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Author Topic: Bitcoins Achilles Heel, (And How To Fix It)...  (Read 944 times)
Sage
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January 27, 2013, 03:58:08 PM
 #1

It seems the future of Bitcoin is very much controlled right now by the centralized exchanges.

To me, they are the achilles heel.  Bitcoin won't be taken down.  But the exchanges could be regulated out of existence.

Current OTC exchanges are too clunky, and simply not a centralized exchange replacement.

The solution:  A decentralized exchange...

Why can't we cut out the middle man, and create a decentralized software solution that connects Bitcoin buyers with fiat sellers? 

A software program with no central server, torrent style.

It seems to me the only thing necessary to make this work is some kind of escrow transaction.

It could possibly be done simply with a feedback system, Ebay style.

Also it could be done with a 3 party transaction.  Where both parties agree on a mediator.  Then create a 3 signature trade, where all 3 parties have to sign-off on trade before Bitcoins end up in the sellers wallet.

If 3 parties aren't enough, maybe allow the option of both parties choosing 3, or hell, even 5 or more mediators per transaction.

It could also be done with a simple kill switch...

I remember reading somewhere this kind of Bitcoin transaction is possible.... where Bitcoins are frozen in limbo for an agreed set of time.  If the goods/services aren't rendered the Bitcoin seller can kill the transaction... causing both seller and buyer to lose coins.  But at least it would keep both parties honest.

Maybe create a system with a few recourse options where buyer/seller can choose whatever recourse options they want for the deal.

This system could also be used with any goods/services purchase.  Making Bitcoin a trusted/safe payment option when dealing with an unknown seller.

I'm not a technical person.  But seeing other systems out there, I don't see why this could not be done.

Any technical people want to chime in here on what it would take to create such a system.




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b3b456de
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January 30, 2013, 02:04:39 AM
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There are a bunch of ways to acquire BTC without going through any official exchanges.  This forum, and BitCoin-OTC are some examples of many.

I think that the main reason centralized exchanges are popular is that they are, for the unexperienced user, loads safer than any other form of obtaining BTC.  Sure you could set up a decentralized exchange, and adding an Escrow feature to it would make it more secure than most of the systems already in place.  However you would not be able to eliminate scamers entirely.

Though the main reason is that there has not been a need for anything like this yet.

Didn't really answer your question, but at least this gave your thread a bump.
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January 30, 2013, 02:06:37 AM
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Also, here is another thread about a decentralized exchange.  It is a bit more technical, and about 2 years old.

https://bitcointalk.org/index.php?topic=45751.0

----

I also found Dark Exchange.  Which is the only example of an existing P2P exchange.  I don't know if it is still in use, though it might have been moved to the tor network or i2p.

Thread: https://bitcointalk.org/index.php?topic=27055.0
GitHub: https://github.com/macourtney/Dark-Exchange
Bitcoin Wiki: https://en.bitcoin.it/wiki/Dark_Exchange

----

I like the idea of a decentralized exchange, but as some other have mentioned in this thread (https://bitcointalk.org/index.php?topic=45751.0) it is unlikely for such a system to gain wide acceptance with bitcoin being easy to obtain through "legal" centralized exchanges.
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February 05, 2013, 02:39:21 AM
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Who is this stealing my ideas. Probably a guy on irc stealing my ideas. That is the same problem I see with btc right now. Bitcoin was made to be p2p not p2ex2p. That is why I started my site bitcoin friends it is a method for me to provide bictoins to the general public (when I have coins). My vision would be individuals acting as exchanges on a highly decentralized manor using a verification system to validate and see a members online rep. Check us out on facebook at bitcoin friends.

COBINHOOD – ZERO TRADING FEE CRYPTOCURRENCY EXCHANGE 
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