ExchangeCoin?

[enmaku]

So I'll fully admit, I'm NOT programmer enough for this project - I have a decent high-level understanding of a lot of what would be involved but I am nowhere near competent enough to actually write the code. Instead I'm just going to suggest an idea and see if someone who DOES have the skills will run with it. Perhaps if others like it enough we could even start a Bounty or something.

In light of the recent Mt. Gox issues I think it's time we built a distributed exchange. NameCoin has already proven that you can use a BTC-style blockchain to store non-coin data like DNS so why not provide a modified client that holds a buy/sell order database and matches buyers with sellers? The client could support a small variety of payment processors to begin (dwolla, etc) and expand with time. If the client interfaces directly with, for example, Dwolla's API then it should be able to transfer funds directly from my account to my seller's account, bypassing the middleman entirely.

I'm sure there is some obvious technical limitation that I'm missing or this would have been done already, right?

[cunicula]

Requires data from a trusted third party, no?
More feasible solution is a decentralized exchange that allows trading based on information in the block chain itself. Difficulty is essentially a proxy for price as denominated in KwH (+ technological shocks). It is in the block chain.

[Icy-]

This wouldn't work the way your trying to think it would.

[MindFunk]

So I'll fully admit, I'm NOT programmer enough for this project - I have a decent high-level understanding of a lot of what would be involved but I am nowhere near competent enough to actually write the code. Instead I'm just going to suggest an idea and see if someone who DOES have the skills will run with it. Perhaps if others like it enough we could even start a Bounty or something.

In light of the recent Mt. Gox issues I think it's time we built a distributed exchange. NameCoin has already proven that you can use a BTC-style blockchain to store non-coin data like DNS so why not provide a modified client that holds a buy/sell order database and matches buyers with sellers? The client could support a small variety of payment processors to begin (dwolla, etc) and expand with time. If the client interfaces directly with, for example, Dwolla's API then it should be able to transfer funds directly from my account to my seller's account, bypassing the middleman entirely.

I'm sure there is some obvious technical limitation that I'm missing or this would have been done already, right?

Why not have a smartphone app that matches up buyers and sellers of bitcoins IRL.  Cash in hand for bitcoins?  Perhaps this could work with your proposed system.

[ben-abuya]

I talked about this in a separate thread. The p2p part is really important, but it can't interface with non-p2p stuff like regulated corporations. It also doesn't really have to.

A currency exchange addresses two problems:

1. Coordinating the market price of the currency pair.
2. Safely transferring ownership of the traded currencies.

The first problem can be solved completely within a p2p system using only bitcoins as the currency. See Prediction Markets.

The second problem is tricky because it involves transferring ownership of fiat money, e.g. USD. But, if the market price is known to all via (1), it becomes a lot easier to just meet somebody on the street and swap dollar bills for bitcoins, or do it via #bitcoin-otc. So I think the hard problem here is the prediction market.

[MindFunk]

I talked about this in a separate thread. The p2p part is really important, but it can't interface with non-p2p stuff like regulated corporations. It also doesn't really have to.

A currency exchange addresses two problems:

1. Coordinating the market price of the currency pair.
2. Safely transferring ownership of the traded currencies.

The first problem can be solved completely within a p2p system using only bitcoins as the currency. See Prediction Markets.

The second problem is tricky because it involves transferring ownership of fiat money, e.g. USD. But, if the market price is known to all via (1), it becomes a lot easier to just meet somebody on the street and swap dollar bills for bitcoins, or do it via #bitcoin-otc. So I think the hard problem here is the prediction market.

I agree. The cash in hand for Bitcoin amount would have to be negotiated up front.
I did find 3 places (In the Wiki) currently doing this:

http://btcnearme.com/

https://ubitex.org/

http://tradebitcoin.com/about