Who is interested in investing in a BTC Exchange?

[SgtSpike]

No, I don't mean actually exchanging your BTC for USD.  I mean investing your hard-earned bitcoins into a website that would compete with MtGox, in a good way.

The Basics:
- Website would offer asks and bids, like any exchange should.
- Dark pool included.
- Website would include detailed statistics about trading, volume, more robust charting built in, etc
- Protected by HTTPS (obviously)
- Hosted with a webhost with anti-DDOS capabilities, so that when the time comes, we can quickly and easily switch to a plan with anti-DDOS.  I do not expect to be able to afford anti-DDOS right off the bat though, unless there is a lot of investor interest in this.
- Dwolla would be the primary method of transferring USD in and out of the exchange.
- Fees would be competitive (read: lower) than MtGox's current fees.  If MtGox lowers their fees, I would bring our fees even lower, always ensuring a competitive advantage on the fees front.

How?
Fees would initially be 0%.  This is to gain use and acceptance of the site.  Once an acceptable amount of usage is shown, fees would be introduced.

I am a capable PHP programmer, but will fully admit that a project of this scale would be over my head and time availability.  Therefore, I would hire programmers to work on the website in exchange for BTC.  I would hire multiple programmers and have them work together, likely providing a temporary forum or other means of discussion so they can communicate effectively.  The work would be divided into logical work units, such as charting, user authentication/security, backend, frontend, design, etc.  Some programmers may take on more than one work unit, but the ultimate goal would be getting the site up and running as quickly as possible.

I would be the president/CEO of the company, and would sell 40% of the company to shareholders to raise funds for startup costs.  Once the company begins to turn a profit, shareholders would be paid via dividends on a monthly basis, based on their stake in the company.

My Qualifications
I am a university graduate with a BS degree in Accounting from the School of Business.  I have 9 years of working experience in the IT realm, and 1 year of working experience in Accounting (current day job).  I have a good understanding of business, markets, finance, accounting, and business law.


So, are you interested?  Would you invest in such a company?  How much?

[1715581376]

1715581376

[nuttynut]

Hey, you might want to look into google App engine. It enables you to write your website in Python and also allows up to 5 million views per day absolutely free.

This stuff is really scalable. And python is a lot nicer than PHP.

[gusti]

there is standard currency trading platforms, why reinvent the wheel ?
http://www.metaquotes.net  (not affiliated)

[Nefario]

You also might consider listing on glbse.com, it would allow easy shareholder management, dividend payments, voting, and secondary trading of the shares.

It will allow you to have many small investors instead of just trying to find a few big ones.

We're also working on a web based client, which should be available to use by June 6th.

If you want I can also help you with writing the share contract.

Nefario.

[SgtSpike]

Nutty, that might be true, but that's why I would be hiring out the development.  I know almost nothing about Python or many of the other technologies that might be more suitable to such a project.  I know a good deal of PHP and Javascript, but beyond that it's pretty spotty. 

I would prefer it be written in a language that I am familiar with though, so I can review the code and make basic changes myself.

Gusti, that looks like a tool - a platform to connect to exchanges.  I am talking about creating an actual exchange, not creating software to connect to MtGox.

Nefario, that's the plan.    Very happy to hear that you're almost ready with the web-based client too - that is a much needed improvement!

[gusti]

Gusti, that looks like a tool - a platform to connect to exchanges.  I am talking about creating an actual exchange, not creating software to connect to MtGox.

no, metatrader server IS the exchange software

[Hawkix]

I would like to see a some more user-friendly version of OTC market website. For each country/currency, you could list potential merchants willing to trade local currency. All based on some ring-of-trust, reviews, etc. You could probably somehow link your ebay or other site trust to your personal account on this market.

MtGox is special because it has multiple currency support and plans to improve it even more. Sorry, but for me, not being in US, is the Dwolla no option.

[genjix]

http://bitcoinconsultancy.com/wiki/index.php/Intersango

If you want to get mucked in and involved then the source code is open:

https://gitorious.org/intersango/

It's the software we use for Britcoin, https://britcoin.co.uk/

We're working on 2.0 version which will be more secure and have a ton more features.

Oh yeah, we charge NO fees.

