Topic: P2P Exchange for bitcoin - page 10. (Read 42805 times)

I think that it will be better to add one layer to bitcoin mining protocol which could serve as a cloud-hosting-crowd-sourced p2p service... for start, perhaps only tickers and charts should be deployed at that new infrastructure and therefore take the load of exchanges... Introduction of new coin doesn't have to be mandatory, reward could be spread in form of bitcoins which could be collected from markets in a form of small fee for every transaction... Or even that new hosting layer could demand a 1 satoshi fee for every http request...

Exchange sites will never have the ability to provide a full working service, it is not just up to them to buy more servers, the whole web server hosting system is sort of faulty... Please check more analysis here: https://bitcointalksearch.org/topic/distributed-infrastructure-of-bitcoin-exchange-hosting-layer-api-179027

Maybe a hybrid system would be better.  You need some kind of history to establish price discovery and allow orders.

If I want to sell 1 BTC for at most EUR 100, I need some way of figuring out what the market price actually is.  If there was a ticker that tracks the price, then that could be used to handle off-chain trades.

Those trades would have to be handled some way though.

Also mining for such a system would take hashing away from the main bitcoin network.

Would it not be possible that each client in the decentralised system either could import an existing private PGP-key, or generate one for you to use, for example it could even import ratings from bitcoin-otc.com if you could prove you had the right private key. Then all that were needed for trading and identifying a certain individual on the network would be to prove that the client holds the private key, kind of like the same authentication method that is used on freenode when auth/verifying with gribble.

That would build kind of a layer over bitcoin-otc, but it could also be made to work stand alone. So the ratings given and received somehow where retained in the system. Not sure how you'd secure the data integrity, perhaps by signing a rating, and then having the client check it against the public key to see if the signature is valid ?

So if you're Alice and trades with Bob, you can see that Bob has received like 20 ratings, and then an indicator could indicate whether the signature of all those ratings were valid or not. And then it would also be possible to click on the usernames that rates Bob to check their history and so on.

I'm not sure what's most desirable, just to connect individual parties for trades, like bitcoin-otc, or to have a more liquid orderbook like MtGox. In the event of the latter, you would need to have a fiat balance and a btc balance for each user, and the btc would need to be held somewhere ? Are we then talking about centralization again, hum.. Perhaps the best option is to neither store fiat nor btc in such a desentralized exchange, but only to connect buyers and sellers. And then there could be a bunch of trusted escrows that could be used as well, or one could just send the funds if one felt comfortable with it based on the rating of the counterparty. A trade could also be completed in bunches, where a 1K USD trade is completed by first sending 100 USD, then 200 and so on. The more I think of it, just having a nice bit-torrent like client connecting buyers and sellers would be pretty nice.

To make things easier, there could be different filters, so one could filter users based on geo-positions for instance, or currency, or whatever. If someone puts up a bid of 10 BTC in london for whatever price, then somebody could chose to match it completely or partially, and after it's matched it could be locked in the market for a certain time frame, perhaps 12 hours, or whatever timeframe (could also be adjustable) the seller or buyer (or both ) is interested in ? If the deal goes through, the order is removed from the market and added to the done trades list, so that other users can see what trades are done, and at what price. In the done trades list, there could also be a link to ratings, as it would be desirable for both parties to rate the other when the deal is done.

Some crafty software could even hide all the 'ugly' PGP details from the less advanced users. So all they needed to do was to download the client, hook up with a counterparty, and check his trustrating, and then decide how to proceed from there, so there should obviously be some messaging capasity in the system as well. I think there's a bitmessage open source system recently created, don't know much about it, but maybe it could be used ?

So in the future, it could be super-easy, just go to bitcoin-org, download BOX (Bitcoin Open eXchange) or whatever name it is called. And then after it is installed, it asks for PGP-import, or generates a private pgp-key if you don't have one, and uploads the public key to a keyserver or perhaps the public key should reside in the exchange network itself ? Anyway, everything happens under the hood, so the only thing the user does is entering his order.

