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Author Topic: What happened to all those "distributed" exchanges  (Read 4542 times)
jubalix
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September 23, 2013, 09:19:43 PM
 #1

After the GOX melt down earlier this year, there were 100's of threads and a Chinese wall of text on distributed exchanges, replete with picture, flow charts, etc

now nothing has come of it, that I can see.

Did any of them go anywhere?

I said at the time, if they spent as much time cutting code as wall of text, they could have made something.



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September 24, 2013, 02:11:14 AM
 #2

Nope
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September 27, 2013, 10:35:45 AM
 #3

Many initiatives have been posted but it seems none of them have borne any fruit as of yet. This is still an important project however, I hope a team does come through at some point. Bitcoin is only as decentralized as its underlying infrastructure, inter-coin trading needs to be moved off of private exchanges. Exchanges will still have a use as a crypto-to-fiat converter, at least while fiat money is still worth anything that is.

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September 27, 2013, 04:48:40 PM
 #4

After the GOX melt down earlier this year, there were 100's of threads and a Chinese wall of text on distributed exchanges, replete with picture, flow charts, etc

now nothing has come of it, that I can see.

Did any of them go anywhere?

I said at the time, if they spent as much time cutting code as wall of text, they could have made something.

The whole point of an "exchange" is to put Fiat in your bank account or pocket.

The only way to make this "distributed"...
Is to have random people send random strangers money...
And keep track of all this is a decentralized way.

The banking system is not designed for and does not allow anonymous payments...
Except maybe very small amounts.

So that's the end of that pipedream.
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September 27, 2013, 08:23:31 PM
 #5

After the GOX melt down earlier this year, there were 100's of threads and a Chinese wall of text on distributed exchanges, replete with picture, flow charts, etc

now nothing has come of it, that I can see.

Did any of them go anywhere?

I said at the time, if they spent as much time cutting code as wall of text, they could have made something.

The whole point of an "exchange" is to put Fiat in your bank account or pocket.

The only way to make this "distributed"...
Is to have random people send random strangers money...
And keep track of all this is a decentralized way.

The banking system is not designed for and does not allow anonymous payments...
Except maybe very small amounts.



So that's the end of that pipedream.

i generally agree

i think a possibility was to make some sort of unified account that you could send money to and from , with your local bank account. Then people write intefaces  for a particualr bank

sort of like bank--->bolt on interface--->unified system

Im not sure how you make it so money sends from a local bank account though?Huh

eg http://bpay.com.au/About-BPAY/Overview.aspx provides a way to interface with almost all Australian banks

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September 30, 2013, 10:36:07 PM
 #6

The whole point of an "exchange" is to put Fiat in your bank account or pocket.

The only way to make this "distributed"...
Is to have random people send random strangers money...
And keep track of all this is a decentralized way.

This is effectively what happens when you buy bitcoin via a site such as LocalBitcoins or Bittylicious. In my experience, all trades have gone without a hitch, but I've only been dealing in pocket money (<$1000) rather than serious money.

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October 01, 2013, 11:34:47 AM
 #7

The only decentralized/distributed exchange platform that actually accepts deposits (and is not just OTC) and has a somewhat active market I know of is Ripple.

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October 10, 2013, 12:52:11 AM
 #8

I asked bitbargain.co.uk to open their code as I'd like to see it hosted on a hidden service. Unfortunately it hasn't happened yet

Even a deepweb site for LTC/BTC would be something

Crypto supporter!
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December 08, 2013, 07:59:36 PM
 #9

After the GOX melt down earlier this year, there were 100's of threads and a Chinese wall of text on distributed exchanges, replete with picture, flow charts, etc

now nothing has come of it, that I can see.

Did any of them go anywhere?

I said at the time, if they spent as much time cutting code as wall of text, they could have made something.

The whole point of an "exchange" is to put Fiat in your bank account or pocket.

The only way to make this "distributed"...
Is to have random people send random strangers money...
And keep track of all this is a decentralized way.

The banking system is not designed for and does not allow anonymous payments...
Except maybe very small amounts.

So that's the end of that pipedream.

Dont bury that so fast.

I think there are possibilities to realize a distributed, decentralized, trustless p2p fiat-cypto exchange.
The bank transfers are from one trader to another trader but there is no central point who knows about that. Banks cannot control payments from one user to another, you dont need to mark them as bitcoin payment.... Banks and the state can only attack or block companies but not 100 000s of single traders.

