[OFFICIAL]Bitfinex.com first Bitcoin P2P lending platform for leverage trading - page 49.

Quickseller

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Quote from: deisik on February 25, 2017, 04:08:49 AM

Quote from: Quickseller on February 25, 2017, 04:01:22 AM

The "round trip" cost -- that is the cost to withdraw from one exchange and deposit in another -- will be under 0.5% in most cases (when you have an economy of scale). As mentioned previously, traders can keep fiat on exchanges, and do not need to wait for a withdrawal (and subsequent deposit) to process to engage in an arb trade due to the fungibility of USD -- they can simply use USD on one exchange, then replenish that USD once a withdraw/deposit cycle is completed from the exchange with the higher BTCUSD price

This opens opportunities for arbitrage, but as such it is inconsequential to the principles behind operation of any exchange. And a distributed decentralized exchange fits into this "grand scheme of things" perfectly. To put it differently, there is nothing that would conceptually distinguish such an exchange from any other exchange out there, apart from it being decentralized, of course

But that's an intended feature

But you are not describing any feature that will force the price to be in line with the overall market. With cash-settled futures (as you describe this kind of exchange), the futures price will remain in line with the index price because contracts will eventually be settled at the index price at expiration.

Quote from: deisik on February 25, 2017, 04:08:49 AM

Quote from: Quickseller on February 25, 2017, 04:01:22 AM

The fact that USD balances on an exchange will never be safe on an exchange, which essentially means that BTC balances are not safe, and thus LN does nothing to prevent thefts via the hacking of an exchange.

The reason why BTC balances are not safe if USD balances are not safe is because if an exchange is hacked, then the hacker could create a USD balance on their account that was not actually received by said exchange, use that USD balance to buy up the BTC on the order book, and bid up the price on the exchange is higher than other exchanges, traders will wish to sell their BTC on the hacked exchange. The hacker could then withdraw the BTC they just purchased with (fake) USD

If the Bitcoin network is hacked, then Bitcoin is essentially dead. And so what?

I am referring to the exchange, not the "Bitcoin network"

deisik

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Quote from: Quickseller on February 25, 2017, 04:01:22 AM

The "round trip" cost -- that is the cost to withdraw from one exchange and deposit in another -- will be under 0.5% in most cases (when you have an economy of scale). As mentioned previously, traders can keep fiat on exchanges, and do not need to wait for a withdrawal (and subsequent deposit) to process to engage in an arb trade due to the fungibility of USD -- they can simply use USD on one exchange, then replenish that USD once a withdraw/deposit cycle is completed from the exchange with the higher BTCUSD price

This opens opportunities for arbitrage, but as such it is inconsequential to the principles behind operation of any exchange. And a distributed decentralized exchange fits into this "grand scheme of things" perfectly. To put it differently, there is nothing that would conceptually distinguish such an exchange from any other exchange out there, apart from it being decentralized, of course

But that's an intended feature

Quote from: Quickseller on February 25, 2017, 04:01:22 AM

The fact that USD balances on an exchange will never be safe on an exchange, which essentially means that BTC balances are not safe, and thus LN does nothing to prevent thefts via the hacking of an exchange.

The reason why BTC balances are not safe if USD balances are not safe is because if an exchange is hacked, then the hacker could create a USD balance on their account that was not actually received by said exchange, use that USD balance to buy up the BTC on the order book, and bid up the price on the exchange is higher than other exchanges, traders will wish to sell their BTC on the hacked exchange. The hacker could then withdraw the BTC they just purchased with (fake) USD

If the Bitcoin network is hacked, then Bitcoin is essentially dead. And so what?

Quickseller

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Activity: 2996

Merit: 2374

Quote from: deisik on February 25, 2017, 03:47:07 AM

Quote from: Quickseller on February 25, 2017, 03:27:46 AM

Quote from: deisik on February 25, 2017, 03:14:49 AM

Quote from: Quickseller on February 25, 2017, 02:41:17 AM

I guess I have a few questions about this system:
1 - What mechanisms are in place to force the price on this (hypothetical) exchange to generally match the prevailing market price on other efficient markets?
2 - How do I turn my 1 BTC into $1,100 (or however many dollars 1 btc is worth) in $100 bills/cash?
3 - If those who have a USD balance (secured by BTC) on the exchange, what, from a technical perspective, would prevent the exchange from stealing the BTC that is backing the USD? If nothing, then I think there is still the problem that I described above.

Now to your questions

1. As I understand it, there shouldn't be any such mechanism at all, the price should be determined entirely on the basis of supply and demand existing on this distributed exchange. Apart from that, how many exchanges do you know that index their price to some other exchange?

