Should there be a consortium for crypto exchange best practices?

[juvo_3]

In the beginning there was bitcoin. And people traded manually, pure p2p. With time past, the volume and price increased, a need for exposure to liquidity arose. If you needed to change your market position at any point in time, there needed to be a market available. Enter local bitcoin and a plethora of exchanges.

- Local bitcoin utilized p2p matchmaking which mitigated the need to have a online wallet or remote locations of your bitcoin. This came at the cost of manual match making, communication overhead between peers and in some cases, non-benevolent behaviour amounst peers.

- Exchanges utilized the classical structure of trading marketplaces, by implementing a clearing house of offers and bids. This allowed for heterogeneous order volumes and prices to be dynamically matched. Further more it allowed for a global price determination within that exchange. This came at the cost of having remote storage of the peer's coin on the exchange.

Over the history of exchanges existing for bitcoin and now alternate coins, security has been a huge issue, with a successful hack of an exchange happening every six months or so. Observing the community of exchanges, as a whole progress has been poor. Now there are exchanges that have good empirical data when it comes to hacks. And it might be a choice of peers to select the right ones, but i think that multiple exchanges leads to diversification, access point redundancy and other advantages too, we should have a diverse community of exchanges.

Given that exchanges make an large amount of absolute volume over each day in trading, I find these hacks unacceptable within the community. I am not saying that the security aspect of an exchange is trivial. I am saying that exchanges should be on par with classical market place institutions by this time given the resources that have been provided to them.

In my perspective I see progress requiring two things, resources and knowledge. In this function, one is able to exchange resources for knowledge by acts of research and development. Observing the lack of progress made by the community and the resources available to them, I assume that there is a lack of knowledge in how exchanges should be run. Hence the title (finally):

- Is there a consortium for crypto exchanges where best practices, standards and certification levels are provided?
- If not, should we create one?

[1713925280]

1713925280

[lizardbtc]

I do not believe that there should be one. First of all everyone can start an exchange or be a brooker, indeed many new bussniesses are trying to do so but this is not an easy game as you have to build reputation and trust where there is variety of well known go to places. Even if there are best practises not every exchange will be obligated to follow them as in different countries different laws apply. What I thinik will be interesting to watch is these Decentralized Excahgnes that are being developed and let's see what protocols are they looking to apply to them.

[LeGaulois]

Are you talking about the security side specifically? There is one proposal already https://cryptoconsortium.github.io/CCSS/Details/ started over one year ago. It's from cryptoconsortium.org Not sure if it's useful for the large websites but for the smallest one surely.