I will post later some more detailed description of some building blocks of a possible solution. For the moment just a quick summary for at least a part of the problem:

- An automated escrow service (no real person escrow included)
- Use the idea of the Nash equilibrium (based on from https://nashx.com) where the tradingpartners loose both money if they dont play fair
- A trading pool to fix the danger of blackmail from different risk amounts in the trading states (explained in a following post)

In that way a BTC seller could trade with a fiat seller just knowing the fiat sellers bank account. The trading platform does not know the bank details (communication could be encrypted) and does not hold any money or BTC (so regulatory issues should be no danger as well as btc theft). The escrow inside the system cannot access the funds. The platform is at the end just software without interception of real persons.

The next challenges are how to build such a system in a decentralized, distributed way.
One possibility could be to have something like what is wordpress for blogs. If the solution is easy to install, does not require special infrastructure, is open source, there could be a wide distribution. As nobody could shut down the blogoshere, but a certain newspaper, many server instances of such a distributed exchange could be pretty safe against political attacks.

The exchanges needs to broadcast all offers to all others and are displaying all receiving offers, so they would act on a global level. The only centralized part would be to manage the trade transaction, so that part needs to be stored in some way. Maybe there is a way to apply that to the blockchain, but at the moment I have not thought further in that part...

Maybe Open transaction (would be great to get some input from fellow traveler) serves as a ready to use system for parts of that. Ripple is for me not an good option as its operated by a company and I would prefer a trustless system rather the a trust relationship based system.

Best of course would be to have only real p2p clients (not the above described highly distributed servers). Clients could broadcast their offers to all other p2p clients. If they find a matching partner, they could decide to use a randomly choosen remote client which serves as temporary server for that transaction (best if that client does not know anything about that). To get more stability (clients could leave during the tx...) that process could be replicated to many clients. Maybe there is a way how to use the blockchain and/or scripts for the transaction?

All that is of course very unspecific.... just some ideas....
And of course I am aware that its a super complex area. But people created skype, torrent and other complex systems, so why not a p2p exchange.

I will post a detailed description of the above basic building block in a following post.

https://www.bitsquare.io  |  GPG Key: 6A6B2C46 or 57D66BDA
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December 08, 2013, 08:46:10 PM
 #10

Here are some building blocks of a possible solution for a trustless p2p fiat-crypto exchange:

Based on ideas from:
https://nashx.com
http://www.bitescrow.org
and in discussion with 2 other friends (not sure if they want to get listed here....)

To understand the following better its suggested to have a look first to the above 2 solutions.

The escrow solution is used for 3 escrow transactions. 2 risk funds (one for each trader) and the payment fund (btc). The fiat transaction goes over a conventional channel (bank,...).
To introduce an incitive for releaseing the fund after the fiat buyer has received the money (he could just be fine in that situation, he has payed btc and received fiat) we introduce the idea of the Nash equilibrium. If the transaction for one of both is not satisfying, both will loose the money they paid to the risk fund.

But there is a problem with the Nash equilibrium, as in different stages of the trade transaction there are different amounts both traders could loose. That leads to 2 attack situations for blackmailing the other user. If both are loosing some money but one loose more then the other, that could be used to blackmail the other...
To get rid of that problem a trading pool could serve as a possible solution.
Maybe there are other solutions, the basic idea was to break the connunication line so a blackmail does not work anymore (if you dont know the other you cannot blackmail him). With a trading pool where the mapping of the partners in the second part of the tx is randomized the communication line is broken (see later in the example if its not clear enough yet...).

Trading pool:
A group (n) of trading pairs want to buy 1 btc for the same price.
At the end it does not matter who will pay whom. All give the same fiat amount for 1 BTC.
The mapping between the fiat receiver and the btc receiver is randomly defined (only the system knows the mapping, not the traders).
The larger the pool the lower the risk for attacks.
First it looks that a trading pool will be much more difficult to use for trading as more then 1 trading partners must be found, but I think that depends only on the number of users. A user could set an offer within a price range and some security conditions like:
I want to buy 1 BTC for price 800 EUR +/- 20EUR in a pool with min. 5 trading pairs.

