Topic: Idea for universal Decentralized Exchange inspired by Bitcoin/Namecoin (Read 1357 times)

egold handled alot of peoples FIAT taking it from one person and giving it to another. much like an exchange. its his handling of FIAT that got him in trouble because he didnt buy a licence or do any amlkyc stuff.

now coinbase are already licenced so lets say they made the altcoin pegged at a dollar, so:
1. people can deposit their fiat and buy $$coin at the fixed rate of $1.
2. people can deposit their $$coin and get fiat at their bank account.
all amlkyc approved. this is just the cashing in and cashing out gateway

now then, people can then pt their funds on private keys in in thier p2p exchange program to exchange the $$coin for bitcoin, using the decentralised programs order list.

cashing in and out gateways will always be needed but the p2p client is a new blockchain that has the double transactions per TXID
eg
 instead of just (in laymens terms) having the transaction saying:
"send 1BTC from 1ssgdfgdfdfg to 1awsdesaas"

it instead says:
 "send 1BTC from 1ssgdfgdfdfg to 1awsdesaas and send 650 $$coin from $pldfpgldpfg to $dldkfgldfkg"

now the deeper part of the TX.
person 1 accepts an offer from person 2
the offer has a random code that had been generated when accepting the offer
person 1 signs their transaction
person 2 signs their transaction
the send each other the signed transaction and then the 2 are joined together and signed by the random offer code
both parties then send the (technically triple signed) TX to the network. which then gets validated and mined and becomes part of the p2pblockchain

the blockchain has no reward and miners just get 0.2% of the transactions. even having the mining as part of the p2p client and set to mine only on cpu's to avoid the whole polava of racing to be the top hasher of the mining farm race.

making any p2p user having equal chance of receiving a bonus.(the total of all the 0.2% tx fees of the block)
again its just my brainfart

I don't know a whole lot about this but couldn't Ripple help to facilitate the BTC exchange to USD somehow while maintaining ease of use and decentralization?

Check out BTS X, it's pretty much the only decentralized exchange idea I've heard that can actually operate on the same level of trustlessness as BTC itself. It uses a market peg to create assets whose value tracks real-world assets

Seems to me that MaidSafe has done a lot of what it takes to encrypt and decentralize the whole Internet. And it seems to be free except for development of apps that ride on the MaidSafe system, for which they are asking 1% of the earnings for apps running on Maidsafe and earning income. Now 1% may or may not be fair. But here is what they have that May not be around anywhere else yet.

What they have is that they are ready to go right now. A few parts of their program may be in Alpha, but most of it is in Beta or later. General usage is free.

A currency exchange could be built on top of their system. By its nature, it would be encrypted. And on top of the MaidSafe encryption would be the Bitcoin or other currencies' encryption. The exchange encryption would be on top of it all. Margin accounts could be added and be automatic. It would be extremely difficult for governments to stop it without disrupting their whole communications systems. Once this system is set up, banking as we know it will be a thing of the past.

I haven't used MaidSafe, yet. I have it downloaded; haven't installed it. But I am sure there must be those that are running it right now. To my way of thinking, MaidSafe wouldn't be effective until a lot of folks were running it. The only reason that Bitcoin took off as well as it did was that there is "money" and profit built right into it. The profit in MaidSafe isn't direct profit. It would be seen in app sales, or in usage profits, which are indirect. But... an entirely active, worldwide MaidSafe would make privacy and stability of the Internet to be a whole lot better. And, to my way of thinking, it would make the automatic exchange(s) way more private, and virtually foolproof until the arival of the quantum computer.

I think this could be accomplished with the help of a dollar trust, but again the key problem is anti money laundering laws and the money transmitter licenses required. Which of course means you have to trust the organization trust to pay you back, but always with the knowledge that law enforcement will constantly require that same organization to track your every move and report "suspicious activity" like any good snitch would.

Besides, you don't necessarily have to have that same organization pay you back. You can divulge yourself of the counter-party risk by buying real goods and services with it if you really wanted to.

Again, the obsession with exchange rates is only so that people can buy into it. Once ways are found to keep the volatility of bitcoin and other cryptos under wraps, or at least allow for near instantaneous exchange speed, then things will pick up. The volatility of bitcoin because of all the speculation is probably the worst bit of press out there.

Perhaps including a 1% inflation of maximum coins possible, or having unlimited coins increasing at a flat rate of 25 coins every 10 minutes might have been a bit better. The thing about bitcoin is that it is going to always have a certain level of ACTUAL inflation until all the coins are mined out. I mean imagine if all the rest of the bitcoins that could ever exist were mined out TODAY! That's a real test of bitcoin as a deflationary currency.

Until we reach that point, bitcoin will always be inflating until it reaches that maximum point in 140 years (by which time we probably would have invented computing that makes SHA-256 crytographic algorithms look like crackable MD5 hashs today (unsalted, of course)!

The problem with making any kind of exchange is that both things being exchanged have to be transmitted electronically.   It's not a problem for bitcoin or an alternate cryptocurrency.  (it would be easy to trade between them electronically)

The problem is converting fiat currency into an electronic form.  You would have to trade electronic tokens that are pegged to the fiat currency being used.   This requires that some authority that issues the tokens will guarantee that it can be converted back to fiat.   Right now, this is done with wire transfers, and a system of banks that says it will pay you in fiat currency for the value that is electronically transmitted, or an exchange that holds your fiat currency tokens and promises to give it back to you.

