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Title: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Trader Steve on May 25, 2012, 04:18:30 AM From http://tinyurl.com/dyu4xcq :
Quote How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Problem: Centralized exchanges are vulnerable to attack and/or regulation by existing power structures. Solution: Decentralize the exchange process. Here’s how you do it: Essentially you want to cultivate your own personal network of trusted trading partners. Make a market in bitcoin among your social network. Put the word out that you are the “go to guy” to buy or sell bitcoin. Build your “little black book” of trading partners that you can contact whenever you need to increase or decrease your bitcoin holdings. Build your reputation as a trusted trader (Bitcoin-OTC, Forum Reputations, BTCnearme.com). Ask every trading partner to think of you first when they need to buy or sell. Point out the privacy and money-saving advantages of staying “off exchange”. Don’t charge an exchange fee. The goals are to: 1. Help others in your personal community easily move in and out of bitcoin 2. Ensure yourself a reliable source of buyers and sellers 3. Facilitate the easy exchange between currencies which helps remove friction in the bitcoin economy 4. Avoid exchange fees 5. Preserve privacy 6. Reduce risk of attack by existing power structures Ideally we may someday arrive at the point where everyone is an exchanger and the process of exchanging bitcoin will be as easy as asking someone to “break a twenty”. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: kangasbros on May 25, 2012, 04:40:35 AM I like this article, but bitcoin guys really lack marketing skills. Nobody gets what a "decentralized p2p currency exchange is".
A better article would be "How to make easy money by exchanging bitcoins" or even more provocative "How to get rich via running a bitcoin cash exchange". OK, probably it isn't that good way to get rich, but at least the title would catch people's attention ;) Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: kangasbros on May 25, 2012, 04:43:37 AM And in addition, it should be practical guide, not list of philosophical reasons why decentralized exchanges are good...
Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Trader Steve on May 25, 2012, 04:45:22 AM Yes, the point I think is to simply build a large network of people you can trade with on a regular basis. I've been doing this myself and I make trades even when I don't have to because I want a ready market of buyers and sellers coming to me so that I always have a way to buy or sell without fees.
Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Trader Steve on May 25, 2012, 04:49:53 AM I think the point of this article is to make a market for yourself, not to run a business.
Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: kangasbros on May 25, 2012, 05:03:17 AM I think the point of this article is to make a market for yourself, not to run a business. Well yeah, maybe the goals are a little different. OK, it is great to have ideals (eg. nonexistant exchange fees), but who would do some real work, such as running an cash exchange without reward? The thing is, to improve bitcoin cash liquidity, you need more than few hippies doing cash trading with bitcoins. You need people dedicated to running cash exchanges. And by marketing cash exchanges as a business, they could catch on. A cool way to create a little additional income or something. BTCNearme.com seems great, but I would add couple of little features: - send email directly from the site to sellers/buyers - allow listing your offer/amount with bitcoin-otc style (or some easier way?), eg. "{{ mtgoxlast }} * 0.95" The optimal process for buying would be: - look up on the list, find someone pretty near and with decent price, contact using form included on the web page - make your offer, and wait for contact. Email is not shown on the page, you are first contacted using the form, and then you can continue with email. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Trader Steve on May 25, 2012, 05:11:55 AM I think the point of this article is to make a market for yourself, not to run a business. Well yeah, maybe the goals are a little different. OK, it is great to have ideals (eg. nonexistant exchange fees), but who would do some real work, such as running an cash exchange without reward? The thing is, to improve bitcoin cash liquidity, you need more than few hippies doing cash trading with bitcoins. You need people dedicated to running cash exchanges. And by marketing cash exchanges as a business, they could catch on. A cool way to create a little additional income or something. BTCNearme.com seems great, but I would add couple of little features: - send email directly from the site to sellers/buyers - allow listing your offer/amount with bitcoin-otc style (or some easier way?), eg. "{{ mtgoxlast }} * 0.95" The optimal process for buying would be: - look up on the list, find someone pretty near and with decent price, contact using form included on the web page - make your offer, and wait for contact. Email is not shown on the page, you are first contacted using the form, and then you can continue with email. Yes, there is the business profit approach and then there is the personal profit approach. I profit by not having to pay exchange fees and by having a steady market of buyers and sellers. I like your ideas for BTCnearme.com. If I knew how to program I would try to implement some of these. The basic idea is sound. It connects you with local traders and then you can build a relationship and trade directly in the future without having to go through the site. The idea behind the article, I believe, is to build long term trusted networks. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: PawShaker on May 25, 2012, 05:22:46 AM The problem with "decentralised" exchanges is that they are not that profitable. Adding a personal touch to service (which is basicaly what Trader Steve has advocated) takes time and PR skills. If you have cheep time+skill resources you may try to compete against centralised and automated exchanges.
