Any work being done on decentralized fiat exchanges?

[Rath_]

Decentralized crypto exchanges are already a thing but unfortunately, they lack users. People still prefer to use big, centralized exchanges such as Bittrex and Binance because they support a huge variety of altcoins. Making decentralized fiat exchange is literally impossible. Even regular exchanges have problems with their bank accounts being frozen for no reason in some countries. Using Bitcoin ATMs and localbitcoins seems to be the best idea. Keep in mind that even localbitcoins started to force some people to pass through KYC verification.

The developers of Lightning Network are working on Atomic Swaps which will allow users to trade cryptocurrencies without any third party. It won't be possible for fiat, though.

[Carlton Banks]

The problem with truly decentralised/market-based stable coins (assuming they're definitely possible) is acceptance: the only way to prove the peg is to have stableUSD trade directly against USD. That means a centralised exchange has to pick up stableUSD for trading, to prove the peg. This might be considered not to be in their interests, and consequently never happen. Although maybe it might work if a p2p stablecoin like Tether was used as a proxy to demonstrate the peg fidelity of a truly decentralised stablecoin... it's a tough challenge

Dare I say it, but the often derided central banking news pieces claiming an interest to create "national cryptocurrency" might be the genuine solution, depending on which central bank actually does this (and under what conditions). I'm not sure if it's more likely that Bitcoin simply gains more share of commercial transactions first instead, although that might be the catalyst that inspires a central bank to make the breakthrough.

[Elwar]

The way Waves DEX handles fiat trades is through a central bank.

[Carlton Banks]

Which central bank?

[Elwar]

Which central bank?

Beneficiary Bank: Fio bank
Beneficiary: CashTan Financial Services s.r.o.
Beneficiary bank address: Fio banka, a.s., V Celnici 1028/10, 117 21 Praha 1
Account No.: 2601191382

[monsterer2]

Dare I say it, but the often derided central banking news pieces claiming an interest to create "national cryptocurrency" might be the genuine solution, depending on which central bank actually does this (and under what conditions). I'm not sure if it's more likely that Bitcoin simply gains more share of commercial transactions first instead, although that might be the catalyst that inspires a central bank to make the breakthrough.

They don't even need to launch their own cryptocurrency - all they need to do is to create a coloured coin on omni ledger (like USDT is). They'd then have all the power to issue/confiscate coins and trace transactions that they require while piggybacking on bitcoin.

[Carlton Banks]

Which central bank?

Beneficiary Bank: Fio bank
Beneficiary: CashTan Financial Services s.r.o.
Beneficiary bank address: Fio banka, a.s., V Celnici 1028/10, 117 21 Praha 1
Account No.: 2601191382

So the Czech central bank?

Dare I say it, but the often derided central banking news pieces claiming an interest to create "national cryptocurrency" might be the genuine solution, depending on which central bank actually does this (and under what conditions). I'm not sure if it's more likely that Bitcoin simply gains more share of commercial transactions first instead, although that might be the catalyst that inspires a central bank to make the breakthrough.

They don't even need to launch their own cryptocurrency - all they need to do is to create a coloured coin on omni ledger (like USDT is). They'd then have all the power to issue/confiscate coins and trace transactions that they require while piggybacking on bitcoin.

Central banks would be unlikely to take that approach, but in principle there's no technical reason why not. The only reason I have for saying central bank cryptocurrency would solve the stablecoin issue is the simplicity, why use omni layer when they could just redeem TCP/IP routed USD 1:1 directly at federalreserve.com, or through whatever regular commercial bank? 

[monsterer2]

Central banks would be unlikely to take that approach, but in principle there's no technical reason why not. The only reason I have for saying central bank cryptocurrency would solve the stablecoin issue is the simplicity, why use omni layer when they could just redeem TCP/IP routed USD 1:1 directly at federalreserve.com, or through whatever regular commercial bank? 

That's not a cryptocurrency you're talking about, its a wire transfer. As you know, cryptocurrencies exist because of the double spend problem - so why go to all the effort of solving it again in your own crypto when you can just piggyback on the most trusted crypto in the world?

[Carlton Banks]

That's not a cryptocurrency you're talking about, its a wire transfer. As you know, cryptocurrencies exist because of the double spend problem - so why go to all the effort of solving it again in your own crypto when you can just piggyback on the most trusted crypto in the world?

