Bitcoin Forum

This thread is for project development of the Distributed Exchange known as DEX. All help, advice, thought donations, and cheers are welcome.

Any opinions, comparrissons to other distributed exchanges, and talk that doesn't move the project forward will be shunned. You can always add that stuff to the DEX announcement thread if you must:

ANN: Whitepaper for the Distributed EXchange (DEX) is here! (https://bitcointalk.org/index.php?topic=236908) (If you have general questions about how DEX works, add it over there too.)

For anyone who hasn't seen the DEX whitepaper yet, you may download it here:

Whitepaper for DEX Distributed Exchange (http://distributedexchange.org/DEX.pdf) (.pdf format, 22 pages)


Let me start out by saying thank you to all who participate with DEX in any way.

I, like most of you, share a vision of the future where commerce is something that cannot be regulated by any state nor manipulated by any DDoS attacks. With bitcoins' very fate riding in the balance, the time is clearly NOW to create a P2P, fully distributed exchange that even our grandmothers can figure out how to use.

Even Ripple doesn't offer all of that. Even their biggest cheerleaders admit that their gateways are few and regulatable. So just reading through the threads on this forum, you can almost smell the desperation for this need, however. DEX is certainly not the first, or even in the first 50 attempts at making a distributed exchange; but I hope all of you will come to agree it could actually be the last.

I hold no illusion that it will be easy to code, so I am going to need a lot of help. My coding skills are minimal, mostly HTML and PHP, so all I can do from here is direct the vision and funds of DEX to ensure it stays on track until completion. I have managed projects many times in my previous career, so I will direct the overall project and all fundraising. (In bitcoin for transparency!)

If we have to hire any full-time coders, I will take them on after a community vote from contributors only. There will likely be other things we vote on, simply because I know there is more I can learn from this community. Be assured that everyone involved will have a voice in DEX's direction.

The help I need from you guys comes in all forms... DEX could literally grow to replace Wall Street one day, but at this time exists only in concept.

I don't even know what language is best to program DEX in! So here is a list of help we are going to need soon:

• 1. Framework Dev - Get the overall shape of DEX started on Github! (github.com/p2pdex/dex (http://github.com/p2pdex/dex))
• 2. Logo design - Any graphic folks want to design DEX's logo? Post em' in this thread and we'll vote on it!
• 3. UI Dev - Design the UI interface for all of DEX, with the aim of making it 'Apple-product easy' to use for noobies.
• 4. Encryption code - Like bitcoin, DEX uses a lot of crypto. It's likely that we'll need encryption specialists to make the matching and escrow engines secure.
• 5. Other coding - I honestly don't know yet what else I'll need, but certainly there will be some general coding needed.
• 6. Monetary donation - For most things in life there are coders... For everything else, there is bitcoin... We'll definitly need some to pay coders for various parts of this sytem, so any donations in bitcoin would be most welcome. You have my word of honor that every millibit donated will go towards coding and creating a USEFUL, open-source product. Funds will be appropriated towards DEX first and then VenDEX. I've even started the fund off with 2 of my own bitcoins, and I'm in talks with some other donors now.

Main DEX donation Addy: 1BrysB64u8C57pJxW4WpHvhMJsRRgRTfLR

Did I leave anything out? Please tell me below!

Got any questions you can't ask in public? You can PM me here if it's semi-private, or use Bitmessage to email me if it's even more private:

BM-opuWHZ8YdsHcKd9L9kkt3aMWc9A3hTvRN

Thanks again all!
-BTCLuke

The domain name isn't resolving, so I will base my comments upon a couple day old draft: http://the-iland.net/static/downloads/DraftDEX.pdf   

If anything has changed since we last talked, then my apologies in advance.

"Note: Like the matching engine, the escrow engine cannot be used on any orders as either the buyer nor seller on the same client."

This is an assumption that cannot be enforced because anyone could modify the clients source code *or* run two clients on two different computers and control them both.  To the extent that this is a requirement of a functioning system the system will not work.

If you can buy cyrpto-bonds from different people and then trade them all as if they were equal, then I would buy the junkiest bonds I could find and then trade them on the exchange to acquire less-junky bonds and then profit from the spread.   If the bonds are not fungible then the market would be fragmented.

Because the bonds do not post margin greater than the initial value of the bond, any price volatility in the wrong direction would immediately compromise the value of the bond as some percentage of the bond would be unsecured and thus 'a junk bond'.    Junk bonds have higher risk of default.    If users can trade bonds at values other than par then you will create a million fragmented markets where the ultimate value of the bonds will approach the value of the Bitcoin backing it.    If you don't allow trading of bonds within your system, it will occur outside of your system, mean while inside your system people will be taking advantage of the price fixing until the whole system falls apart. 