I do not know economic realities in US (and they probably vary greatly depending on state and size of city). However, in Sydney it is hard to find a merchant who is making less than 2-3 AUD per customer at the checkout (not per item, people oftern buy more items). If you sell 4 BTC for around 21 AUD than fee would be ourageous 15%. On top of that, to manage risk you need volume. Earlier or later someone will push you a counterfited bill or a shady persona will try to protect you for a fee. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: kangasbros on May 25, 2012, 07:34:07 AM The problem with "decentralised" exchanges is that they are not that profitable. Adding a personal touch to service (which is basicaly what Trader Steve has advocated) takes time and PR skills. If you have cheep time+skill resources you may try to compete against centralised and automated exchanges. If a person is already long on bitcoins, then it would be pretty risk-free to make a few bucks by exchanging bitcoins as well. For example, buy on mtgoxlast and sell on mtgoxlast * 1.05 I would code a better competitor to BTCNearme.com web site, but currently I have my hand full of work with all my old bitcoin projects :D Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Sukrim on May 25, 2012, 07:54:47 AM Just going to the city center, probably spending ~1 hour there with someone who is afraid that 3 confirmations might not be enough and I run off to double-spend his 5 BTC and the trade fees on exchanges mean that I could only do this as a hobby, not valuating my time invested. Otherwise I might earn more by sewing Nike shoes in Thailand... ::)
Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: kangasbros on May 25, 2012, 08:05:43 AM Just going to the city center, probably spending ~1 hour there with someone who is afraid that 3 confirmations might not be enough and I run off to double-spend his 5 BTC and the trade fees on exchanges mean that I could only do this as a hobby, not valuating my time invested. Otherwise I might earn more by sewing Nike shoes in Thailand... ::) Or you give the buyer your address (house number), let him come to you, and when he calls you 2-5 minutes and the transaction is done. Use a 3rd party service like mtgox/exchange/instawallet/easywallet.org to have instant transactions. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: FreeMoney on May 25, 2012, 08:06:07 AM Just going to the city center, probably spending ~1 hour there with someone who is afraid that 3 confirmations might not be enough and I run off to double-spend his 5 BTC and the trade fees on exchanges mean that I could only do this as a hobby, not valuating my time invested. Otherwise I might earn more by sewing Nike shoes in Thailand... ::) Lol, when someone wants multiple confirmations for less than 4 digits you should just make a face at them. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Trader Steve on May 25, 2012, 03:51:22 PM In light of the suggestions in this thread I asked the author to re-write this post from the consumer standpoint and here is what he came up with:
Quote How to set up your own bitcoin trading network, protect your privacy and save exchange fees http://tinyurl.com/d2zzeh4 Problem: The large, centralized bitcoin exchange services are not private (most are now requesting detailed personal information to satisfy Anti-Money Laundering regulations). It also can take time to open and fund an account and the transaction fees can add up. Not to mention, these centralized exchanges are vulnerable to targeted attack by cyber-criminals and governments. Solution: Set up your own bitcoin trading network Here’s how you do it: Essentially you want to cultivate your own personal network of trusted trading partners. Make a market in bitcoin among your social network. Put the word out that you are the “go to guy” to buy or sell bitcoin. Build your “little black book” of trading partners that you can contact whenever you need to increase or decrease your bitcoin holdings. Build your reputation as a trusted trader (Bitcoin-OTC, Forum Reputations, BTCnearme.com). Ask every trading partner to think of you first when they need to buy or sell. Point out the privacy and money-saving advantages of staying “off exchange”. Don’t charge an exchange fee. The goals are to: 1. Help others in your personal community easily move in and out of bitcoin 2. Ensure yourself a reliable source of buyers and sellers 3. Facilitate the easy exchange between currencies which helps remove friction in the bitcoin economy 4. Avoid exchange fees 5. Preserve privacy 6. Reduce risk of attack from predators Ideally we may someday arrive at the point where everyone is an exchanger and the process of exchanging bitcoin will be as easy as asking someone to “break a twenty”. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Portnoy on May 25, 2012, 04:04:05 PM A better article would be "How to make easy money by exchanging bitcoins" or even more provocative "How to get rich via running a bitcoin cash exchange". That goes against the view expressed in that article, "Don’t charge an exchange fee." I agree with that view and not the view you express, which would tend to make the exchanger look like he is more interested in making a buck then in helping the community he is a part of. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: kangasbros on May 26, 2012, 11:45:59 AM I agree with that view and not the view you express, which would tend to make the exchanger look like he is more interested in making a buck then in helping the community he is a part of. So basically you mean that it is better that there is no cash exchanges, than the alternative where there are cash exchangers who charge fee. Communism was a nice ideology, but it doesn't work in practice ;) Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Portnoy on May 27, 2012, 01:27:03 AM I agree with that view and not the view you express, which would tend to make the exchanger look like he is more interested in making a buck then in helping the community he is a part of. So basically you mean that it is better that there is no cash exchanges, than the alternative where there are cash exchangers who charge fee. Communism was a nice ideology, but it doesn't work in practice ;) I don't see how setting up a decentralized network like is presented in the OP is anything like a centralized - Statist - system like Communism. I am not a communist. That doesn't mean that I look at every situation and relationship I encounter ( especially involving family, friends, neighbors etc. ) as a potential way to make money. I seem to recall etotheipi, the developer of Armory, speaking eloquently on why he wants to keep his client free... Perhaps you could seek out his words if you are still unclear on the concept of being more interested in the good that systems like bitcoin can do for everybody - or at least those communities that one feels a part of - and not just for oneself on a financial level alone. I have nothing against making money, but I am sure I am not alone in feeling that it is not the most important thing in life. Even if one is only interested in making money there are still positives, for oneself, that come from things like philanthropy, and charitable and generous ways of conducting oneself and doing business. Also it is best, I feel, not to think in either/or terms. I am not suggesting that there be only exchangers that don't charge fees and operate in the way the OP gets into. There is room for a lot of alternatives, giving each individual as many choices as possible for a system they feel comfortable in using and supporting. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: kangasbros on May 27, 2012, 04:48:11 PM I am not a communist. That doesn't mean that I look at every situation and relationship I encounter ( especially involving family, friends, neighbors etc. ) as a potential way to make money. I seem to recall etotheipi, the developer of Armory, speaking eloquently on why he wants to keep his client free... Perhaps you could seek out his words if you are still unclear on the concept of being more interested in the good that systems like bitcoin can do for everybody - or at least those communities that one feels a part of - and not just for oneself on a financial level alone. I have nothing against making money, but I am sure I am not alone in feeling that it is not the most important thing in life. Even if one is only interested in making money there are still positives, for oneself, that come from things like philanthropy, and charitable and generous ways of conducting oneself and doing business. Also it is best, I feel, not to think in either/or terms. I am not suggesting that there be only exchangers that don't charge fees and operate in the way the OP gets into. There is room for a lot of alternatives, giving each individual as many choices as possible for a system they feel comfortable in using and supporting. Well, I don't want to imply that you are a communist or anything like that, you took it way too personally :D I mean that especially cash exchanges are not going to work without market makers. That means people, who are accessible, charge a little, and make the system work. I guess most people see the benefit of cash exchanges, but usually there are many kind of people with different goals - some just want the bitcoins fast and without hassles, others are willing to wait and save on exchange fees. The ones who can serve the impatient ones, can make a little money in the process. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: kangasbros on June 15, 2012, 01:27:57 PM So, after getting inspired from the original article, I actually started competing service to BTC Near me: http://localbitcoins.com
Also I write similar guide, but with more practical and less philosophical focus: http://localbitcoins.com/cash_exchange_howto Any feedback and suggestions welcome! Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: cgpgroup on June 15, 2012, 02:05:11 PM I like this article, but bitcoin guys really lack marketing skills. Nobody gets what a "decentralized p2p currency exchange is". A better article would be "How to make easy money by exchanging bitcoins" or even more provocative "How to get rich via running a bitcoin cash exchange". OK, probably it isn't that good way to get rich, but at least the title would catch people's attention ;) That sums up the problem with BitCoins. Too many geeks and not enough business men. The world dont give a flying rats ass about how awesome crypto-currencies are, how secure they are or how decentralized they are. The world only care if they can make money from it. Just show the world that their is money to be made and watch the flood of people to it. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Trader Steve on June 15, 2012, 03:52:51 PM Saving money is the same as making money. When you build a local network of exchange partners willing to trade the fees go down. I predict the exchange fees will practically evaporate, or become negligible, over time.
