Topic: Interest in a P2P Exchange - page 3. (Read 5317 times)

My suggestion was: https://bitcointalksearch.org/topic/m.2197907 (earlier in thread)

Ripple will be completely decentralized.  It is not designed to be a 'single entity', and though there will be nodes that will be regulated -- there will be those which will not.  The final project is however not yet complete, though they must be getting close by now.


The 'something' you are missing is Gateways, which obviate the reason for these difficulties.   Obviously, it's better if you have the network of friends and trusted contacts, however.

how you will wire money in a p2p exchange ? , i don't see it possible.

If you were only concerned about fraud, and not arbitrary actions by the government to lock accounts, then you would definitely be better off trusting large, centralized exchanges to transfer your USD to BTC, like bitfloor, Mtgox etc. Recent history and, I would say, an understanding of the politics of money, suggests that's not the right position to take.


The NashX concept is only a bit different from what has previously been implemented as 2 of 2 escrow (at least that's the name I read). It's technically fairly simple. A sends the BTC into an address which can only be unlocked by A and B (B is the recipient). Take a look at the earlier discussion on this in the thread. 2 of 3 is only marginally more complex, and involves a third party, but the trust in the third party is not the kind of trust you need when storing money on an exchange or a bank account, because the third party can never take the money.
Edit: https://en.bitcoin.it/wiki/User:Casascius/Escrow_scheme_draft has a good clear overview of the concept, and take a look at bitescrow.org for an implementation. It's fairly simple.

Yes and no. You can sign a message with the private key of one of your bitcoin addresses to verify identity. That's the beauty of bitcoin - it actually creates cryptographically very solid identities, but these identities are totally disassociated from government sanctioned identities. Reputation systems can be built on top of this bitcoin identity.

I personally am not in favour of overemphasising the reputation aspect in this, though, because it seems that this would tend to a centralization of the money flows, which is really what (I think) we should be trying to avoid.

I'm certainly well aware of hawala as a concept, I guess most of us here are. It's an entirely different approach to Bitcoin, involving trust in third parties. The two are not mutually exclusive, but they are completely different systems.

From a user perspective I am only concerned about fraud. Unlike exchanges that hold both bitcoins and fiat, P2P will require one party to take the risk of the other party defaulting. How exactly is "escrow" going to work without a 3rd party arbiter?

An alternative, described earlier as "mutually assured destruction" is to have both parties put up a deposit equal to the value of the deal, and if either one of them is unhappy they both loose it, so the "bad guy" has nothing to gain. But the "good guy" has twice as much to loose, and that opens the door for another character, the "crazy guy" who just goes arround defaulting to sabotage the system.

Oh, and reputation is based on verification, and that's just another 3rd party action.

Take a look at hawala, it's based on trust. Trust is based on kinship, or one member voching for another. What we need, is just another social network, for friends with benefits.

Yes, maybe.  You're right about this though:


Putting bank info into the client software works within the boundaries of a single currency.  It was me being dense, not you.

It's still very effective and cheap within a currency though - SEPA is 0.9 Euro, and ACH is 25 cents - but not across that barrier.  Frankly though, for new users and for general-use convenience, a single-currency P2P system would be Good Enough (TM).

Cross currency gets more expensive.  Not as bad as a wire transfer for sub-$2k transactions, but still high.  No good at all for larger transactions.  My thought was having users on a forex exchange (MtGox) to take in bitcoin and currency, and swap them on the exchange.  A $1k purchase Euro > USD might cost about $8-9.  Cheaper than a wire +  exchange fee, but...

You don't need friends to develop trust lines, you just have to have some sort of business which you can trust. For example, one gateway which many people use is BitStamp. BitStamp only sends out ripple IOUs for bitcoins or USD which they are holding because people deposited those funds at their exchange. So if somebody gives you a BitStampBTC, you know there is an actual bitcoin sitting at BitStamp which you can withdraw if you have an account set up with BitStamp. You could also trade that BitStampBTC for USD without ever having an account with BitStamp.

Good point, I'm pretty sure colored coins could solve that. It's a pretty complex architecture though.

Ripple or colored coins.

Thanks for the support. I would definitely participate too! But I think github is the right place to start a project like this and take it from there.
I have coding experience of sorts, but it goes back a decade or more, and even worse I have zero experience of P2P or network programming, so others would have to take a leading role in the implementation. On the other hand, I luckily will have a lot of free time over the next 6 months so I would definitely be in a position to take part.

I'm struggling to get your idea, however. How does knowledge of bank transfers inside the software help us to avoid the need for doing the wire transfers? Probably being dense here...

EDIT: Just to add, my original thought was to keep the bank transfer process completely out of the core of the software. There could be a mutable layer on top describing the payment with certain data (the amount, the currency etc.), to make it easier for the user, but it would probably be good if the software kept a certain "deniability" of the actual outside world transaction, for security reasons.

Personally, I have no interest in daytrading.  There are plenty of forex-type bitcoin exchanges for that - Gox, for example.  The issue is making it easy for new people to get bitcoin; and easy for those who want to, to get fiat.  Period.

For a P2P system like waxwing describes, I would be absolutely in favor of integrating delays in order matching to eliminate daytrading and HFT bullshit.

And I would never participate in anything with even a whiff of Ripple to it.  That thing is designed to own all the bitcoin and issue IOUs in the form of XRP, near as I can tell.  It's not open source, it's premined, it's completely centralized, and I want no part of it.

