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LegendaryActivity: 1764Merit: 1007 Re: Interest in a P2P Exchange May 19, 2013, 10:07:39 AM #41 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.



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Sr. MemberActivity: 352Merit: 250https://www.realitykeys.com Re: Interest in a P2P Exchange May 19, 2013, 10:14:16 AM #42 Quote from: solex on May 19, 2013, 09:59:11 AM Quote from: edmundedgar on May 19, 2013, 09:50:32 AM 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 could be Liberty Reserve? Perhaps that is the best quasi-crypto version of the dollar (also a euro version exists, I think).

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

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 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.

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MemberActivity: 84Merit: 10 Re: Interest in a P2P Exchange May 19, 2013, 10:26:15 AM #43 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. Dankedan: price seems low, time to sell I think...

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Sr. MemberActivity: 469Merit: 250 Re: Interest in a P2P Exchange May 19, 2013, 10:39:39 AM #44 Quote from: herzmeister on May 19, 2013, 10:07:39 AM 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.







If I understand you correctly, the main difference between what you're suggesting and what I'm suggesting is you're looking to have exchanges to create deep order books for liquid trading between BTC and USD held on those exchanges, or more accurately, the USD will be held in a distributed ledger.

That would mean you need to perform the same magic as Satoshi did with the blockchain (verifying the ledger), which means proof of work again (to prevent the double spend attack). Isn't that right? Because effectively to take USD off that ledger means a transaction, which means you're having to create a whole crypto again (USDcoin or whatever). Possibly I misunderstood.



(I was just looking for a way to let people bring USD into the BTC world, rather than trading back and forth, so I wasn't thinking about a ledger for it, just peer to peer buying/selling).

If I understand you correctly, the main difference between what you're suggesting and what I'm suggesting is you're looking to have exchanges to create deep order books for liquid trading between BTC and USD held on those exchanges, or more accurately, the USD will be held in a distributed ledger.That would mean you need to perform the same magic as Satoshi did with the blockchain (verifying the ledger), which means proof of work again (to prevent the double spend attack). Isn't that right? Because effectively to take USD off that ledger means a transaction, which means you're having to create a whole crypto again (USDcoin or whatever). Possibly I misunderstood.(I was just looking for a way to let people bring USD into the BTC world, rather than trading back and forth, so I wasn't thinking about a ledger for it, just peer to peer buying/selling). PGP fingerprint 2B6FC204D9BF332D062B 461A141001A1AF77F20B (use email to contact)

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Sr. MemberActivity: 469Merit: 250 Re: Interest in a P2P Exchange May 19, 2013, 10:46:24 AM

Last edit: May 19, 2013, 10:56:40 AM by waxwing #45 Quote from: BTC Books on May 19, 2013, 08:29:28 AM This is really quite good. Here's a missing piece:



Integrate knowledge of ACH and SEPA into the routing scheme of the (P) client. Use bitcoin transfers to hop between the two when necessary, so that wire transfers are never needed . Then you've got the whole world into the system with no transaction having a base cost of more than a dollar. What individual members of set S choose to charge is up to them, of course.



EDIT: I would participate in this, and contribute to a kickstarter-type campaign.



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. 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. PGP fingerprint 2B6FC204D9BF332D062B 461A141001A1AF77F20B (use email to contact)

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Hero MemberActivity: 756Merit: 500It's all fun and games until somebody loses an eye Re: Interest in a P2P Exchange May 19, 2013, 01:42:44 PM #48 Quote from: joesmoe2012 on May 15, 2013, 04:33:48 AM Unfortunately I don't understand how ripple accomplishes this, it requires a network of friends to develop a trust relationship, so for those who have never used it before and don't have friends that use it, its worthless?



Or am I just missing something.





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. 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.



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MemberActivity: 84Merit: 10 Re: Interest in a P2P Exchange May 19, 2013, 04:39:59 PM #49 Quote from: waxwing on May 19, 2013, 01:28:50 PM Quote from: herzmeister on May 19, 2013, 11:07:50 AM Quote from: waxwing on May 19, 2013, 10:39:39 AM That would mean you need to perform the same magic as Satoshi did with the blockchain



Ripple or colored coins.

Ripple or colored coins.

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

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



Quote 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...



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... 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... Dankedan: price seems low, time to sell I think...

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NewbieActivity: 20Merit: 0 Re: Interest in a P2P Exchange May 19, 2013, 05:45:30 PM #50 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.

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Sr. MemberActivity: 469Merit: 250 Re: Interest in a P2P Exchange May 20, 2013, 06:04:35 AM

Last edit: May 20, 2013, 06:26:14 AM by waxwing #51 Quote from: Namealreadyexists on May 19, 2013, 05:45:30 PM From a user perspective I am only concerned about fraud.

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.



Quote 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.



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:



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

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.



Quote 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.

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. 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,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. PGP fingerprint 2B6FC204D9BF332D062B 461A141001A1AF77F20B (use email to contact)

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Sr. MemberActivity: 252Merit: 250 Re: Interest in a P2P Exchange May 20, 2013, 08:48:04 AM #53 Quote from: charleshoskinson on May 15, 2013, 04:32:23 AM I'm talking about a secure protocol that is P2P and totally decentralized. I understand Ripple accomplishes this but it is controlled by a single entity and regulatable



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.



Quote from: joesmoe2012 on May 15, 2013, 04:33:48 AM Unfortunately I don't understand how ripple accomplishes this, it requires a network of friends to develop a trust relationship, so for those who have never used it before and don't have friends that use it, its worthless?



Or am I just missing something.



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.



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.

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NewbieActivity: 20Merit: 0 Re: Interest in a P2P Exchange May 20, 2013, 06:34:27 PM #55 Quote from: waxwing on May 20, 2013, 06:04:35 AM because the third party can never take the money

It is not enough. There should be a mechanism for the 3rd party to make the right decision, and I don't see that being addressed by the escrow system.



For example me and you agree to trade my bitcoins for your USD. I put the bitcoins in escrow, you wire me the money, now it's turn for the 3rd party to release my bitcoins to you. Based on what? If I don't admit I received your USD, you'll have to initiate a dispute, provide your bank statements, etc and this is becoming just another legal battle. How is the 3rd party supposed to get perfect information to make the right decision? It is not enough. There should be a mechanism for the 3rd party to make the right decision, and I don't see that being addressed by the escrow system.For example me and you agree to trade my bitcoins for your USD. I put the bitcoins in escrow, you wire me the money, now it's turn for the 3rd party to release my bitcoins to you. Based on what? If I don't admit I received your USD, you'll have to initiate a dispute, provide your bank statements, etc and this is becoming just another legal battle. How is the 3rd party supposed to get perfect information to make the right decision?

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LegendaryActivity: 1120Merit: 1008CEO of IOHK Re: Interest in a P2P Exchange May 20, 2013, 06:38:43 PM #56 Quote ipple 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.

I've asked the Ripple community several time to record a lecture for the Bitcoin Education Project on how ripple works and explain how to conduct commerce. They have never replied back. I really hate being ignored. Yet, until I get a detailed explanation on Ripple, I honestly don't know if what you are saying is completely correct. I've asked the Ripple community several time to record a lecture for the Bitcoin Education Project on how ripple works and explain how to conduct commerce. They have never replied back. I really hate being ignored. Yet, until I get a detailed explanation on Ripple, I honestly don't know if what you are saying is completely correct. The revolution begins with the mind and ends with the heart. Knowledge for all, accessible to all and shared by all