I don't see exchanging as a sustainable business model for the average person. As it says in the article, I believe making exchanges will eventually be as easy as changing a twenty dollar bill. BTW, great job kangasbros! Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: kangasbros on June 15, 2012, 03:59:46 PM Saving money is the same as making money. When you build a local network of exchange partners willing to trade the fees go down. I predict the exchange fees will practically evaporate, or become negligible, over time. I don't see exchanging as a sustainable business model for the average person. As it says in the article, I believe making exchanges will eventually be as easy as changing a twenty dollar bill. It isn't sustainable business model, but many different businesses are not sustainable in the longer time. However, meanwhile they are still making money _now_. It is stupid to evaluate businesses by sustainability, you should evaluate them how much you can make buck over the lifetime of the business model. For example: business is sustainable, and makes 10 dollars a week + inflation = sustainable but bad business Business is unsustainable, makes this year 10 millions, next year 100k usd and third year -50k usd = unsustainable business, but might still be really good business Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Elwar on June 15, 2012, 04:20:06 PM Why would I want to rely upon other people's needs for BTC or dollars to determine my own ratio of BTC to dollars?
Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: kangasbros on June 15, 2012, 04:25:09 PM Why would I want to rely upon other people's needs for BTC or dollars to determine my own ratio of BTC to dollars? Hmm, how are you not relying on those things already, if you use bitcoins? After all, if there is no demand for bitcoins, traditional exchanges will stop working as well. Cash exchanging is probably not for everyone. But there are some advantages over exchanging with the real exchanges - you don't need bank accounts, no need for papers etc, better privacy, etc. Btw. with localbitcoins.com you can determine your price dynamically with equation, for example: USD_24h*1.05 or mtgoxusd_close*0.95. Values are updated each 5 minutes. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Trader Steve on June 15, 2012, 04:30:08 PM For example: business is sustainable, and makes 10 dollars a week + inflation = sustainable but bad business Exactly my point. It's not worth it to the average person as a business model to make 3, 4 or even 10 dollars on the average exchange when it costs that much in gas (and time) to meet the other person in the first place. The idea is to build up your own network of trusted trading partners so it becomes as simple as picking up the phone and making the deal. I already have trusted trading partners with whom I can close the deal for thousands of dollars over the phone and settle up via mail, bank deposit, or in person the next time we meet. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Trader Steve on June 15, 2012, 04:32:40 PM Why would I want to rely upon other people's needs for BTC or dollars to determine my own ratio of BTC to dollars? I think a better question is "why would I want to rely on centralized exchanges thousands of miles away that require the use of the banking system, ID, blood type and first born in order to make a trade?". Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: kangasbros on June 15, 2012, 04:45:59 PM Exactly my point. It's not worth it to the average person as a business model to make 3, 4 or even 10 dollars on the average exchange when it costs that much in gas (and time) to meet the other person in the first place. The idea is to build up your own network of trusted trading partners so it becomes as simple as picking up the phone and making the deal. I already have trusted trading partners with whom I can close the deal for thousands of dollars over the phone and settle up via mail, bank deposit, or in person the next time we meet. I think it is impossible to have that kind of situation, unless the other guy is a market maker and is making profit with the deal, eg. selling above market price or buying below market price. Or then he/she wants privacy from banks and other electronic forms of payments, since he/she would get better deal and less hassle exchanging the coins online. If you really are able to call your contact whenever you want/need, and able to conduct business at market rate with him/her, it doesn't sound very sensible from the other guys viewpoint. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Trader Steve on June 15, 2012, 05:00:49 PM Exactly my point. It's not worth it to the average person as a business model to make 3, 4 or even 10 dollars on the average exchange when it costs that much in gas (and time) to meet the other person in the first place. The idea is to build up your own network of trusted trading partners so it becomes as simple as picking up the phone and making the deal. I already have trusted trading partners with whom I can close the deal for thousands of dollars over the phone and settle up via mail, bank deposit, or in person the next time we meet. I think it is impossible to have that kind of situation, unless the other guy is a market maker and is making profit with the deal, eg. selling above market price or buying below market price. Or then he/she wants privacy from banks and other electronic forms of payments, since he/she would get better deal and less hassle exchanging the coins online. If you really are able to call your contact whenever you want/need, and able to conduct business at market rate with him/her, it doesn't sound very sensible from the other guys viewpoint. I agree, it's not for everyone but it is not impossible. For my trading partners and I it is profitable (by way of convenience - not commissions) to provide liquidity to each other and make a market for each other. The ultimate goal, of course, is to arrive at the point where most people carry a bitcoin balance and the stranger next to you (or the local shopkeeper) can make change. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Trader Steve on June 15, 2012, 05:04:53 PM An additional comment: My trusted trading partners and I become friends and we don't charge each other commissions to make change.
There's nothing wrong with people making change as a business for a fee. My goal is to go beyond that as described above. Both can coexist - it's not one or the other. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Elwar on June 15, 2012, 05:09:39 PM Why would I want to rely upon other people's needs for BTC or dollars to determine my own ratio of BTC to dollars? I think a better question is "why would I want to rely on centralized exchanges thousands of miles away that require the use of the banking system, ID, blood type and first born in order to make a trade?". Because I may need more Bitcoins or more dollars as any given point. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Red Emerald on June 15, 2012, 05:15:51 PM Why would I want to rely upon other people's needs for BTC or dollars to determine my own ratio of BTC to dollars? I think a better question is "why would I want to rely on centralized exchanges thousands of miles away that require the use of the banking system, ID, blood type and first born in order to make a trade?". Because I may need more Bitcoins or more dollars as any given point. I think calling this "P2P" is a bit confusing. When I see that, I think about my computer communication with a bunch of other computers, not "person to person." Maybe it should be "How and Why You Should Set Up Your Own IRL P2P Bitcoin Currency Exchange" Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Trader Steve on June 15, 2012, 05:16:40 PM Why would I want to rely upon other people's needs for BTC or dollars to determine my own ratio of BTC to dollars? I think a better question is "why would I want to rely on centralized exchanges thousands of miles away that require the use of the banking system, ID, blood type and first born in order to make a trade?". Because I may need more Bitcoins or more dollars as any given point. Yes, that is when you need the major exchanges but the whole point of this thread is to develop trusted trading partners with whom you can trade with away from the centralized exchanges so that you never have to go there. Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: dscotese on June 15, 2012, 06:56:11 PM The major value to me of this thread is that when there are a lot of people who have their own IRL P2P Bitcoin networks (whether they transact through computers or not), the trading of bitcoin will be much more difficult to suppress. The expectation in this article (https://economicsandliberty.wordpress.com/2011/07/03/expect-bitcoin-to-be-%e2%80%9cbanned%e2%80%9d-expect-the-ban-to-be-ignored/) that any kind of ban will be ignored is one that the BTC community will want to help realize. Setting up your own network is a way to do that.
I wonder if alternate currencies will catch on quickly enough to help very many people as fiat currencies harm them. Having access to wealth with a key locked inside your brain and no evidence that you command that kind of wealth is remarkably powerful, and it's an ability everyone can have - but first they have to work hard to earn that wealth, and find the technology (BTC is only one example) that will support such a "personal off-shore bank". Title: Re: How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange Post by: Trader Steve on June 17, 2012, 04:25:46 PM To keep the party going please see the following announcement introducing TradeYourBitcoin.com (http://TradeYourBitcoin.com):
https://bitcointalk.org/index.php?topic=88181.0 :) |