to double-spend his 5 BTC and the trade fees on exchanges mean that I could only do this as a hobby, not valuating my time invested. Otherwise I might earn more by sewing Nike shoes in Thailand...

The problem with "decentralised" exchanges is that they are not that profitable. Adding a personal touch to service (which is basicaly what Trader Steve has advocated) takes time and PR skills. If you have cheep time+skill resources you may try to compete against centralised and automated exchanges.

Well yeah, maybe the goals are a little different. OK, it is great to have ideals (eg. nonexistant exchange fees), but who would do some real work, such as running an cash exchange without reward?

The thing is, to improve bitcoin cash liquidity, you need more than few hippies doing cash trading with bitcoins. You need people dedicated to running cash exchanges. And by marketing cash exchanges as a business, they could catch on. A cool way to create a little additional income or something.

BTCNearme.com seems great, but I would add couple of little features:

- send email directly from the site to sellers/buyers
- allow listing your offer/amount with bitcoin-otc style (or some easier way?), eg. "{{ mtgoxlast }} * 0.95"

The optimal process for buying would be:

- look up on the list, find someone pretty near and with decent price, contact using form included on the web page
- make your offer, and wait for contact. Email is not shown on the page, you are first contacted using the form, and then you can continue with email.

I think the point of this article is to make a market for yourself, not to run a business.

How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange

Problem: Centralized exchanges are vulnerable to attack and/or regulation by existing power structures.

Solution: Decentralize the exchange process.

Here’s how you do it:

Essentially you want to cultivate your own personal network of trusted trading partners. Make a market in bitcoin among your social network. Put the word out that you are the “go to guy” to buy or sell bitcoin. Build your “little black book” of trading partners that you can contact whenever you need to increase or decrease your bitcoin holdings.

Build your reputation as a trusted trader (Bitcoin-OTC, Forum Reputations, BTCnearme.com). Ask every trading partner to think of you first when they need to buy or sell. Point out the privacy and money-saving advantages of staying “off exchange”. Don’t charge an exchange fee.

The goals are to:

1. Help others in your personal community easily move in and out of bitcoin

2. Ensure yourself a reliable source of buyers and sellers

3. Facilitate the easy exchange between currencies which helps remove friction in the bitcoin economy

4. Avoid exchange fees

5. Preserve privacy

6. Reduce risk of attack by existing power structures

Ideally we may someday arrive at the point where everyone is an exchanger and the process of exchanging bitcoin will be as easy as asking someone to “break a twenty”.