All the USD exchanges trade at roughly the same price. The reason for this is because users can withdraw dollars and/or bitcoin from one exchange and deposit it into another, this allows traders to engage in arbitrage when the price on one exchange deviates from others. Traders will frequently have both BTC and USD on multiple exchanges, so that they do not need to wait for the withdrawal and deposits to process. For example, if the price on bitfinex rises above the price on coinbase (and there is sufficient liquidity), then a trader will sell BTC on bitfinex, and buy an equal amount of BTC on coinbase, they will then withdraw USD on bitfinex, and BTC on coinbase, and deposit an equal amount on the opposite respective exchange.

I do not see any similar mechanism on the exchange you describe

There is none, and there shouldn't be none

On the other hand, you are obviously stretching your "facts" here. While it is certainly true that folks can send bitcoins from one exchange to another (and this remains the same), this is not the case with fiat (say, dollars) due to hefty commissions on both fiat withdrawals and deposits as well as time it takes to process these transactions (which basically renders your "mechanism" irrelevant). In short, it doesn't work the way you pretend it does. Anyway, even if we assumed that what you say were true, it still wouldn't change anything. As I just said, cash-settled futures (which make up the majority of futures traded) work exactly this way. In other words, you can't withdraw gold which you allegedly have

The "round trip" cost -- that is the cost to withdraw from one exchange and deposit in another -- will be under 0.5% in most cases (when you have an economy of scale). As mentioned previously, traders can keep fiat on exchanges, and do not need to wait for a withdrawal (and subsequent deposit) to process to engage in an arb trade due to the fungibility of USD -- they can simply use USD on one exchange, then replenish that USD once a withdraw/deposit cycle is completed from the exchange with the higher BTCUSD price.

Quote from: deisik on February 25, 2017, 03:47:07 AM

Quote from: Quickseller on February 25, 2017, 03:27:46 AM

Quote from: deisik on February 25, 2017, 03:14:49 AM

3. There is no exchange as such as you come to think of it. It is the network itself that imposes restrictions. In other words, it works in absolutely the same way as the plain vanilla Bitcoin network, i.e. you can't spend more bitcoins that exist on the blockchain and linked to your Bitcoin address

I was under the impression that this type of exchange would be the solution to the problems that I described here?

What point specifically do you refer to here (there)?

The fact that USD balances on an exchange will never be safe on an exchange, which essentially means that BTC balances are not safe, and thus LN does nothing to prevent thefts via the hacking of an exchange.

The reason why BTC balances are not safe if USD balances are not safe is because if an exchange is hacked, then the hacker could create a USD balance on their account that was not actually received by said exchange, use that USD balance to buy up the BTC on the order book, and bid up the price on the exchange is higher than other exchanges, traders will wish to sell their BTC on the hacked exchange. The hacker could then withdraw the BTC they just purchased with (fake) USD.

deisik

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Quote from: Quickseller on February 25, 2017, 03:27:46 AM

Quote from: deisik on February 25, 2017, 03:14:49 AM

Quote from: Quickseller on February 25, 2017, 02:41:17 AM

I guess I have a few questions about this system:
1 - What mechanisms are in place to force the price on this (hypothetical) exchange to generally match the prevailing market price on other efficient markets?
2 - How do I turn my 1 BTC into $1,100 (or however many dollars 1 btc is worth) in $100 bills/cash?
3 - If those who have a USD balance (secured by BTC) on the exchange, what, from a technical perspective, would prevent the exchange from stealing the BTC that is backing the USD? If nothing, then I think there is still the problem that I described above.

Now to your questions

1. As I understand it, there shouldn't be any such mechanism at all, the price should be determined entirely on the basis of supply and demand existing on this distributed exchange. Apart from that, how many exchanges do you know that index their price to some other exchange?

All the USD exchanges trade at roughly the same price. The reason for this is because users can withdraw dollars and/or bitcoin from one exchange and deposit it into another, this allows traders to engage in arbitrage when the price on one exchange deviates from others. Traders will frequently have both BTC and USD on multiple exchanges, so that they do not need to wait for the withdrawal and deposits to process. For example, if the price on bitfinex rises above the price on coinbase (and there is sufficient liquidity), then a trader will sell BTC on bitfinex, and buy an equal amount of BTC on coinbase, they will then withdraw USD on bitfinex, and BTC on coinbase, and deposit an equal amount on the opposite respective exchange.