I'm just saying that you can't create a fiat/cryptocurrency trading system without trusting somebody to pay back your fiat currency tokens into fiat currency.  It can't be done with math.

Great link franky!!

I really liked this particular post:


My response to this, however, is that this is exactly what E-Gold attempted to achieve, only with gold-backed currency instead. However, because of his lack of experience and education in finance and business law (he was a doctor by trade), he ended up getting knocked down very hard on charges of money laundering and operating with a money transmitter license.

As such, any entity that tried to do this alt-coin-pegged-to-the-dollar idea for exchange would have to apply for a money transmitter license and comply with some very onerous laws that are very expensive to comply and keep up with. Every member would have to supply the institution with a lot of "personally identifiable information" that would open up every market participant to the risk of identity theft if the institution has even one kink in its cyber-security armor.  

Naturally the money would have to be held in an interest-bearing off shore trust that cannot be arbitrarily seized by the US government at the whim of a wildly baseless money laundering accusation.  

https://bitcointalksearch.org/topic/m.5617009 <- my brainfart

This idea is very much in draft, so for those of you that want only the bare bones and to the point, skip to the underlined and bolded sections for the bottom line. But if you want to know how I arrived at these ideas, feel free to surmount my wall of text and plant a flag on top of the mountain when you are done. But if you have some good points or inspire me in some way, or know of a place where this has already been discussed, I will modify this post to reflect your points. This post is very much a living document, so to speak.

So here we go:

------------------

One of the problems with centralized currencies, whether they be centralized government currencies or centralized "private sector organization" currencies (eg E-gold, WoW gold, Ripples, etc) is that if the "trusted" center goes corrupt or gets taken down by an adversary group, then the whole economy based on the centralized currency is basically fucked. If the Federal Reserve makes a fatal mistake, it's you and I that pay the price. Bitcoin, or any currency like it, is starting the move human kind away from such a highly centralized method of currency management to a somewhat centralized oligarchical system of of currency management via "pools". And one of the genius aspects of the Bitcoin and Namecoin protocals is that it REWARDS and financially compensates people for providing the infrastructure backbone necessary for its existence, and this reward would be issued in a currency unique to the protocol itself. Most importantly however, and this is an Achilles heel not only for governments but base level human nature as well, the bitcoin and namecoin protocals denied its greatest opponents a single, identifiable TARGET!! Just...like...bit...torrent!!

A face can be struck. A leader can be killed. A company can go bankrupt. A server can be confiscated. A website can be shut down by coercing a domain host provider to hand over control of the offending domain. And a government or agency can be infiltrated and coopted. But how do you obliterate persistent software backed by even a tiny community that can span the globe? It only takes two computers in the entire world to sufficiently run the entire bitcoin network without issues.

But now that the new truly unique and secure currencies of the internet, crypto currency, can be decentralized thanks to the genius of Nakamoto Satoshi, we need to ask ourselves, "what else can we decentralize to a manageable enough level to keep the accepted 'tribal leader(s)' honest but able to keep the community from losing its way?" How can we create MORE institutions and communities like Wikipedia, Reddit, Torrents, and Bitcoin where you have the appearance of a leaderless society, but in reality still has socially influential and socially connected elites such as Developers, website operators, high volume content creators and other highly active hard core members with just enough influence to make it all work for the good of all?


My proposal is that we apply the principles of Bit-Torrent, Bitcoin and Namecoin to the crypto exchanges themselves.

So what do I mean by this? Well let me explain and please bear with me and follow my train of thought.

Decentralized, server-less exchanges are not a new idea, and I've seen at least a few ideas and projects spring up. However, what I have yet to see is a system whereby everyone keeps the coins on their own system and are able to offer up their own prices on a software client market that works like a stock market. But who runs the servers necessary to make the client work at all? At the moment, with crypto exchanges, only one person or named entity (Mt Gox, Crypsy, etc), operates all the (website) server hardware and software to make the trading platform work. And because these entities and people operate and own all the server hardware and software to make the platform work, anyone who uses the platform is subject to what's known on Wall Street as "counter party risk". In the wall street world, this risk is for the most part non-existent because of the FDIC and other government policies meant to maintain the status quo. But in the crypto world, this is the 1880-1914 era all over again, where bank failures and 100% loss of deposits and bank robberies were not unheard of. These "named entities" can mature, but they are a centralized point of failure that we depend too much on, esp when there are more robust methods we can turn to given the necessary developer and designer talent necessary to make it all work.

What we need, and what I challenge everyone running decentralized exchange projects to do, is to help come up with an exchange market system with these key features:

1) Exchange transaction fees shared between everyone who provides the computer resources, divided up according to how much resources they were able to provide, and

2) Every exchange that occurs between coins on the market place is recorded on a block chain unique to the client itself and shared between every node.

BOTTOM LINE: I'm talking about a decentralized software exchange (as opposed to a centralized server-based website exchange like Crypsy or Mt.Gox), whereby YOU can get paid a small portion of transaction fees in ONLY the coins where you have a local wallet software (the more wallets and coins you have, the more diverse the fees you can collect) if you devote bandwidth and computer resources necessary for the proper functioning of the exchange!!


This idea is a work in progress, so please leave feedback, and if your comment or feedback is good enough I may modify the original post.

Sadly I have no programming skills, so I cannot make this happen by itself, but I feel that I might have a good vision of how this idea can come to fruition, given the right team comes together and we make it happen.