Here a quick overview of the rough idea:
Fiat Seller 1 sends fiat to BTC Seller 1
Fiat Seller 2 sends fiat to BTC Seller 2
Fiat Seller 3 sends fiat to BTC Seller 3
After successful fiat transactions:
BTC release with randomly choosen mappings.
BTC Seller 1 release BTC to BTC Seller 2 (for example)
BTC Seller 2 release BTC to BTC Seller 3
BTC Seller 3 release BTC to BTC Seller 1


Lets play it with an example:
User A sell 800 EUR to 1 BTC
User A has to pay trading value + x to risk fund, in our example 0.1 BTC: 1 BTC + 0.1 BTC = 1.1 BTC in risk fund
User B has to pay payment + x to risk fund, in our example: 1 BTC (payment fund) + 0.1 BTC (risk fund)

Critical attack situations:
Situation 1: User A does not send fiat money
Situation 2: User A has sent fiat, user B does not release btc payment and risk funds


Fair game:
Situation 1
User A: -1.1(Risk); balance: -1.1
User B: -0.1(Risk) - 1(Payment); balance: -1.1

Situation 2:
User A: -1(Money); balance: -2.1
User B: +1(Money); balance: -0.1

Release:
User A: +1.1(Risk) + 1(Payment); balance: 0
User B: +0.1(Risk); balance: 0
All fine....

User A tries to cheat:
Situation 1
User A: -1.1(Risk); balance: -1.1
User B: -0.1(Risk) - 1(Payment); balance: -1.1
Blackmail attack from user A does not make sense as both would lose the same:
If user A does not send, both will lose the same.

User B tries to cheat:
Situation 1
User A: -1.1(Risk); balance: -1.1
User B: -0.1(Risk) - 1(Payment); balance: -1.1
Situation 2:
User A: -1(Money); balance: -2.1
User B: +1(Money); balance: -0.1
User B could try to blackmail user A but the probability that user A get his payment and risk fund released from user B is 1/n (due to the randomized mapping).
Losses if he does not release:
User A: balance: -2.1/ n (only if the system mapped him to that trader)
User B: balance: -0.1

Users has only contact info to their trading peer not to the other users in the pool, so no way to make a poolwide blackmail.

What value should be applied to x? It depends on the size (n) of the trading pool.
To obtain an equilibrium we have that condition:
(2 + x) / n = x

for n = 1 that would result in an inequation, so that will not work.
2+ x != x

for n = 2 we get a valid result for the equalition, so min. pool size is 2.
(2 + x) / 2 = x
x = 2

Test:
x = 2 for n = 2;
User A: balance: -4/2 = -2
User B: balance: -2
both loose the same so no blackmail risk

Attack situation 1:
User A: -3(Risk); balance: -3
User B: -2(Risk) - 1(Payment); balance: -3

for n = 3
x = 1
Test:
User A: balance: -3/3 = -1
User B: balance: -1

Attack situation 1:
User A: -2(Risk); balance: -2
User B: -1(Risk) - 1(Payment); balance: -2

Conclusion:
As soon as we have a second trading pair we get perfect Nash equilibrium using the propability of the pool size. The larger the pool the lower the necessary risk fund.


Additional:
Some thoughts about user reputation systems:
If the p2p trading system would work, it should be very easy to create a new user.
That could be automated by scripts, so there could be created 1000s of virtual traders used to build up good ratings.
So I think a rating system without visible controlled identity will be misused.


Real person escrow (if we need that at all) could be introduced like that:
In case of a dispute a trading party could ask for an escrow which would be selected automatically from the system randomly between all users.
The selected escrow has to reply within a certain timespan (e.g. 1 hour), if he does not reply the next one will be selected. If the escrow accept to help he would get a fee.
The escrow could then release funds for one or the other party.

Let me know if you find any weak points in the trading pool approach.
One could be that members in a pool could work together, or a pool is a pseudo pool by 1 member with different accounts. But I think as a cheater cannot proof that he is the owner of the other pool members, a blackmail will be hard…

But of course that needs to be refined much more and there will be for sure more problems when getting deeper. Just a first step....

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February 05, 2015, 02:34:20 PM
 #11

I know that this topic is a bit out of date, but just in case you are still interested in a P2P Fiat-BTC exchange, I wanted to post an update of our project and announcement for our crowd funding campaign which will end in a few days (on February 9th).

Bitsquare released an alpha version in December and it can be tested at our regular testing sessions with other traders (testnet).
Today 17:00 CET we have such a session. Feel free to join us on our IRC channel #bitsquare-trading on Freenode.
Further information can be found here:
https://github.com/bitsquare/bitsquare/wiki/Bitsquare-WAN-Parties

Regarding the crowd funding campaign:
We are using Lighthouse as decentralized crowd funding solution to iteratively fund the development of every milestone, leading to a fully functional version 1.0.
The funding goal is 120 BTC for the next milestone and the campaign ends in a few days on February 9th. 
Please visit our web page for more details:
https://bitsquare.io/crowdfunding

If you like to support that project please help us to spread the word.