I do not see any similar mechanism on the exchange you describe

There is none, and there shouldn't be any

In fact, this is no more than correlation due to free market laws, not a mechanism (in the sense as you first meant it). On the other hand, you are obviously stretching your "facts" here. While it is certainly true that folks can send bitcoins from one exchange to another (and this remains the same), this is not the case with fiat (say, dollars) due to hefty commissions on both fiat withdrawals and deposits as well as time it takes to process these transactions (which basically renders your "mechanism" irrelevant). In short, it doesn't work the way you pretend it does. Anyway, even if we assumed that what you say were true, it still wouldn't change anything. As I just said, cash-settled futures (which make up the majority of futures traded) work exactly this way. In other words, you can't withdraw gold which you allegedly have

Quote from: Quickseller on February 25, 2017, 03:27:46 AM

Quote from: deisik on February 25, 2017, 03:14:49 AM

3. There is no exchange as such as you come to think of it. It is the network itself that imposes restrictions. In other words, it works in absolutely the same way as the plain vanilla Bitcoin network, i.e. you can't spend more bitcoins that exist on the blockchain and linked to your Bitcoin address

I was under the impression that this type of exchange would be the solution to the problems that I described here?

What point specifically do you refer to here (there)?

Quickseller

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Activity: 2996

Merit: 2374

Quote from: deisik on February 25, 2017, 03:14:49 AM

Quote from: Quickseller on February 25, 2017, 02:41:17 AM

I guess I have a few questions about this system:
1 - What mechanisms are in place to force the price on this (hypothetical) exchange to generally match the prevailing market price on other efficient markets?
2 - How do I turn my 1 BTC into $1,100 (or however many dollars 1 btc is worth) in $100 bills/cash?
3 - If those who have a USD balance (secured by BTC) on the exchange, what, from a technical perspective, would prevent the exchange from stealing the BTC that is backing the USD? If nothing, then I think there is still the problem that I described above.

Now to your questions

1. As I understand it, there shouldn't be any such mechanism at all, the price should be determined entirely on the basis of supply and demand existing on this distributed exchange. Apart from that, how many exchanges do you know that index their price to some other exchange?

All the USD exchanges trade at roughly the same price. The reason for this is because users can withdraw dollars and/or bitcoin from one exchange and deposit it into another, this allows traders to engage in arbitrage when the price on one exchange deviates from others. Traders will frequently have both BTC and USD on multiple exchanges, so that they do not need to wait for the withdrawal and deposits to process. For example, if the price on bitfinex rises above the price on coinbase (and there is sufficient liquidity), then a trader will sell BTC on bitfinex, and buy an equal amount of BTC on coinbase, they will then withdraw USD on bitfinex, and BTC on coinbase, and deposit an equal amount on the opposite respective exchange.

I do not see any similar mechanism on the exchange you describe.

Quote from: deisik on February 25, 2017, 03:14:49 AM

3. There is no exchange as such as you come to think of it. It is the network itself that imposes restrictions. In other words, it works in absolutely the same way as the plain vanilla Bitcoin network, i.e. you can't spend more bitcoins that exist on the blockchain and linked to your Bitcoin address

I was under the impression that this type of exchange would be the solution to the problems that I described here?

deisik

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Quote from: Quickseller on February 25, 2017, 02:41:17 AM

Quote from: deisik on February 25, 2017, 02:22:14 AM

The exact mechanism had been discussed here a few years ago even before LN was conceived

But with LN and instant transactions, it should work like a charm. As I said earlier, I was also rather skeptic at first and thought that it was not quite possible to do. More specifically, when you buy 1000 dollars for 1 bitcoin, you obviously can't have dollars physically, but it is basically along the same lines as, for example, cash-settled futures work (so there is nothing fishy about that). You should have only 1 bitcoin locked in your account that matches 1000 dollars at the current price. If the dollar rises (say, 1 bitcoin is now worth only 500 dollars), you should have 2 bitcoins in your account to still keep 1000 dollars. If you don't have enough bitcoins, the network forcefully takes some satoshis from the account so that your balance wouldn't go negative. In the latter case, you would get what is called a margin call in trading parlance

I am not sure if you are familiar with how OkCoin.com futures works, but this sounds a lot like how their system works (although OkCoin futures are more like gambling than anything else) -- maybe with much lower leverage. With OkCoin futures, the price is generally kept in line with the market price via the fact that contracts are periodically settled at an index price (that is compiled of prices of exchanges in which actual dollars can be exchanged for actual btc, and vice versa)

No, I'm not familiar with their system. Anyway, if there is some company behind such a system, it should be taken with a grain of salt

Quote from: Quickseller on February 25, 2017, 02:41:17 AM

I guess I have a few questions about this system:
1 - What mechanisms are in place to force the price on this (hypothetical) exchange to generally match the prevailing market price on other efficient markets?
2 - How do I turn my 1 BTC into $1,100 (or however many dollars 1 btc is worth) in $100 bills/cash?
3 - If those who have a USD balance (secured by BTC) on the exchange, what, from a technical perspective, would prevent the exchange from stealing the BTC that is backing the USD? If nothing, then I think there is still the problem that I described above.