No the idea would be to use a p2p network protocol to allow permissionless transfer of the stablecoin, but use direct convertibility with the issuer to maintain the peg.

[monsterer2]

That's not a cryptocurrency you're talking about, its a wire transfer. As you know, cryptocurrencies exist because of the double spend problem - so why go to all the effort of solving it again in your own crypto when you can just piggyback on the most trusted crypto in the world?

No the idea would be to use a p2p network protocol to allow permissionless transfer of the stablecoin, but use direct convertibility with the issuer to maintain the peg.

I'm sorry, I don't follow what you're saying. Why doesn't this allow double spending the stablecoin (or double convertibility to use your terminology)?

[Carlton Banks]

That's not a cryptocurrency you're talking about, its a wire transfer. As you know, cryptocurrencies exist because of the double spend problem - so why go to all the effort of solving it again in your own crypto when you can just piggyback on the most trusted crypto in the world?

No the idea would be to use a p2p network protocol to allow permissionless transfer of the stablecoin, but use direct convertibility with the issuer to maintain the peg.

I'm sorry, I don't follow what you're saying. Why doesn't this allow double spending the stablecoin (or double convertibility to use your terminology)?

Direct convertibility

Either the coins are in the ACH legacy banking network, or they're in p2p stablecoin network. Neither permit double spends. It's simple.

[monsterer2]

Either the coins are in the ACH legacy banking network, or they're in p2p stablecoin network. Neither permit double spends. It's simple.

When coins are in the banking network, they get burnt to nothing, so they don't exist. When they're out in the open, they have to be inside a cryptocurrency to prevent double spends.

[Carlton Banks]

Either the coins are in the ACH legacy banking network, or they're in p2p stablecoin network. Neither permit double spends. It's simple.

When coins are in the banking network, they get burnt to nothing, so they don't exist. When they're out in the open, they have to be inside a cryptocurrency to prevent double spends.

Right, it's the same model as Tether, but with either the issuing central bank or Wells Fargo etc doing the 1:1 redemption

[monsterer2]

Right, it's the same model as Tether, but with either the issuing central bank or Wells Fargo etc doing the 1:1 redemption

Then my question still stands: why invent your own cryptocurrency in order to do that?  Its much easier to use a coloured coin.

[Carlton Banks]

It's simpler just to interchange USD for stableUSD directly on a one-page website, without using any tech inbetween (coloured coins, whatever). The Federal Reserve accepting 1 stableUSD for 1 USD is the most guaranteed peg possible

[goddog]

It's simpler just to interchange USD for stableUSD directly on a one-page website, without using any tech inbetween (coloured coins, whatever). The Federal Reserve accepting 1 stableUSD for 1 USD is the most guaranteed peg possible

This way they can also force kyc for each stablecoin tx :-D
but how is this different from actual online banking?

[monsterer2]

It's simpler just to interchange USD for stableUSD directly on a one-page website, without using any tech inbetween (coloured coins, whatever). The Federal Reserve accepting 1 stableUSD for 1 USD is the most guaranteed peg possible

You can BUY stableUSD that way, yes, but you can't sell it back to them like that, you have to do a cryptocurrency transfer to their wallet address.

[Carlton Banks]

It's simpler just to interchange USD for stableUSD directly on a one-page website, without using any tech inbetween (coloured coins, whatever). The Federal Reserve accepting 1 stableUSD for 1 USD is the most guaranteed peg possible

You can BUY stableUSD that way, yes, but you can't sell it back to them like that, you have to do a cryptocurrency transfer to their wallet address.

The bank can just have a webpage display a stableUSD address they own for every person wanting to exchange to regular USD

This is pretty simple stuff (maybe they might allow an API for doing this programmatically, but I'm afraid I might lose you if we get into that )

[d5000]

I had proposed something very similar here in May, but it was only a concept, there is no work done currently on it.

The idea, in a nutshell: Use the Bisq protocol for fiat-to-stablecoin trades and the BarterDEX atomic swap protocol for trade pairs of stablecoin-to-bitcoin/other cryptos.

