How to integrate a localbitcoins type exchange into the blockchain

[ir.hn]

We all know exchanges are the achilles heel of cryptocurrencies.  But we have explained away this grave realizaton in two ways.  Either we downplay the risk involved in exchanges, or we say that in the future everyone will accept bitcoin so exchanges won't be necessary.  Both views are naive and keep bitcoin and other cryptos from becoming mainstream.  Bitcoin needs to become a self contained e-commerce platform in order to become mainstream and resist attacks on exchanges.  Theoretically if governments can control exchanges they can manipulate crypto's price.  I believe our current spike is caused by china banning exchanges thus making bitcoin effectivly more scarce, but that is beside the point.  The fact that china banned exchanges at least means that people in china really can't effectively trade or use bitcoin.  This problem needs to be solved.

Enter OP return.  If we simply change the way we use (and actually start using) this built in bitcoin funcionality (especially if wallets help automate this process) we can encode enough information to make the blockchain into self contained e-commerce.  This will add some bulk to the blockchain but it is worth it, monero increases their blockchain size to produce privacy, we need to bloat our blockchain size to protect against the exchange attack.

here is my whitepaper for more info: (free to read and no ads)
http://www.naturehackerproducts.com/2017/12/the-age-of-block-explorer-simplest.html?m=1

Please let me know what you think and lets compose a language and wallet functionality and block explorers to do this!

[ir.hn]

What this will also do is make it so you can mine whatever coin you want and have your wallet automatically exchange it for the crypto of your choice, even you could mine an altcoin and get it automatically converted into dollars and add directly to your paypal account!  This will make mining very mainstream.  Just run this program on your computer and watch your paypal balance go up!

[squatz1]

Well something like this in impossible if you are to really think about it, because the problem lies here in the fact that you can't be anonymous when handling a lot of the LBC exchange things which include stuff like bank transfer, credit card selling, etc. These are all transcations that you have to be known for, you have to provide some sense of identification or people are just not going to use you -- as this is an easy way for scammers to try to cash out with their stolen CC's and bank stuff.

Plus the fact that KYC regulations exists, which force companies into intruding into the privacy of their customers.

[ir.hn]

Well something like this in impossible if you are to really think about it, because the problem lies here in the fact that you can't be anonymous when handling a lot of the LBC exchange things which include stuff like bank transfer, credit card selling, etc. These are all transcations that you have to be known for, you have to provide some sense of identification or people are just not going to use you -- as this is an easy way for scammers to try to cash out with their stolen CC's and bank stuff.

Plus the fact that KYC regulations exists, which force companies into intruding into the privacy of their customers.

Thanks for the comment.  Right, depending on what you are offering for trade you can compromise your anonymity.  The point here is not just in maintaining anonymity in exchanges, but making a decentralized p2p exchange in the blockhain itself which has many advantages including "automating" the conversion of your coins (done by a wallet) as well as preventing governments from shutting down or getting your personal info from exchanges.  If privacy is very important to you then you probably don't want to ship anything or offer bank transfers in this system.  Scams can happen but the new feedback functionality and also the factors of how long a wallet has been around, how many blocks it has mined, how many transactions it has made, etc. will not only help you determine if a person is worth risking trading with, but also it could be set up that certain addresses are trusted by a consensus of people or your wallet will look for x y z criteria to determine trustworthy wallets.  The sky is the limit with the possibilites.