Now to your questions

1. As I understand it, there shouldn't be any such mechanism at all, i.e. the price should be determined entirely on the basis of supply and demand existing on this distributed exchange. Apart from that, how many exchanges do you know that index their price to some other exchange?
2. You can't unless you transfer the keys from your wallet to someone else in exchange for physical dollars. As I said, this is how cash-settled futures work. For example, you can buy gold futures but if they are cash-settled you can't demand physical delivery of gold after expiration. What's more, such futures make up most of the trading volume on commodity exchanges (e.g. oil and precious metals markets)
3. There is no exchange as such as you come to think of it. It is the network itself that imposes restrictions. In other words, it works in absolutely the same way as the plain vanilla Bitcoin network does, i.e. you can't spend more bitcoins that exist on the blockchain and linked to your Bitcoin address

Quickseller

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Quote from: deisik on February 25, 2017, 02:22:14 AM

Quote from: Quickseller on February 25, 2017, 02:08:59 AM

Quote from: deisik on February 25, 2017, 01:57:40 AM

Quote from: Quickseller on February 25, 2017, 01:40:24 AM

I am not sure if you are specifically referring to this, however the system you are describing sounds a lot like bitsquare. With bitsquare, traders are mostly protected against a hack of the exchange, although the arbitrators essentially are bearing the risk of the exchange being hacked, and I don't think there is a way of getting around this. Traders also need to trust bitsquare to the extent that multiple arbitrators are not colluding with each other maliciously. Probably very importantly, users will need to know how to detect fraudulent fiat payments, and dispute the receipt of the payment -- this is a skill that many current bitcoin users do not have, and one that potential new users have in less frequently. This kind of exchange will also result in less liquidity than say bitfinex as traders will need to wait longer to receive fiat funds

No, I don't mean anything such

In fact, I'm not quite familiar with smart contracts (which you mentioned earlier) but if I assume correctly the system that I'm talking about has more to do with them that with the arbitrator system of bitsquare. Basically, the LN network itself running over the blockchain will be an arbitrator here. At a real exchange, when your order is filled your account balance changes, with LN it will be pretty much the same. The difference will be that since there are no, say, genuine dollars as such in the system, they will be represented by bitcoins themselves. If the price changes beyond what you have as "dollars", your bitcoin "dollars" (or some part thereof) will be forcefully sold for "genuine" bitcoins. It may look strange at first glance, but this is how margin trading works in general. With margin trading, the dollars in you account are sort of virtual since they are not yours but only borrowed

I am not quite sure I understand the process of how bitcoin held on LN would be turned into $100 bills with the process you describe. I am also not quite sure I understand how the USD balance would be protected against theft/hacking on the part of the exchange. Wouldn't users need to sign a transaction that results in the exchange controlling all of a users' coins that is part of their USD balance? Or am I missing something?

I am interested....do you have a whitepaper or a blog post or something with more information about this system?

The exact mechanism had been discussed here a few years ago even before LN was conceived

But with LN and instant transactions, it should work like a charm. As I said earlier, I was also rather skeptic at first and thought that it was not quite possible to do. More specifically, when you buy 1000 dollars for 1 bitcoin, you obviously can't have dollars physically, but it is basically along the same lines as, for example, cash-settled futures work (so there is nothing fishy about that). You should have only 1 bitcoin locked in your account that matches 1000 dollars at the current price. If the dollar rises (say, 1 bitcoin is now worth only 500 dollars), you should have 2 bitcoins in your account to still keep 1000 dollars. If you don't have enough bitcoins, the network forcefully takes some satoshis from the account so that your balance wouldn't go negative. In the latter case, you would get what is called a margin call in trading parlance

I am not sure if you are familiar with how OkCoin.com futures works, but this sounds a lot like how their system works (although OkCoin futures are more like gambling than anything else) -- maybe with much lower leverage. With OkCoin futures, the price is generally kept in line with the market price via the fact that contracts are periodically settled at an index price (that is compiled of prices of exchanges in which actual dollars can be exchanged for actual btc, and vice versa).

I guess I have a few questions about this system:
1 - What mechanisms are in place to force the price on this (hypothetical) exchange to generally match the prevailing market price on other efficient markets?
2 - How do I turn my 1 BTC into $1,100 (or however many dollars 1 btc is worth) in $100 bills/cash?
3 - If those who have a USD balance (secured by BTC) on the exchange, what, from a technical perspective, would prevent the exchange from stealing the BTC that is backing the USD? If nothing, then I think there is still the problem that I described above.

deisik

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Quote from: Quickseller on February 25, 2017, 02:08:59 AM