[dilatedPixel]

So much more information is needed to determine if this is a feasible business plan/investment or not. For me to even consider investing I would need to know:

-More specifically who you are and what you have done (something like a formal resume)

-What would justify you retaining 60% of the company when nearly all the work is being contracted out, and 100% of expenses would be covered by investors

-What corporate/legal structure you plan on using (most importantly where you incorporate)

-Will you draw a salary now or ever

-Aside from lower fees, what competitive advantage do you have over other BTC exchanges

-What are you estimated startup costs

-Are you devoting 100% of your time towards starting this or will you continue to work at your current job

-How will you deal with multiple currencies

-Will you be integrating option trading

These are just off the top of my head... A major concern I would have as an investor is that you would be the sole majority shareholder. This would subjugate all other shareholders to your decisions, including future share dilutions. I think if you plan on raising a serious amount of capital for this venture you should plan on retaining something like 15-30%, thus allowing shareholders some say in the direction the company takes.  

  

[SgtSpike]

I would like to see a some more user-friendly version of OTC market website. For each country/currency, you could list potential merchants willing to trade local currency. All based on some ring-of-trust, reviews, etc. You could probably somehow link your ebay or other site trust to your personal account on this market.

MtGox is special because it has multiple currency support and plans to improve it even more. Sorry, but for me, not being in US, is the Dwolla no option.

Good point.  I would make it a goal to have several ways to deposit and withdraw money, with the aim of exceeding MtGox's current currency options.  I will need to do more research to answer this in more detail.

[SgtSpike]

So much more information is needed to determine if this is a feasible business plan/investment or not. For me to even consider investing I would need to know:

-More specifically who you are and what you have done (something like a formal resume)

-What would justify you retaining 60% of the company when nearly all the work is being contracted out, and 100% of expenses would be covered by investors

-What corporate/legal structure you plan on using (most importantly where you incorporate)

-Will you draw a salary now or ever

-Aside from lower fees, what competitive advantage do you have over other BTC exchanges

-What are you estimated startup costs

-Are you devoting 100% of your time towards starting this or will you continue to work at your current job

-How will you deal with multiple currencies

-Will you be integrating option trading

These are just off the top of my head... A major concern I would have as an investor is that you would be the sole majority shareholder. This would subjugate all other shareholders to your decisions, including future share dilutions. I think if you plan on raising a serious amount of capital for this venture you should plan on retaining something like 15-30%, thus allowing shareholders some say in the direction the company takes.  

Good questions and thoughts.  Again, this is just to gauge interest in such a project.  It sounds like you may be interested, provided the company was set up in a satisfactory manner (i.e., with me not taking 60% stake in the company), and provided I supply acceptable answers to your questions.  I will delve in to those questions in detail when I have had more time to flesh out exactly how I want to work everything.  I could give answers now, but I would be concerned about the accuracy of some of the answers without having had sufficient time to write out all of the details myself.

Summary: I will probably wait to answer your questions until I have the business plan ready and am ready to begin taking investments.  This thread is just a gauge of interest.  

[xf2_org]

Exchange programmers are a dime a dozen.

Complete lack of mention of regulatory issues makes me think you have not thought this through at all.

[SicKk]

PM

[Genrobo]

I have an interest.

[Adam]

I was thinking about doing the same thing, but it sounds like a bit too much of a headache.  I may be on for an investment though depending on the terms.

I do have an idea for a service the exchange could offer that I haven't seen implemented yet.  That would be investing banking with the ability to pay depositors interest for depositing bitcoins, and then loan these bitcoins out to speculators who hope to profit from a decline in the bitcoin exchange rate.  I came up with some safeguards for it, but I just can't devote the time to the technical aspects of getting it working.  It also works best as part of an existing BTC exchange.  The details are here:

http://forum.bitcoin.org/index.php?topic=11406.msg161711#msg161711

The more types of real world financial transactions that can be fit within the bitcoin world the better the currency has of being successful.

[SgtSpike]

Exchange programmers are a dime a dozen.

Complete lack of mention of regulatory issues makes me think you have not thought this through at all.

There are certainly many details that I haven't mentioned, or considered yet.  Right now, I am just gauging interest.  I am not asking for anyone's bitcoins yet.  I will provide details about my considerations regarding regulatory issues, and much more, when (and if) I open up the company to investors.

I have an interest.

Excellent!

I was thinking about doing the same thing, but it sounds like a bit too much of a headache.  I may be on for an investment though depending on the terms.

I do have an idea for a service the exchange could offer that I haven't seen implemented yet.  That would be investing banking with the ability to pay depositors interest for depositing bitcoins, and then loan these bitcoins out to speculators who hope to profit from a decline in the bitcoin exchange rate.  I came up with some safeguards for it, but I just can't devote the time to the technical aspects of getting it working.  It also works best as part of an existing BTC exchange.  The details are here:

http://forum.bitcoin.org/index.php?topic=11406.msg161711#msg161711

The more types of real world financial transactions that can be fit within the bitcoin world the better the currency has of being successful.

