In light of Mt. Gox... Time for a more professional trading platform?

[bitcola]

It's not just Mt.Gox. Everything about this currency needs to be more professional.

What you see now just looks like a hobby currency. Adoption is slow but I think professionals are turned off by the early adopters fortunes. No matter how you try to explain it, a lot of people don't like the fact that a new currency can be invented and this can happen.

Sure, early discovers of precious metals, oil, rare earths etc. get the same thing. But this currency has been invented out of thin air. I think there is still a great lack of confidence in it. It could yet drop and be worthless.

Bit of a chicken and egg situation.

Yeah I agree with your early adopter analysis. However, many of the first commercial websites grew into huge businesses (take books.com for example) and that didn't stop large scale adoption...

This seems to be the most common argument against it. I hear this comparison with corporations all the time.

But the thing is...BTC is not a corporation. And there are tens of thousands of large corporations. There won't be tens of thousands of new currencies. There will never be tens of thousands of commodities traded on world markets.

What's to stop someone creating their own new currency? And then miners make a load of money there too? And when the early adopters have cashed in, they make another new currency...and another new currency...then it starts to sound more like a ponzi scheme.

This is something that BTC proponents don't like to talk about. And it could ultimately be what makes this currency fail. All you need is a few more competing peer to peer currencies. Then, who is to say that they are any less worthy than BTC as a currency? As soon as that is made clear, all of these currencies will become worthless.

At least other virtual currencies and new country currencies are backed by gold (or at least to some degree). BTC is not backed by anything.

[encoderer]

Thanks everybody for the thoughts. I'll answer questions individually when I have a moment -- weekends are for the family so I just get a little time in the morning before everybody wakes up.

I see what you mean about the centralization issue.

But to be clear: The only person that would need to get an API key would be if another trading site wished to open and trade with people on this proposed site.

Perhaps the Bitcoin community would want this to stay with each site as an island unto itself and I can appreciate that. But when I look at the markets we know -- US equities and the internet advertising market -- and I apply the principles of those "exchanges" onto BitCoin, those are the differences I see. And the assumption is, Bitcoin will look more like that as it grows up.


Here's the inherent risk of creating such a platform and the reason why direct access to it would have to be carefully granted:

If somebody came along as a new trading site operator and got permission to trade with counterparties on other trading sites thru said platform, they could quite easily just invent users and add account balance with a SQL script and then "trade" on the open market and at the end of the day SiteA, SiteB, and SiteC would all settle their business for that day with this NewSite and they'd all transfer thousands of dollars into the site and then -- poof. Gone. They cash out and have just robbed the platform.

It's the same reason very few agencies (relatively) can trade directly onto, say, the NYSE or Nasdaq.

So if people are reflexively against the kind if community-policing you'd need of new trading sites, then maybe we just keep it as every-site-as-an-island.


Truth of why I'm considering this is that it scratches a hobbyist itch (I'm just generally more interested in this market than building another ad tracking system). And because even at the low surchage per-trade we'd charge, I think the Bitcoin market (black friday nothwithstanding) is going to blow up and we could make a lot of money. And if it doesn't, since we already have a lot of these types of tools developed to make it easy to build this site, there's not all that much risk.

Though to answer one question upfront: I don't think we'd be able to base this business onshore in the US. But we have a brilliant attorney so we'll see what she says.

And it's worth noting that she's got veto on all of this. If she doesn't feel she can shelter us and our existing business, well, we won't risk jailtime over this idea

[blck42]

Its not illegal currently to have your business based in the US, and you could see legislation making the exchange illegal coming down the pipe.