Quote from: deisik on February 25, 2017, 01:57:40 AM

Quote from: Quickseller on February 25, 2017, 01:40:24 AM

I am not sure if you are specifically referring to this, however the system you are describing sounds a lot like bitsquare. With bitsquare, traders are mostly protected against a hack of the exchange, although the arbitrators essentially are bearing the risk of the exchange being hacked, and I don't think there is a way of getting around this. Traders also need to trust bitsquare to the extent that multiple arbitrators are not colluding with each other maliciously. Probably very importantly, users will need to know how to detect fraudulent fiat payments, and dispute the receipt of the payment -- this is a skill that many current bitcoin users do not have, and one that potential new users have in less frequently. This kind of exchange will also result in less liquidity than say bitfinex as traders will need to wait longer to receive fiat funds

No, I don't mean anything such

In fact, I'm not quite familiar with smart contracts (which you mentioned earlier) but if I assume correctly the system that I'm talking about has more to do with them that with the arbitrator system of bitsquare. Basically, the LN network itself running over the blockchain will be an arbitrator here. At a real exchange, when your order is filled your account balance changes, with LN it will be pretty much the same. The difference will be that since there are no, say, genuine dollars as such in the system, they will be represented by bitcoins themselves. If the price changes beyond what you have as "dollars", your bitcoin "dollars" (or some part thereof) will be forcefully sold for "genuine" bitcoins. It may look strange at first glance, but this is how margin trading works in general. With margin trading, the dollars in you account are sort of virtual since they are not yours but only borrowed

I am not quite sure I understand the process of how bitcoin held on LN would be turned into $100 bills with the process you describe. I am also not quite sure I understand how the USD balance would be protected against theft/hacking on the part of the exchange. Wouldn't users need to sign a transaction that results in the exchange controlling all of a users' coins that is part of their USD balance? Or am I missing something?

I am interested....do you have a whitepaper or a blog post or something with more information about this system?

The exact mechanism had been discussed here a few years ago even before LN was conceived

But with LN and instant transactions, it should work like a charm. As I said earlier, I was also rather skeptic at first and thought that it was not quite possible to do. More specifically, when you buy 1000 dollars for 1 bitcoin, you obviously can't have dollars physically, but it is basically along the same lines as, for example, cash-settled futures work (so there is nothing fishy about that). You should have only 1 bitcoin locked in your account that matches 1000 dollars at the current price. If the dollar rises (say, 1 bitcoin is now worth only 500 dollars), you should have 2 bitcoins in your account to still keep 1000 dollars. If you don't have enough bitcoins, the network forcefully takes some satoshis from the account so that your balance wouldn't go negative. In the latter case, you would get what is called a margin call in trading parlance

Quickseller

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Activity: 2996

Merit: 2374

Quote from: deisik on February 25, 2017, 01:57:40 AM

Quote from: Quickseller on February 25, 2017, 01:40:24 AM

I am not sure if you are specifically referring to this, however the system you are describing sounds a lot like bitsquare. With bitsquare, traders are mostly protected against a hack of the exchange, although the arbitrators essentially are bearing the risk of the exchange being hacked, and I don't think there is a way of getting around this. Traders also need to trust bitsquare to the extent that multiple arbitrators are not colluding with each other maliciously. Probably very importantly, users will need to know how to detect fraudulent fiat payments, and dispute the receipt of the payment -- this is a skill that many current bitcoin users do not have, and one that potential new users have in less frequently. This kind of exchange will also result in less liquidity than say bitfinex as traders will need to wait longer to receive fiat funds

No, I don't mean anything such

In fact, I'm not quite familiar with smart contracts (which you mentioned earlier) but if I assume correctly the system that I'm talking about has more to do with them that with the arbitrator system of bitsquare. Basically, the LN network itself running over the blockchain will be an arbitrator here. At a real exchange, when your order is filled your account balance changes, with LN it will be pretty much the same. The difference will be that since there are no, say, genuine dollars as such in the system, they will be represented by bitcoins themselves. If the price changes beyond what you have as "dollars", your bitcoin "dollars" (or some part thereof) will be forcefully sold for "genuine" bitcoins. It may look strange at first glance, but this is how margin trading works in general. With margin trading, the dollars in you account are sort of virtual since they are not yours but only borrowed

I am not quite sure I understand the process of how bitcoin held on LN would be turned into $100 bills with the process you describe. I am also not quite sure I understand how the USD balance would be protected against theft/hacking on the part of the exchange. Wouldn't users need to sign a transaction that results in the exchange controlling all of a users' coins that is part of their USD balance? Or am I missing something?

I am interested....do you have a whitepaper or a blog post or something with more information about this system?

deisik

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Quote from: Quickseller on February 25, 2017, 01:40:24 AM

Quote from: deisik on February 24, 2017, 04:57:54 AM

Quote from: Quickseller on February 23, 2017, 11:25:48 PM

Quote from: deisik on February 23, 2017, 11:00:28 PM

There had been plenty of talk about implementing decentralized distributed exchanges over the blockchain, but we are not there yet by any metric. Maybe, Lightning Network will change something with its close to instant transactions

This will never be possible.