I was thinking we'd have to make a thing like Bitcoin but with a way to find out its own exchange rate and print or destroy money, but maybe Liberty Reserve would be good enough for practical purposes. I guess the minimum you'd need would be:
1) An API allowing transactions to be made in real time, and confirmed by third-parties. (Not sure if they have the latter, but if not maybe they could be persuaded.)
2) Non-reversible payments.

I recently wrote this up. Some ideas are similar, but I want to enable real daytrading with real depth rather than OTC only. BTC escrow also may not be necessary.

1. There is a fiat ledger database. It can be a distributed. It only contains internal bookkeeping information. Much like Ripple.  

2. Any exchange website can use this database. Such a website can also run in Tor.  
  
3. I'm new, I want to buy bitcoins, I register and log on to one of those exchange websites.  
  
4. It looks and works like any other exchange. First, I have to deposit some fiat.  

5. This website does not manage its own bank account however.  
  
6. Instead, it tells me to wire-transfer the money to one or more random guy bank accounts.  
  
7. After a while, the random guys confirm that they received the fiat funds.  
  
8. I now have my fiat displayed in my exchange account.  
  
9. Everything looks and feels just like MtGox and other exchanges. No OTC crap. I can instantly buy and sell BTC for fiat. It's just local bookkeeping and number juggling for the website after all at this point.  
  
10. I've made some gains (or not) and want to cash out some or all of my fiat.  
  
11. The network picks one or more appropriate candidates who want to deposit fiat to buy bitcoins.  
  
12. From their point of view, the random guy of point 6 is now me.

13. I have to send a confirmation to the network, probably manually, that I've received my funds.

14. Mission accomplished.

Remarks:

A) The fiat ledger database contains all the necessary bookkeeping, but should keep private information like bank accounts secret.

B) However, cheaters could be blacklisted and their bank account details could be published.

C) Deposits and withdrawals may take quite a long while depending on current market parameters as there'd essentially be internal waiting lists that would have to be matched. Spectacular price crashes and bubble bursts can have dramatic effects in this regard.

Note: There's no one here who receives money to "not return it". Those who receive fiat are those who want to cash out anyway.

The only problem here is that there would have to be some confirmation mechanism about that fact. There's no public API for wire transfer data AFAIK to automate that. The receiver could complain they didn't receive any money. If they make that believable to the network, they could theoretically receive money twice.

Another problem rather is that those who put money into the system could revoke the transaction later, if their bank allows chargebacks. Here the blacklisting and publishing of their identity could be applied. The network could offer a bounty here, which could be funded by trading fees.

That could be Liberty Reserve? Perhaps that is the best quasi-crypto version of the dollar (also a euro version exists, I think).

I believe that's functionally equivalent to 2 of 2 escrow. Have a look at https://bitcointalksearch.org/topic/2-of-3-or-2-of-2-for-escrow-49370

EDIT: I see no reason why we couldn't give the user the choice of 2 of 2 or 2 of 3, with the former being slightly cheaper, but having the risk of your counterparty dying or being irrational enough to destroy their reputation (and receiving nothing) by not paying you. A reputation system could make that risk very small indeed; I could well imagine choosing that option in many scenarios, and yes it would be more convenient.

It's one of two things that would help mitigate the problems. The other is an alt-coin that controls its own money supply to keep its value pegged to a fiat currency - a kind of parallel crypto-dollar.

That wouldn't solve the problem, but it would help because:
- You'd have functioning price discovery even when the non-p2p exchanges were borked.
- You'd be able to speculate and hedge against exchange rate risk between Bitcoins and the equivalent of dollars, in a censorship-resistant, frictionless environment.
- People could sell stable crypto-dollars for cash in a lot of environments where they can't sell volatile Bitcoins. For example, a lot of shops near me sell online gaming tokens, but it's hard to see them selling Bitcoins because they'd have to keep changing the prices. These could then be traded for Bitcoins on a p2p exchange.

Nice to see some good discussion going on this.

I had in mind escrow for the BTC. That is to say, the seller of BTC places them in 2 of 3 escrow, waiting for the wire transfer to arrive.

I hadn't thought about that part at all, but there's no reason why the software can't collect the price data from all the transactions. Clients would probably want to use a reference rate from some external exchange, but they could just as easily use the last price transaction within the P2P network itself, or just agree on their own rate.

A couple more ideas: what I was proposing is only different from existing OTC approaches (including localbitcoins) in 2 ways: first, if it works as designed people can do the transactions without leaving their home (I assume others can wire money from internet banking to a not-pre-defined other bank customer, as I can, using my bank's 2 factor authorization process - but doubtless this must vary a lot from bank to bank) and second, the P2P software can have a lot of intelligence in its algorithm to choose a counterparty/counterparties. If it can be made to work, therefore, this approach is much better than localbitcoins.

It doesn't have to be wire transfers, but it needs to be something with high irreversibility, realistically. Someone on reddit suggested that SEPA transactions are reversible in a certain time frame (I had thought that they weren't). That would limit the speed of these transactions to that timeframe. Does anyone else have info on reversible wires? As for ACH, I only know it exists, not being American I have no knowledge of the nuances.

I'd also emphasize that we should be clear what we're trying to solve. From my perspective, this is not an attempt to create the long term P2P trading structure that might be needed for cryptocurrency based economy in general (as for example Ripple type things are doing now, although I'm in the anti-Ripple camp). This is just about creating a structure to "hack" the banking system such that it's impractical to stop the flow of money into Bitcoins initially.

Is it yet possible to make split-key wallets? I mean a wallet with a private key derived from keys provided by two or more parties, with each party only knowing their own portion of the key, and the generated private key accessible only to someone knowing all of the input keys? If this can be done, no trusted 3rd party is needed. No possibility for arbitration either, though.