Interesting idea Adam, thanks for sharing.  I am definitely all for including innovative ideas into this exchange, as it would help provide more of a competitive advantage.

[xf2_org]

Exchange programmers are a dime a dozen.

Complete lack of mention of regulatory issues makes me think you have not thought this through at all.

There are certainly many details that I haven't mentioned, or considered yet.  Right now, I am just gauging interest.  I am not asking for anyone's bitcoins yet.  I will provide details about my considerations regarding regulatory issues, and much more, when (and if) I open up the company to investors.

There are multiple exchanges already coded.  And there is definitely interest in new exchanges -- mtgox needs competition!

I've been researching the regulations related to opening an exchange.  Getting that right is the hard part.  You don't want to end up like e-gold, who were well meaning yet naive about money transmitter laws.

If you want investors to take you seriously as a leader, I'd look into this

[SgtSpike]

Exchange programmers are a dime a dozen.

Complete lack of mention of regulatory issues makes me think you have not thought this through at all.

There are certainly many details that I haven't mentioned, or considered yet.  Right now, I am just gauging interest.  I am not asking for anyone's bitcoins yet.  I will provide details about my considerations regarding regulatory issues, and much more, when (and if) I open up the company to investors.

There are multiple exchanges already coded.  And there is definitely interest in new exchanges -- mtgox needs competition!

I've been researching the regulations related to opening an exchange.  Getting that right is the hard part.  You don't want to end up like e-gold, who were well meaning yet naive about money transmitter laws.

If you want investors to take you seriously as a leader, I'd look into this

I completely agree, and thank you for the input. 

[Anonymous]

Sure I would throw in a few bitcoin - if it's not hosted somewhere that will end up with an fbi badge on it. 

Dwolla is ok but it's US only. Create a platform that anyone can use to host their own - like a franchise, with a shared order book and agents in different countries. This makes it modular and more decentralized.

[Braden]

I would invest in such a venture, in either BTC or dollars (which might be easier to hire people with)

[SgtSpike]

Sure I would throw in a few bitcoin - if it's not hosted somewhere that will end up with an fbi badge on it. 

Dwolla is ok but it's US only. Create a platform that anyone can use to host their own - like a franchise, with a shared order book and agents in different countries. This makes it modular and more decentralized.

Mmmm, a franchise or licenseable system is an interesting idea as well.

[Anonymous]

Think how powerful 100 mt gox's would be as opposed to 1 . Decentralized order book ftw.

[darbsllim]

If you are in the USA you have to worry about the Patriot Act.

When you are paying out more than $600 USD to a person, and accepting payments from people for something like BitCoin, you will have to worry about the headaches of the Patriot Act requirements.

Just saying don't overlook that headache.

[cunicula]

How about a US dollar-based credit union which also offered USD/BTC exchange services?

Users would be required to verify their identity and maintain a minimum US dollar CD accounts at the credit union.
Users could also maintain demand deposits for trading purposes. Deposits would be made via US dollar checks and wire transfers like a normal bank.

The union would offer a limited number/currency amount of free transfers between demand deposits held by users. These transfers would facillitate BTC/USD trades between users. The union would provide USD escrow for these transfers. The union could allow members to handle BTC escrow independently through clearcoin. The availability of demand deposit transfers would be proportional to the CD account deposited at the union. Excess transfers would incur USD fees.

The union could earn revenue to pay salaries by loaning out US dollar CD deposits and through fees on excess transfers.

Regulatory compliance might be easier because the credit union would have verified all the users identity and would operate similarly to a normal USD credit union. The only thing special is that all the users would be bitcoin enthusiasts. Also, nothing about the union would require it to ever touch BTC or directly facilitate BTC trading, since BTC escrow and order books could be handled by other entities. If holding BTC is a legal issue in the US, this might be a way to get around it.

Is this a good/bad idea? Why?

[broker11]

I am interested.

What to you estimate as the start up costs?

You should try talking to whoever is running Mt Gox to determine the regulatory hurdles and problems in running an exchange. 

[dumb_mother]

Keep me posted, I'm interested in getting involved with something like this if the startup cost and plan seem reasonable.

[SgtSpike]

I will not be continuing this idea.  With tradehill, and a couple of other very competitive-looking exchanges, as well as the potential legal ramifications of running one, it's just not something I want to get in to right now.

However, it's still a very viable idea for anyone else who wants to see another exchange out there.  So go for it!