It could be Tom, living in new york, enters buy 3 BTC @ 93, and selects preferred payment method from a drop down list, for instance wire transfer. Then Janice sees this buy order, and she wants to sell 3 BTC for the artwork she sold online, so she marks the order and a message is sent to Tom that Janice wants to trade. Tom then proceeds to check the trust level of Janice, and sees that she is 'highly trusted after 30 successfull trades. There could be a colorbar or something indicating the trust level of a user + the ability to clik the user to see his/her complete story. So after peeking over the ratings of Alice, Tom thinks it looks good, and sends Alice a message asking her for her bank account information. This is then relayed immediately to Tom, and signed by Alice, and it will show up as 'approved message' on Tom's end. Then tom sends the money, and when the money is received on Alice's end, she sends the btc to Tom (he provided his desirable btc address through the client, signed with his private pgp key). Then either of the parties could mark the trade as completed, and give the other user a rating, and the trade then is moved into 'trade history'-list. In the event the trade didn't go through, Tom could label (give negrating) Alice as a scammer if she never sent the BTC, and then reopen his offer for BTC purchase, since it was never completed. The same way, Alice could negrate Tom if Tom for instance saw that the price fell to 70, and he didn't want to honour the negotiated price.

There are so many ways this could've been made, so what do you think ? I don't think we need a blockchain for a desentralized exchange. A bittorrent like system with discovery of peers would work just fine. Perhaps there would be a need for irc-bootstrapping in the beginning or something, but that should only be used in the early days. Heck, this could even be integrated with the official client!

That's what I've been saying. A blockchain you have to mine is all the rage with the kids nowadays, so they want to stick it into everything 

Do you need miners for a desentralized bitcoin exchange ? Couldn't an exchange be more of the model of bittorrent, or would that not work ?

Some members suggested that we should have a voting. I suggest that we debate on different solutions til sunday 21 April and afterwards summarize all requirements to vote on.

Example of what to vote on:

1 Colored coin:
a) Use colored-coins in the existing bitcoin blockchain.
b) Create a new blockchain (a new alt-coin) which is only used for the exchange so we dont spam bitcoins blockchain. The new alt-coin has 0 value itself, the only value of the coins are what they represent (1 USD or 1 BTC for example)

2 Orderbook:
a) Order book in blockchain
b) Order book in memory

3 Exchanges:
a) One and only one exchange
b) Many independent virtual exchanges running in the system

5 If we decide on Virtual exchanges, miners right to chose exchange:
a) each miner supports the blockchain and specific virtual exchanges (like bittorrent)
b) each miner supports the blockchain and all exchanges

6 Distribution and processing of order books:
a) order books are distributed and processed by all miners
b) order books are distributed and processed only by the closest peers, and not by all miners
c) order books are distributed and processed only by miners that chose to support a specific virtual exchange

7 Fees to miners:
a) Predefined model of X bitcoins per block and halfing periods
b) Parameter model where the fee depends on several parameters
c) Free-market model where each virtual exchange bids whatever they desire and competes against other virtual exchanges to attract miners

...

I believe you that it works, but first, this isn't stocks/commodities trading, this is currency, where companies and merchants like BitPay may want to see what the price is right this second, so they can sell right at that second to convert to fiat. And second, you still haven't explained how this is any different from MtGox with a 10 minute lag, where you saw what the price was 10 minutes ago, and just put your bid where you hope it will stick?


I think you are overcomplicating the problem. Yes, you transmit your order to many relays with hopes of fast execution, and yes, the first one to answer your request for a specific price will be the one you trade with. What more do you need? If the relay is relaying someone else's tx, then you trade with that someone else. You are not looking for for relays, you are looking for orders. If you use an address system (like Bitcoin's address-signed transaction broadcasting or Bitmessage's signed message broadcasting), then all you are interested in is the address of the person willing to trade. Make it work like Bitaddress, and you can use the same system to communicate with the other party as well. If there is a better price, placed after your trade, then obviously you wouldn't hear about it, since you already found a match for yours. It's no different from trading at a point in time, then once the price drops after a few seconds, trading again at a later time.
Regarding the arbiter, it's just individual clients. With your PoW system, it's still the individual clients who look at the PoW blockchain to match up with the best price. The difference is that your idea organizes trades into a blockchain, whereas I suggest to just keep it in a shared database without the blocks and PoW since they are not needed. There is no trades to double-spend or counterfeit.
P.S. In a PoW system, there is nothing to prevent a malicious trader from not following through on sending his side of the money if he sees a better deal, either.

It is here:


https://bitcoinstarter.com/projects/54


No octopi included.

why would he? he's being paid to do that for you. you deposit your fiat with him, then say "submit order!" and he, of course, takes a fee for holding your fiat, while the fee for submitting the order goes to pay the miners described above. thus, if he refuses, he goes out of business.

What if the broker refuses?

If the chain ordered all bids and offers, then there is no need for a crossing system at all.

If you add a bid and the lowest outstanding offer is less than your price, the trade would be immediate at the price of the offer (and vice-versa if you submit an offer).  Otherwise, your bid is added to the order book.

