Bitcoin Forum

http://xchang.in/files/p2p_tmp.png

Order opening,closing and modification
A block-chain is maintained which keeps all valid open orders.A node requesting to open an order sends order quote to the network.The network verifies the order by periodically querying the corresponding blockchain and check that order is sent by the node is less than its
balance or not.In this way fake orders could be weeded out.A node can modify or cancel the order by querying the network with message signed with its private keys.

Orders open could be accessed by all nodes.Any node interested could send request for accepting an order.After similar verification about buyer's balance the order status is changed to accepted.

Money Allocation to intermediate nodes
Once order is accepted,the network divides the money to the other nodes such that,the money send to any node is less than the trade amount,that node wants to execute.This trade assignment is sent to both trading parties.They are required to send money to assigned intermediate nodes.These transactions are verified by the network.

Intermediate transaction
After all intermediate transactions are over,the network sends the address of buyer and seller to the nodes which received money from seller and buyer receptively. Until they successfully execute their routing assignment,their trade money is not released from their intermediates.

Assumptions
1. To start the trading, first two nodes should be assumed that they conducted their routing operation.
 
Advantages
1.Buyer and seller don't know each other until trade is successfully conducted.
2.Using a block-chain,all trading activities can be recorded securely so that trade is not tampered until its over.  

Make this happen man, you are my hero.

Does this mean every buyer/seller needs to run at least 3 instances: LTC, BTC, and the order chain?

What is "Intermdediate" ?

Yes, you are correct.The two instances of the crypto-coins you are buying and selling,plus the order chain.

You haven't described how you plan to secure the trade from these intermediary nodes and that's probably the core problem to solve.

The intermediate node is the random third party node assigned by the network,which handles the trust problem.Once the transaction from the buyer/sellers to intermediate nodes is verified,the network assigns the intermediate nodes, the address of the party (at opposite end of trade) to transfer the money to that end.

Until the intermediate nodes transfer the money,their own trade is locked.
At all levels,all the transaction related to an order are securely stored in blockchain,using method similar to bitcoin,to avoid tampering to an open order.

One way to minimize intermediary fraud is having a concept of a "order chain" (series of small orders), instead of big orders.
Each order is triggered after previous transaction went through, this way if something goes wrong, the loss will be small.

I dont understand this graph or what p2p-trading means. Do you try to invent an secure escrow-payment by using bitcoin. So something like escrow.com only without fees? Or is this about anonymizing coinmoney?

Read this topic - P2P Cryptocoin Exchange (P2PX)  (https://bitcointalk.org/index.php?topic=62879.0)


Generally a centralized trusted third party is needed for money exchange,between anonymous users just like escrow.com.I am putting forward an idea to decentralize the trust in the network.

Having a decentralized EBay has been something in my mind for a long long time, I think if this can be done, it's an important step toward that direction.
 

Sounds interesting... to be independent from third parties would be cool. Because third parties can be not trustworthy at the end. And take fees.

I sold a website a month ago for $562.50 and had to use escrow.com. I had to take a cheque and finally, after one month!, i got my money it was only $464,07. Thats 82.5% of the money. $98,43 less. Because the fee for escrow.com of $25 and the banks took the rest.

I only say i dont like having to trust third parties. Maybe this thing can be used for noncurrency objects at some point too. Would be even nicer... :)

Good luck with this!

Most trading systems in the end need to deal with the issue of trust.

In my view a decentralized trading system needs to mimic real life; there need to have a (loose) integration with WOT or other independent services functioning like "credit bureau", instead of tracking SSNs, they keep track of PKs.

Here are some thoughts:

1. How do we prevent order chain abuse? Adding fee requirement?

2. Why do we need the 3rd chain? can it be integrated with an alt-chain itself?

3. Instead of sending money to intermediary nodes, the network can allow money being sent to non-existent "ghost addresses" and locked there for a period of time; when/where this money is released to depends on whether the trade is successful or not, i.e. it's either released back to the sender (expired), or the trade partner (immediately after a trade).

I think the new BTC multi-sign feature may be useful for this, (not sure, I am guessing here)

Hard to make the trade atomic unless the trade occurs on the same block chain. I think there is a proposal of colored chain which enables atomic trade on a single block chain, provided that all properties (colored coins, smart properties) exists on the same block chain.

The industry's answer to distributed transaction is coming up with standard transaction API that everyone implements.

The chances of having this done in the Bitcoin world is very remote

A tx fee to support the network would be nice.  Something like mining, or proof of stake?  Would it be possible for nodes to earn money?

YES PLEASE

Sure... more fees... great idea...

Why would nodes want to earn extra money,already they would be paying transaction fees for quick transactions,and besides this their trade would be happening without extra brokerage.

I don't understand this well enough to know if it's feasible... but man it would be great to not have to trust exchanges.