1 - Once you sell your btc for USD, your USD will be at risk.

2 - If you have any orders on the exchange will be at risk because the exchange is not going to let you make an order without the coins being controlled by the exchange -- otherwise customers would have the opportunity to not sign a transaction and could potentially delay signing to wait and see if they can repurchase the sold coins at a lower price very soon after they sell

Previously, I also thought along these lines basically

Though, unlike you, I understood that I couldn't know everything, and I assumed that there was a way to make such an exchange irreversible. And yes, some guys have explained to me how a decentralized distributed exchange can be done in an efficient manner. Basically, if you sell or buy bitcoins, you provide collateral in the form of the same bitcoins (say, twice as much the amount you buy or sell), so if you try to welsh on the deal, you lose more. Right now, this system wouldn't be usable for obvious reasons (due to transaction fees and confirmation delays), but with Lightning Network properly implemented it should work flawlessly and reliably

I am not sure if you are specifically referring to this, however the system you are describing sounds a lot like bitsquare. With bitsquare, traders are mostly protected against a hack of the exchange, although the arbitrators essentially are bearing the risk of the exchange being hacked, and I don't think there is a way of getting around this. Traders also need to trust bitsquare to the extent that multiple arbitrators are not colluding with each other maliciously. Probably very importantly, users will need to know how to detect fraudulent fiat payments, and dispute the receipt of the payment -- this is a skill that many current bitcoin users do not have, and one that potential new users have in less frequently. This kind of exchange will also result in less liquidity than say bitfinex as traders will need to wait longer to receive fiat funds

No, I don't mean anything such

In fact, I'm not quite familiar with smart contracts (which you mentioned earlier) but if I assume correctly the system that I'm talking about has more to do with them that with the arbitrator system of bitsquare. Basically, the LN network itself running over the blockchain will be an arbitrator here. At a real exchange, when your order is filled your account balance changes, with LN it will be pretty much the same. The difference will be that since there are no, say, genuine dollars as such in the system, they will be represented by bitcoins themselves. If the price changes beyond what you have as "dollars", your bitcoin "dollars" (or some part thereof) will be forcefully exchanged for "genuine" bitcoins. It may look strange at first glance, but this is how margin trading works in general. With margin trading, the dollars in your account are sort of virtual as well since they are not yours but only borrowed

Quickseller

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Activity: 2996

Merit: 2374

Quote from: deisik on February 24, 2017, 04:57:54 AM

Quote from: Quickseller on February 23, 2017, 11:25:48 PM

Quote from: deisik on February 23, 2017, 11:00:28 PM

There had been plenty of talk about implementing decentralized distributed exchanges over the blockchain, but we are not there yet by any metric. Maybe, Lightning Network will change something with its close to instant transactions

This will never be possible.

1 - Once you sell your btc for USD, your USD will be at risk.

2 - If you have any orders on the exchange will be at risk because the exchange is not going to let you make an order without the coins being controlled by the exchange -- otherwise customers would have the opportunity to not sign a transaction and could potentially delay signing to wait and see if they can repurchase the sold coins at a lower price very soon after they sell

Previously, I also thought along these lines basically

Though, unlike you, I understood that I couldn't know everything, and I assumed that there was a way to make such an exchange irreversible. And yes, some guys have explained to me how a decentralized distributed exchange can be done in an efficient manner. Basically, if you sell or buy bitcoins, you provide collateral in the form of the same bitcoins (say, twice as much the amount you buy or sell), so if you try to welsh on the deal, you lose more. Right now, this system wouldn't be usable for obvious reasons (due to transaction fees and confirmation delays), but with Lightning Network properly implemented it should work flawlessly and reliably

I am not sure if you are specifically referring to this, however the system you are describing sounds a lot like bitsquare. With bitsquare, traders are mostly protected against a hack of the exchange, although the arbitrators essentially are bearing the risk of the exchange being hacked, and I don't think there is a way of getting around this. Traders also need to trust bitsquare to the extent that multiple arbitrators are not colluding with each other maliciously. Probably very importantly, users will need to know how to detect fraudulent fiat payments, and dispute the receipt of the payment -- this is a skill that many current bitcoin users do not have, and one that potential new users have in less frequently. This kind of exchange will also result in less liquidity than say bitfinex as traders will need to wait longer to receive fiat funds.

If the system you describe would work so successfully with an instant-confirmation system (like LN), then platforms like localbitcoins would implement similar systems (especially for difficult-to-reverse type payment methods).

deisik

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Quote from: Ente on February 24, 2017, 06:36:51 AM

Quote from: deisik on February 23, 2017, 11:00:28 PM

What ZeroHedge slogan do you refer to?