The block size question also arises with regards to flooding the order book.

I've been wondering if you could use pieces of Bitmessage ... it has P2P secured comms and a broadcast functionality. So an offer could be broadcast to everyone who's subscribing to the GBP-BTC channel (there could be multiple broadcasting channels (USD-BTC, EUR-BTC, etc) maybe run  by the brokers/market makers?) and then interested parties take up the discussion on P2P messaging from there ... but have no idea how trust ratings, etc, could be policed so just putting this piece of it out there in case it helps someone else's thinking.

The purpose of this proposal has both technical and economical reasons:
-Economical
create a free market that benefits popular exchanges
Give the miners a choice to actively chose which exchanges they want to support with their computing power.
Each exchange should be able to decide what they want to pay to the miners per block, that creates a competition among different exchanges to attract computing power, and also to build up a reputation.

This model will also result in brokers and clients of each exchange to support their exchange by providing computing power to make their exchange more stable and more secure, and also get paid for it.

-Technical
It should benefit the performance of the exchange if the miners are divided in groups where each group is focused on a specific exchange.

Example of how a market with four exchanges could look like:

|Exchange	| Pays/block	| Reputation	| Miners	| Pays/block/Miner   |
| A excellent	| 1 BTC	| 10	| 1000	| 0.001    |
| B average	| 2 BTC	| 5	| 700	| 0.003    |
| C bad service	| 5 BTC	| -5	| 100	| 0.05    |
| D bucket shop	| 10 BTC	|-10	| 10	| 1.000    |

This sounds like the kind of modular approach that should work - plus, if it does work like a torrent, the more popular it becomes, the faster it would become, due to there being more options of where to get the data from?

That would be brilliant!

Interesting idea.  Trying to figure how this would impact the network. More decentralization this way?  Lemme think this one thru.  You see if you have a bunch a brokers, some of those brokers may not want to trade with new startups (why enable the competition) and thus not endorse their exchange key (eg not establish them in Web of Trust). 

So if the small fry brokers had a way to start up their own little trading pit, that might help enable more competition amongst brokers.  As the market for bitcoin users grows, the startup guys will attract new biz cuz the big boys who don't wanna play with them might be goxxing it with high fees and shitty service.  So the 'alt-pit' would grow to a point where desire for liquidity and fear of losing customers would eventual bring the gox boys around to integrating with the alt-pit.

You don't want any broker to somehow use his position to corner liquidity, cuz then he can raise fees and goxx it.

Probably put all the hash solutions of each competing trading pit together as a merkle root, which might somehow make their tx's cross compatible.

Need to sleep on this.  Let it roll around in my brain.

What do you think about having separate blockchains for each exchange? something like file sharing torrents, you choose which torrents (files) to share.
Here you choose which exchanges to share (share, host, mine or whatever we wanna call it).
Some parts of the system can be distributed to all miners if needed, for example executed transaction history.

Tier as i read what you are describing I can't help but think, wrf, this is exactly what i'm proposing said a diff way. 

You: The ious are submitted to the PoW block chain by the client looking to trade.   
Me: The broker who you have the iou with is directed by the client to have HIM submit the iou to the PoW block chain and miners would monitor net balances of ious to make sure they are within the credit tolerances. 

Functionally they are the same, but my way is +1 XP for privacy, cause i don't have to fix my IP to the origination of the tx to buy or sell.  I tell gox to go send the order to market on my behalf, and when he squawks it i just relay it to all the miners i know.

maybe my whole description sucks in those earlier posts, but i'm sure we are fundamentally describing almost the exact same thing, if only your structure just sounds a hair different.

You would have the previous block as a guide to where the price discovery and liquidity depth is.  You won't bid blindly.  I've use trading systems even more blind that this on wallstreet.  You enter the number of shares and the maximum you are will to pay.  Others do the same, but you don't see their bids and offers.  Then on or about every half hour the system crosses you anonymously with all the other overlapping trades, resolving allocation and price according to weighted averages.  

I guess you just have to see it in action to believe it.  Its a really neat trick.  Only diff is with Bitcoin Open Xchange (calling it this from now on), you could see every ones order.  So there would be even more price transparency.  If it works not seeing any one's competing orders, it sure as shit can work with more price/depth disclosure.  Trust it.  The logic is sound.

Unnecessary. Remember, we're dealing with clients looking for trades here. If a match between a buyer and a seller comes up, and somewhere far away anther double match shows up, the client will already have his match and will reject any new matching attempts. So I think something like a Bitcoin transaction memory pool, without having to actually mine the orders into a block will work fine.