Best regards,
Manfred

https://www.bitsquare.io  |  GPG Key: 6A6B2C46 or 57D66BDA
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February 17, 2015, 01:44:41 AM
 #12

Indeed, Bitshares has launched an exchange that's decentralized. I have been trading on there for about one week now. I have seen some good deals in the market, and have turned a decent profit, exchanging bitshares for BitUSD (a pegged asset) while the price of btc fell from 260 to 230.

Also and probably most awesome is that BitUSD and all other pegged assets pay you %'s just for holding them!

Have questions, you wil be welcomed over on their own forum. On here i'll answer questions to the best of my ability.

Matthew
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February 17, 2015, 12:50:38 PM
 #13


how are bitusd backed by usd?

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February 17, 2015, 03:46:26 PM
 #14

They are not, they are backed by BTS (the Bitshares native currency). They just enforce that (within a certain range) the can be exchanged easily at current market prices.

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February 18, 2015, 01:08:43 PM
 #15

Mulltigateway.org

Been up and running for months. It is based upon 3 servers, run by 3 different businesses,  needing to agree before authorising a transaction. There is no central wallet to hack, cryptos are balanced among many accounts.

You can currently trade:

BTC
BTCD
LTC
DOGE
BC
VIA

(Some in maintenace, as I type)

With these in development:

VRC
OPAL
BITS
VPN

Others can be requested.
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Any store can buy, sell, and accept Crypto


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February 18, 2015, 01:35:44 PM
 #16

Try this :https://shapeshift.io
No account is required, it is like on chain transaction!

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February 18, 2015, 01:39:22 PM
 #17

Try this :https://shapeshift.io
No account is required, it is like on chain transaction!

Isn't shapeshift centralized? You rely on a single party to complete the other side of the trade?
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February 20, 2015, 05:48:11 PM
 #18

Mulltigateway.org

Been up and running for months. It is based upon 3 servers, run by 3 different businesses,  needing to agree before authorising a transaction. There is no central wallet to hack, cryptos are balanced among many accounts.

You can currently trade:

BTC
BTCD
LTC
DOGE
BC
VIA

(Some in maintenace, as I type)

With these in development:

VRC
OPAL
BITS
VPN

Others can be requested.


Since BTER went down, Nxters have switched to Multigateway

http://coinmarketcap.com/currencies/nxt/#markets

Liquidity is growing. Anyone who wants to give MGW I try for BTC trading (tight spreads, very very low fee), I can answer any questions.
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February 22, 2015, 10:04:01 AM
 #19

The first decentralised exchange with instant (~3 secs) will be going into testing soon.

I added fixed fees of 2.5 NXT per side for direct exchange. will be another 5 NXT for a hybrid orderbook trade

so this is a 5NXT to 10 NXT per trade and will discourage small orders and also those annoying bots that bid 1 satoshi higher, they wont be able to do that as the fee per trade is too expensive.

but for trades of ~0.2 BTC it is 0.1% fee, for 1 BTC trade it is <0.025%, which is quite a good deal

I added some error handling, but need to debug it as it is rejecting all trade offers. Anyway the basic function of InstantDEX is working via API, net week I hope the GUI team will release something like: yunbi.com/markets/nxtbtc just without all the centralized parts.

So finally we are close to being able to test a decentralized crypto exchange that looks like a centralized one. No charge for making/cancelling bids/asks and just a low fixed fee for trades. Additionally I will be deploying automated market makers for the major issues with a target bid/ask spread of 1%. this will create a lot more liquidity and value for everything involved. And of course BTCD will be the reference currency for the hybrid orderbooks that will bridge the crypto coins with the NXT assets

James

tl:dr it's ok to start getting excited
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February 22, 2015, 11:06:00 AM
 #20

Since BTER went down, Nxters have switched to Multigateway

http://coinmarketcap.com/currencies/nxt/#markets

Liquidity is growing. Anyone who wants to give MGW I try for BTC trading (tight spreads, very very low fee), I can answer any questions.

Are orders executed real-time (or close to) there?

I still can't imagine how it would be possible to make order execution real-time at a decentralized exchange. After the bter fiasco, I'm strongly incentivized to look deeper into the matter (with safety of my money being the primary focus, of course).
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