Why, it's

Code:

On a long enough timeline the survival rate for everyone drops to zero.

of course :-)

Kinda death is irreversible no matter what we try, life is not recyclable we are born to die. On the other hand, when we move closer and closer to a limit (i.e. zero or infinity), virtually everything becomes possible

Quote from: Ente on February 24, 2017, 06:36:51 AM

Quote from: deisik on February 23, 2017, 11:00:28 PM

I don't think it is a question of trust. Obviously, there is no trust in any such exchanges. But we don't have a lot of choice in this regard. If we want to earn profits or just convert our bitcoins to fiat (and vice versa) and get market prices at that, we may have to use exchanges after all (or similar centralized services). There had been plenty of talk about implementing decentralized distributed exchanges over the blockchain, but we are not there yet by any metric. Maybe, Lightning Network will change something with its close to instant transactions

Exchanges can and will show up in a decentralized, secure way, I am sure. The real ~~gambling~~, err, trading, is in the margin trading. Now that's a different thing, where I don't know if this can even be possible in a decentralized, secure way. Maybe with smart contracts

Margin trading would be no different from regular trading

As to me , there is no particular difference with regular trading at all (i.e. without using borrowed funds). Just like when trading with no margin you can't sell more than you have, it is the same with margin trading, though the price change required to wipe your account will be less (it will be just above 0 by a certain margin, pardon the pun). In this way, I don't see any insurmountable difficulty in setting the limit on the price change which will make your funds forcefully overtaken. This is a minor technical issue, I can't even call it a difficulty as such

Ente

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Quote from: deisik on February 23, 2017, 11:00:28 PM

What ZeroHedge slogan do you refer to?

Why, it's

Code:

On a long enough timeline the survival rate for everyone drops to zero.

of course :-)

I don't think it is a question of trust. Obviously, there is no trust in any such exchanges. But we don't have a lot of choice in this regard. If we want to earn profits or just convert our bitcoins to fiat (and vice versa) and get market prices at that, we may have to use exchanges after all (or similar centralized services). There had been plenty of talk about implementing decentralized distributed exchanges over the blockchain, but we are not there yet by any metric. Maybe, Lightning Network will change something with its close to instant transactions
[/quote]

Exchanges can and will show up in a decentralized, secure way, I am sure. The real ~~gambling~~, err, trading, is in the margin trading. Now that's a different thing, where I don't know if this can even be possible in a decentralized, secure way. Maybe with smart contracts ^^

Ente

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Quote from: Quickseller on February 23, 2017, 11:25:48 PM

Quote from: deisik on February 23, 2017, 11:00:28 PM

There had been plenty of talk about implementing decentralized distributed exchanges over the blockchain, but we are not there yet by any metric. Maybe, Lightning Network will change something with its close to instant transactions

This will never be possible.

1 - Once you sell your btc for USD, your USD will be at risk.

2 - If you have any orders on the exchange will be at risk because the exchange is not going to let you make an order without the coins being controlled by the exchange -- otherwise customers would have the opportunity to not sign a transaction and could potentially delay signing to wait and see if they can repurchase the sold coins at a lower price very soon after they sell

Previously, I also thought along these lines basically

Though, unlike you, I understood that I couldn't know everything, and I assumed that there was a way to make such an exchange irreversible. And yes, some guys have explained to me how a decentralized distributed exchange can be done in an efficient manner. Basically, if you sell or buy bitcoins, you provide collateral in the form of the same bitcoins (say, twice as much the amount you buy or sell), so if you try to welsh on the deal, you lose more. Right now, this system wouldn't be usable for obvious reasons (due to transaction fees and confirmation delays), but with Lightning Network properly implemented it should work flawlessly and reliably

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Quote from: deisik on February 23, 2017, 11:00:28 PM

There had been plenty of talk about implementing decentralized distributed exchanges over the blockchain, but we are not there yet by any metric. Maybe, Lightning Network will change something with its close to instant transactions

This will never be possible.

1 - Once you sell your btc for USD, your USD will be at risk.

2 - If you have any orders on the exchange will be at risk because the exchange is not going to let you make an order without the coins being controlled by the exchange -- otherwise customers would have the opportunity to not sign a transaction and could potentially delay signing to wait and see if they can repurchase the sold coins at a lower price very soon after they sell.

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Quote from: Ente on February 23, 2017, 09:36:40 PM

Quote from: deisik on February 23, 2017, 11:12:15 AM

Quote from: Ente on February 23, 2017, 11:00:06 AM

Quote from: pbleak on February 23, 2017, 08:47:50 AM

Quote from: ETCethereum on February 21, 2017, 08:25:22 PM

i want to ask, bitfinex still trusted , deposit and withdraw normal and fast or not
thank you

It's fine in general day to day terms. Just be aware that the hack was possibly insider so you can never be sure. Just don't put much on an exchange as a rule. Alternatively just use one that has never been hacked.