Lastly, issuing bearer bonds is 'illegal' and in order to redeem the bonds for actual fiat would require you give up your anonymity as the issuer.   Thus you would have tremendous risk from sting operations.   

What is the profit motive for someone to issue a crypto-bond?   There is no opportunity cost to maintaing the position and if you sell the bond at a 'premium' then the buyer takes an immediate loss and there is no longer any incentive for this individual to redeem his bonds.    The network wouldn't be able to detect the fraud until he failed to redeem the bond at which point it is too late, the fraudster has already profited from the sale even if he never sees his bitcoin again.   He can then create a new client ID and start all over.     The only way to prevent this kind of fraud is if the issuers are PUBLIC and not anonymous.  If they are public then they are in violation of the law and easily shutdown if they operate in any significant volume what-so-ever.   If they do not operate in volume, then they will have 0 trust and thus the value of their bonds will always and forever equal the value of the collateral.   In effect, the bonds simply become Bitcoins.

If you attempt to fix these problems by simply requiring additional margin, you still will not have answered the following questions: 

1) Where is the profit motive to issue the bond?  To go short USD vs BTC.  If this is the case, then it is a head-I-win, tails-you-lose kind of bet.
2) What happens if the price changes more than the margin?
3) All bonds will vary in price proportional to the margin backing them and thus approach the value of the bitcoin backing.

I hope this feedback helps.

Working link: http://the-iland.net/static/downloads/DEX.pdf

...All answered over on the Invictus thread here (https://bitcointalk.org/index.php?topic=229315.msg2505719#msg2505719).

Anyone still can't download the whitepaper now? I've got a few reports of it coming back up...

Alright, now that propagation is done and everyone can get to the whitepaper, it's time to start this ball rolling.

I've already added 2 BTC to the donation wallet, and I'm considering where it should be spent first. Suggestions?

Anyone know which programming language is best for this type of exchange? C++?

Also, I would like to invite all graphics folks here to submit a logo for DEX. You can just post it in this thread and we'll vote on a winner. Remember guys, DEX is targeted at a worldwide audience. Since it pays you to simply download and run it, no matter where you are in the world, DEX is going to be on most computers on the planet. Perhaps 3 Billion people could see your logo one day!

Luke,  have you got a team of people who have vetted and accepted your proposal?     It seems like this effort is diverging from the Invictus thread and thus dividing our efforts. 

I would suggest you hold your 2 BTC and invest it in the P2P exchange being developed by the Invictus P2P Exchange group and help drive that. 

If not I wish you the best with your effort and it will be interesting to see how two competing exchanges turn out! 

Question to cryptographers: Is Shamir's Secret Sharing (http://en.wikipedia.org/wiki/Shamir's_Secret_Sharing) the ideal way to split the escrow key?

Invictus Thread has gone quiet. I sent email to join list, haven't seen anything back. Is Invictus still active?

Invictus is alive and well.   The thread was locked to new replies while we prepare a series of bounties and refocus efforts.

I have had lengthy conversations with the people behind Market Coin, DEX, OT and we have identified a path forward for Invictus.    The developer of Market Coin and I believe we may be able to use the same code base as the primary difference between our two systems is 'crypto-USD' and he has a negative dividend rate.    

The BitShares white paper has been significantly revamped / clarified / expanded upon (22 pages now) etc.   It is worth going back to read the new one even if you read prior ones.  

https://docs.google.com/document/d/1RLcjSXWuU9vBJzzqLEXVACSCdn8zXKTTJRN_LfoCjNY

BitShares will be the foundation of the Invictus P2P exchange effort though its exact features / requirements / implementation are still subject for review / discussion / debate.   More details will be forthcoming in the weeks ahead.

I would like to move all discussion on BitShares and Invictus to the google docs / white paper.   In this way we can all focus on refining the specific details and clarifying confusing parts of the white paper.

Sorry - kinda confused - thought Invictus was going to be an open discussion among interested parties, with mailing list. Heard from Charles, responded, didn't receive anything since. Now it seems a decision has been made in the dark.

No decisions have been made we are still seeking input to converge on the ideal solution.  We are just refocusing efforts to converge on a single document.   Everyones input is still desired with a goal of actually converging on a single approach.

Luke has apparently decided to pursue DEX on his own while Market Coin and BitShares have reached a high degree of consensus.   The most important aspect is agreeing on the criteria which have been expanded upon in the BitShares white paper.  You are invited to comment on and help refine those criteria.

Thanks for the clarification. I'll check out the googledoc.