Topic: The Final Solution to the Mtgox Problem... - page 2. (Read 7226 times)

How about this http://en.wikipedia.org/wiki/Smart_contract ?

Darkcoin is actually a pretty brilliant name. The problem is no one is going to want to have to deal with darkcoins. Good name and if you're really desperate for it you could do it that way but I just dont see ordinary people going onto the darknet and having to deal with pedophiles, terrorists and other dangerous type people just to get Bitcoins. That would hurt Bitcoin.

Ripple isn't open source. Does the community control it? Can we fork it? Until then why mention it?

The difficulty is getting USD into the decentralized system. It's not impossible, we are still able to get Bitcoin without mtGox it's just hard using localbitcoins.

BTW I think the darknet should be avoided. The moment you bring Bitcoin into the darknet people will associate it with terrorism, child porn, and mercenaries. The wrong kind of people would be at these exchanges and it would never go mainstream.

I think also encryption doesn't really add to the security of Bitcoin or of email. Alice can try as much as she like to communicate secrets to Bob but the rubberhose is all that is needed to break Bob whether Bob reveals the secret or not.

So encryption = persecution when applied wrong. It would have to be opportunistic and not something the individual even knows happens and it should also be at the protocol level not to hide email communication but to actually prevent the network from being shut down somehow. You can protect the network with encryption but not the users.

I can't get over the title of this thread, lol. What were you thinking, haha.

You are doing a lot of hand-waving here.

You have given no clue as to how you would have reports of settlements done in a way that doesn't enable pervasive fraud. I fail to see how it could be done with some kind of escrow, in which case that party is acting exactly like a broker in the system discussed.

Your proposal to issue non-backed IOUs also seems to rely on a level of trust that is simply untenable without full identities being revealed to both parties (and, probably, a neutral third party) and a mechanism for arbitrating disputes / failure to pay. The latter would almost certainly have to involve the local judiciary systems, making it a complete nightmare in every way. Even if everyone were located in the same country/state, forcing someone to settle a debt can be extremely difficult (and sometimes impossible).

Backing the IOU with a signature from an escrow service would make the proposition more manageable. The buyer would then have proof that a given amount of money existed for settling a dispute and the seller would be free to decide if the buyer's escrow service provider was reputable enough (and covered enough funds).

However, at that point, it would seem simpler to just let the escrow service pay the money from the escrow account and function as a full broker. It seems unlikely that operating such a service would be significantly simpler from a legal perspective than operating as a broker--and escrow would entail considerably more risk for the seller.

With a system to track credit obligations between parties, and a reporting system for settlements between those parties, who needs a broker?

For that matter most of it is rumours and such. Stating the obvious makes no sense.

Well, both parts are essential to the whole. If you can't transfer fiat into the system, you can't exchange. And if you don't have a system to match buyers with sellers, then you don't have an exchange (but just a bunch of people shouting at each other).

My point is simply that the OP and numerous other members of these forums are going absolutely nuts over the EASY problem to solve and completely ignoring the HARD problem.

You might think mtgox is horrible, but there's a reason why 100 competitors haven't sprung up--and it's not that matching buyers and sellers is difficult.

Bottom line, setting up the brokerage part of an exchange (with the influx and outflux of fiat) is a huge legal minefield and subject to quite a bit of regulatory oversight.


I don't like calling the suggestions of the OP and others a P2P exchange. Someone called it a ledger and I think that probably describes it well.

This P2P ledger would not be particularly difficult to create. There would not be a whole lot of data through the system (relatively speaking) and no personal information would need to be propagated. Nothing about it would be critical in the sense that everything important would be checked (and easily so) by the broker, so the risk of double transactions, double spends, or fake offers would be minimal.

I don't personally think it makes much sense to do, but I can probably whip up a simple proposal for how something like that could work. Later ;-)

Tip to the OP: "The Final Solution" has different implications to different people... might want to google that one.

Exchange means the connection to existing financial system, I think that is much needed cooperation, why don't directly list on some existing established exchanges like LME/CME/FOREX

Back to the point - a peer to peer system would need to solve the problem of double executions (rather than double spends). Perhaps a blockchain type solution would be necessary.

Exactly. Have you tried trading on Mt Gox recently?



Bitcoin is founded on mistrust of central authorities. If I'm forced to trust one (like Mt Gox), then that's a bad thing.

Each individual participator in the BTC economy should see what trouble has been caused by relying so much on MT.GOX, and change their behavior accordingly. 

I think the community seems to be moving in the right direction and this last week was hopefully a final wake call.

It's great to read some of these new ideas folks are coming up with as well, on new directions to move forward.

I'm not sure how "decentralized" exchanges would solve any issues. It seems create more issues.

One main reason an "exchange" exists in a one place is: speed.
If a buy-sell takes more than few seconds (or milliseconds), why bother with the concept of exchange at all?

On secondary points: Think about why an exchange exists: You trust your Bitcoins to the exchange. A p2p exchange is founded on mistrust. While it works for Bitcoin as an absolute currency, mistrust kills it for an exchange.

MtGox, given that is the defacto exchange, is bound to cause some problems. They just have to strengthen up.

Maybe someone can point out something I'm missing.

-SZ

So I've been thinking about this for a couple of days now.

I can envisage a peer-to peer exchange, where bitcoin is traded for 'promissory debts' denominated in fiat. For example, I might buy 1BTC from you, I then give you an IOU for $100. This is recorded by the network. From what I understand, this is very similar to Ripple.

Given this, a trader knows whom he owes money to and is owed money from at any given time. And of course, which debts cancel out. With this information, the trader can choose to settle his debts by making a fiat payment directly to the counterparty. The counterparty marks the payment as received on the network, and the debt is settled.

The challenging part is trust. The system could place a hard 'credit limit' on traders based on how trustworthy they are, and disallow any new trades which would go over this limit. But there's a chicken and egg problem here: the network can't give any credit to brand new users, as this could be gamed easily. Credit has to be earned. So how does one earn it, when they can't transact on the system?

Keen to hear people's thoughts on this.

The broker aspect is important but its not the most crucial part. The most crucial part is the exchange, that is essential.

But could a peer to peer exchange really function given the volume and flow of transactions going on? Plus this volume is only going to increase.  Could it keep up in real time? Surely there are going to be lags.

Look at the size of the blockchain and delays involved at present with that.

The difficult problem is the one involving fiat. Matching buyers and sellers is trivial at the volumes mtgox handles, even on days when trading spikes.

What is NOT trivial is the broker aspect. Handling money, interfacing with banks, paying out money (a large part of the problem), and so on. Know Your Customer regulations and similar only exacerbate the problem.

It's also critical to remember that trades must be QUICK. Sending cash or gold is not a valid solution.

+1 As soon as OpenCoin opens the source code, and decentralizes itself.

In the meantime, for starters, i think that all the market data feeds - Bitcoinity, ClarkMoody, BitcoinCharts - should list most prominently at the top of their tickers the average (aggregate) rate from the top 10 or so USD exchanges, rather than the gox rate.

That should be what's used for private, merchant and payment-processor reference rate. We know from way back that the gox rate is always a bogus, pump-and-dump-speculator illusion, further distorted by gox's technical inadequacy, the caprices of its owners, and whatever other intrigues go on there.