Bitcoin Forum

Most of us like the idea of a decentralised internet, and thus I guess everyone would be happy to see a P2P trading system.

I doubt however that we should expect a technical solution to do so.  Rather, we should encourage people to provide their own currency exchange service.

I personnaly sell bitcoins on a small, cheap website that you can see on my signature.  I accept cash in the mail and bank wire.  So far it works quite well.   I initially decided that I would only SELL bitcoins, because I was hoping that other people would do just as I did, so if I want to buy bitcoins, I could just by some on their website.  This is one of the reasons why I self-published the source code of my website.

So, I hereby encourage everyone to do exactly what I did.  The code is public domain.  Just use it or modify it anyway you want.  In order to have it work, you need:

* a webserver or a host that accepts CGI.  If you chose a webserver on your own machine, I recommend you use thttpd.  It is WAY simpler than apache to configure.
* some knowledge in bash.  My code is not very complicated, and after a bit of time reading the bash manual, you'll understand it easily.
* if you selfhost your site, you may need a domain name.  You might you no-ip.com, or any other solution.  You can also consider using TOR hidden service (just google those three words).

That's all.  Once a lot of people host their own currency exchange offer, it would be easy to organise some kind of federation.  Basically some bots would inspect those websites and publish best bids/asks.  A full order book could thus be reconstructed.  And then we'll have a nice decentralised trading system.

My soon to be opened exchange (http://britcoin.co.uk/findex.php?page=) has free source code.

http://gitorious.org/intersango/master/trees/master

Federation won't happen because I don't trust your exchange.

I'm hesitant to trust any exchange, nothing personal.
The potential to rip people off is huge. If there's a way to make it safer then I could see a federation popping up.

Still I like the idea of multiple exchanges.
I'd like to open one in S. America  but I need to research a few things.

Not everyone has the time or inclination to run their own exchange. Setting it up is one thing then you constantly have to watch for hackers.

This is why things such as wordpress.org,posterous and blogger exist to allow people to have a basic site without having to worry about the back end.

ie :- hosted exchanges with ongoing support.

There is some talk and work on the Ripple project.
There are some design docs on the decentralized version if you are interested:

http://ripple-project.org/decentralizedcurrency.pdf (http://ripple-project.org/decentralizedcurrency.pdf)\

Do not reinvent the wheel. :P

Oh yeah I totally forgot about Ripple.  I'm not convinced about it being of any help for a decentralized currency, yet it can definitely be used for decentralised trading.

It is not intended to be a currency, just for trading and rapid payment.
If we get it decentralized and integrated into the Bitcoin clients it would kill ALL of the cons of the currency. :)

I really like the concept of Ripple. While not completely anonymous, it does take away power and manipulation of credit markets by decentralizing transactions. I also believe when people owe to people the know there are less defaults. Especially since individuals will never grant or take unlimited or crazy credit lines.

A simple interest rate can be built in an agreed upon; instead of the current system that is designed to keep you hooked on credit.

Well, even if it is not integrated in all it would still be awesome!/me starts reading Java networking books.

I am currently trying to learn about Atom Publication Protocol (http://en.wikipedia.org/wiki/Atom_feed) and I think it is pretty much everything we need.

Basically anyone who wants to buy/sell bitcoins against anything could just publish his orders on his feed.  It would be twitter-like.   Some bots would search such orders on the web and recreate an order book that they could publish somewhere.  There would be some competition between those "broker-bots".   Basically those bots would do both order searching and adjudication.

Sounds good but how do you prevent getting ripped off?

Something based on xmpp would be nice. Then you could trade from any jabber client.

XMPP is just a communication protocol, isn't it?  So it would not be a "base", but just a tool.

What we really need is a standard format for orders.  How you publish them is not really a problem.

It would be nice to have a standard trade size if it's 1btc 10btc or 100btc+ doesn't really matter, I'd probably say 10btc but I guess 1btc would work fine.

Um, no. I think a decimal or int64 field "amount" works just fine.

I thought about it some more and I suppose it wouldn't really change anything.
I was reading earlier about the benefits of selling in specific denominations but I changed my mind.

the problem with this is that any distributedly-published orders are not binding, and therefore your 'order book' will fill up with all kinds of stuff. i know from direct experience, creating an inside bid/ask quote for OTC (http://bitcoin-otc.com/ticker.php) that you tend to end up with (a) stale orders, (b) joke orders (c) orders using some specific payment methods that as a result of their peculiarities have higher/lower pricing (e.g., cash in person in such and such city), etc.

so aggregating order feeds from all sorts of places, you'll basically end up with a mishmash of all kinds of orders wherein "best ask" or "best bid" have little meaning.

further, even if something is a legitimate order, you may not want to take it if you don't trust the counterparty.

in all, i'd say don't expect from this any more than you'd expect from a simple list of bitcoin exchangers. which is not a bad thing in itself, mind you - just not as useful, in many ways, as an exchange that intermediates both sides of a transaction.

I think the best scenario is going to be several large exchanges that trust each other which allows them to share their trades.

here's a free idea for y'all.

there's no need for exchanges to trust each other. what you need to do is set up a 'meta-exchange', which has accounts on all the major exchanges, and automatically gives the best price to a person placing an order on your metaexchange. in addition to that, the metaexchange would of course also have its own exchange with local user balances, the order book, etc.

eventually, since the biggest aggregated order book will be on the metaexchange, it'll suck up most of the order volume from the other exchanges, thus becoming the biggest exchange.

step 3: profit! :)

Sounds good.  I'd do it if I was not so lazy.