Would it be possible to make a decentralised stock exchange?

[Lethn]

Looking at the situation with the GLBSE got me thinking because while it was a great idea to kickstart the Bitcoin economy it had a major flaw in my mind and that it was centralised and easy to take down, would it be possible to make a decentralised stock exchange in a similar fashion to the way Bitcoin is set up where you use a client with some kind of P2P technology? I mean we have brokers who have set up that kind of software so why couldn't it be possible? The difficulty after that I think would be dealing with the long term problems like the valuing the shares and where to put the money.

I'm no programmer, that stuff is way over my head so I thought I'd make a thread to see what people's thoughts were on it.

[Seal]

Looking at the situation with the GLBSE got me thinking because while it was a great idea to kickstart the Bitcoin economy it had a major flaw in my mind and that it was centralised and easy to take down, would it be possible to make a decentralised stock exchange in a similar fashion to the way Bitcoin is set up where you use a client with some kind of P2P technology? I mean we have brokers who have set up that kind of software so why couldn't it be possible? The difficulty after that I think would be dealing with the long term problems like the valuing the shares and where to put the money.

I'm no programmer, that stuff is way over my head so I thought I'd make a thread to see what people's thoughts were on it.

The technology for a stock exchange is not the difficult part. Decentralising it will depend upon a handful of developers using a cloud based database and open source code.

Stock exchanges depend upon legal contracts, each one individual to the listed stock. Unless you set up some kind of board of directors to review each legal contract, it will not work. This is be the tricky part.

GLBSE's downfall was Nefario's failure to get the legals in order in time before FUD spread, this lead to a lot of investor money being lost. What this community needs is a number of legal specialists who have worked in corporate law IRL. As bitcoin lies in a legal grey area as far as the SEC is concerned, this won't be straightforward.

[Mike Hearn]

See here:

https://en.bitcoin.it/wiki/Contracts

[cbeast]

Right, crypto based contracts can be trust-less. No need for a central legal authority for trading purposes. The investment itself however, is only worth as much as it can be trusted. This also opens up triple entry accounting for business which would make them much more trustworthy than any current business.

[Lethn]

This kind of thing is precisely why I think we need some programmers and math experts to have a look I just think it would be a shame if Bitcoin investing was let down by shabby organisation because people didn't have any tools to do it properly.

[benjamindees]

Here's the bigger problem with a Bitcoin stock exchange.  It will be 99% scams.  The 1% that isn't scams will be targeted and sabotaged by TPTB.

You guys really need to realize that you can't just take all the financial institutions that exist in the fiat system, copy and add Bitcoin to them, and expect things to work out fine.

[cbeast]

Here's the bigger problem with THE CURRENT stock exchange.  It IS 99% scams.

FTFY
Corruption on Wall Street is no longer fly-by-night. It is flaunted.

[Benson Samuel]

Check out Dark Exchange.

I dont think there is current development on it though.

[mintymark]

I am certain that a decentralised stock exchange is the way to go.

Yes, much of the stock will be for "scams" but you know this is not a problem with the stock exchange, indeed scam business running through 'normal' stock exchange are very common place. With GLBSE, the problem was with the stock exchange, not the stock, so far as I can see. (Though not involved.)

Who is to judge if scam or not? Why the stock purchser of course!! In another sense, there can never be any scam at all, if the stock market performs, the person who purchases the stock, pays what he thinks its worth and gets what he gets. The point is he pays the price he thinks its worth. And if he later feels he got it badly wrong, well he wont be so stupid next time perhaps.

A decentralised, crypto-contract stock exchange would be a world first, and would be massive improvement on the existing world stock exchanges. In itself it would be as big a development as Bitcoin. Once it was going I predict that many non-bitcoin companies would want to move into it (that is to be bit coin stock exchange listed rather than say AIM listed. ) just because of the characteristics of crypto contracts.

There is a lot to be worked out of course, and this will be a major effort. But it will happen. And it will be just as unstoppable as Bitcoin is.

[Lethn]

If a decentralised stock exchange were ever made then like with most things anarchist/libertarian the users would have to accept that if they get into trouble it is their fault for not taking the necessary precautions in the first place. Also, I have no idea why this was moved to the project development section, as much as I'd like to see it happen I have no programming experience at all! It was just an idea I had after seeing all the crap with the GLBSE.