The reason for the stablecoin integration is that atomic swaps to a "stable" currency would be theoretically possible, so using the exchange to "hedge" against the fluctuations of Bitcoin's prices is possible, without having to use a centralized IOU or exchange. To "get in" or "get out" of the crypto world (cashing out to fiat or buying for fiat) without exchange price risk, Bisq is actually (imo) more suitable than to exchange volatile cryptocurrencies to fiat.

One could use Ethereum-based Dai as an USD-based stablecoin, which seems to have actually most acceptance (from the more "decentralized" types). As Ethereum is supported by BarterDEX, it should be possible to adapt the swap transactions to transfer Dai-to-BTC instead of ETH-to-BTC. The only problem would be the management of "forced settlements", which are always possible in Dai if the exchange rate diverges too much from the target price.

There may be an intermediate step necessary, if the stablecoin used cannot be exchanged directly via an atomic swap. For example, BitUSD seems not to support the BarterDEX protocol, if I'm not wrong. In the BitShares case one could use a combination of the internal BitShares exchange and BarterDEX; this would be however not desirable, so actually Dai may be a better option.

[Elwar]

I had proposed something very similar here in May, but it was only a concept, there is no work done currently on it.

The idea, in a nutshell: Use the Bisq protocol for fiat-to-stablecoin trades and the BarterDEX atomic swap protocol for trade pairs of stablecoin-to-bitcoin/other cryptos.

The reason for the stablecoin integration is that atomic swaps to a "stable" currency would be theoretically possible, so using the exchange to "hedge" against the fluctuations of Bitcoin's prices is possible, without having to use a centralized IOU or exchange. To "get in" or "get out" of the crypto world (cashing out to fiat or buying for fiat) without exchange price risk, Bisq is actually (imo) more suitable than to exchange volatile cryptocurrencies to fiat.

One could use Ethereum-based Dai as an USD-based stablecoin, which seems to have actually most acceptance (from the more "decentralized" types). As Ethereum is supported by BarterDEX, it should be possible to adapt the swap transactions to transfer Dai-to-BTC instead of ETH-to-BTC. The only problem would be the management of "forced settlements", which are always possible in Dai if the exchange rate diverges too much from the target price.

There may be an intermediate step necessary, if the stablecoin used cannot be exchanged directly via an atomic swap. For example, BitUSD seems not to support the BarterDEX protocol, if I'm not wrong. In the BitShares case one could use a combination of the internal BitShares exchange and BarterDEX; this would be however not desirable, so actually Dai may be a better option.

Yes, I definitely think the Bisq to a cryptofiat would be the key thing to enable more widespread decentralized exchange. The swap from cryptofiat to cryptocurrencies is easier from there.

My proposed solution (and I am currently putting together the pieces to test this out) would be:

-Have a single BTC address from which you can purchase cryptofiat. Initially the price would be set and known throughout the network based on a namecoin list of exchange addresses (more on that in a bit).
-The addresses that purchase the cryptofiat would be known by the network and the amount they purchased could be sent from them in colored coins, with 1 satoshi = 1 unit of the currency, to open a channel on a cryptofiat Lightning Network.
-Bisq can then be used to convert fiat to cryptofiat. User can then open a Lightning channel to receive their colored coins.
-With those colored coins they can easily do an atomic swap for bitcoins, or do multiple micro swaps so that someone can sell just the smallest unit possible adding up to a full purchase rather than needing one person to buy the full amount offered by another person (ie. 50 people can buy from someone offering 1BTC for 7k cryptofiat).

Now back to the cryptofiat price. Initially it would be centralized. It would likely start as a centralized exchange with a website, etc. But using all of the pieces in the background. The user doesn't really even know the difference. Those that buy cryptofiat with bitcoins can start to have some input on the namecoin list of exchanges used (some sort of voting mechanism based on amount purchased and time passed).
Eventually, the goal would be to set the price to the publicly known price of the last trade in the decentralized swap. But initially the volume would be too low to do so. But when that is triggered it becomes truly decentralized and unstoppable.

No tokens needed, ETH not necessary, Rootstock not needed. All done by consensus through Bitcoin. The hope being that a typical user would just log into a website (or open an app), put in how much money they want to send, they get the highest rated Bisq seller for their criteria (bank, amount, location, time, etc.) and they just send their money. They see that they have money "in their account" and can now purchase bitcoins (just like on any other exchange). They purchase it and withdraw their BTC. Same in the other direction.