Heh.
That's like saying "only drive in cars that never had an accident"

In fact, there is a reason behind this

Would you drive a car which had been in an accident in the past, and you don't what was the real cause that made it happen? I guess common sense would tell you to stay away from this car until you find out the exact cause of the accident (and fix it). What if the brakes are out of order in this car? It is basically the same with Bitfinex. Basically, we don't know for certain what happened there. If it was an inside job, and they didn't "fix it", you can be dead sure that it will happen again sooner or later (that's what happened to Bter)

What you say isn't wrong, not at all.
What I'm saying is that all cars are insanely dangerous, high-speed high-weight deathbullets carrying fragile humans inside. And that zerohedges slogan has some truth in it.
The real question, of course, is if you trust yourself more than a centralized exchange

What ZeroHedge slogan do you refer to?

I don't think it is a question of trust. Obviously, there is no trust in any such exchanges. But we don't have a lot of choice in this regard. If we want to earn profits or just convert our bitcoins to fiat (and vice versa) and get market prices at that, we may have to use exchanges after all (or similar centralized services). There had been plenty of talk about implementing decentralized distributed exchanges over the blockchain, but we are not there yet by any metric. Maybe, Lightning Network will change something with its close to instant transactions

Ente

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Quote from: deisik on February 23, 2017, 11:12:15 AM

Quote from: Ente on February 23, 2017, 11:00:06 AM

Quote from: pbleak on February 23, 2017, 08:47:50 AM

Quote from: ETCethereum on February 21, 2017, 08:25:22 PM

i want to ask, bitfinex still trusted , deposit and withdraw normal and fast or not
thank you

It's fine in general day to day terms. Just be aware that the hack was possibly insider so you can never be sure. Just don't put much on an exchange as a rule. Alternatively just use one that has never been hacked.

Heh.
That's like saying "only drive in cars that never had an accident"

In fact, there is a reason behind this

Would you drive a car which had been in an accident in the past, and you don't what was the real cause that made it happen? I guess common sense would tell you to stay away from this car until you find out the exact cause of the accident (and fix it). What if the brakes are out of order in this car? It is basically the same with Bitfinex. Basically, we don't know for certain what happened there. If it was an inside job, and they didn't "fix it", you can be dead sure that it will happen again sooner or later (that's what happened to Bter)

What you say isn't wrong, not at all.
What I'm saying is that all cars are insanely dangerous, high-speed high-weight deathbullets carrying fragile humans inside. And that zerohedges slogan has some truth in it.
The real question, of course, is if you trust yourself more than a centralized exchange..

Ente

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Quote from: Ente on February 23, 2017, 11:00:06 AM

Quote from: pbleak on February 23, 2017, 08:47:50 AM

Quote from: ETCethereum on February 21, 2017, 08:25:22 PM

i want to ask, bitfinex still trusted , deposit and withdraw normal and fast or not
thank you

It's fine in general day to day terms. Just be aware that the hack was possibly insider so you can never be sure. Just don't put much on an exchange as a rule. Alternatively just use one that has never been hacked.

Heh.
That's like saying "only drive in cars that never had an accident"

In fact, there is a reason behind this

Would you drive a car which had been in an accident in the past, and you don't what was the real cause that made it happen? I guess common sense would tell you to stay away from this car until you find out the exact cause of the accident (and fix it). What if the brakes are out of order in this car? It is basically the same with Bitfinex. Basically, we don't know for certain what happened there. If it was an inside job, and they didn't "fix it", you can be dead sure that it will happen again sooner or later (that's what happened to Bter)

Ente

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Quote from: pbleak on February 23, 2017, 08:47:50 AM

Quote from: ETCethereum on February 21, 2017, 08:25:22 PM

i want to ask, bitfinex still trusted , deposit and withdraw normal and fast or not
thank you

It's fine in general day to day terms. Just be aware that the hack was possibly insider so you can never be sure. Just don't put much on an exchange as a rule. Alternatively just use one that has never been hacked.

Heh.
That's like saying "only drive in cars that never had an accident".
The correct solution is to never give up your bitcoins - especially not to a place where hundredthousands of them are laying, where there are no legal securities and no insurance.
If you need to exchange coins, sure, put a few up. But as few as possible, and for as short as possible.

Many have to learn that the hard way. I learned it the hard way.

Ente

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Quote from: ETCethereum on February 21, 2017, 08:25:22 PM

i want to ask, bitfinex still trusted , deposit and withdraw normal and fast or not
thank you

It's fine in general day to day terms. Just be aware that the hack was possibly insider so you can never be sure. Just don't put much on an exchange as a rule. Alternatively just use one that has never been hacked.

Topic: [OFFICIAL]Bitfinex.com first Bitcoin P2P lending platform for leverage trading - page 49. (Read 723903 times)