Let's Design The Ideal Bitcoin Exchange

[corebob]

...
1) community validation / certification - I would to see some huge size community group (none anonymous) say 1000+ people, vote give star ratings to service providers.
...

Something simple like star ratings would be nice. This is a feature that usually works really well due to the fact that it represents independent peer reviews, something that could fit bitcoin really well. If nothing else if would make sure the vast majority of newcomers picks a trustworthy service.

There was a session at the Texas bitcoin conference where this issue was discussed, and there was some interesting ideas there, even though I fear we could easily end up with a cartel like situation if we don't get it right.

what are some of the other ideas that were shared at the conference  

http://www.youtube.com/watch?v=oQTM8NkbIVw&t=24m30s

That is more about making exchanges secure though, not necessary efficient or user friendly or decentralized

[Singlebyte]

...
1) community validation / certification - I would to see some huge size community group (none anonymous) say 1000+ people, vote give star ratings to service providers.
...

Something simple like star ratings would be nice. This is a feature that usually works really well due to the fact that it represents independent peer reviews, something that could fit bitcoin really well. If nothing else if would make sure the vast majority of newcomers picks a trustworthy service.

There was a session at the Texas bitcoin conference where this issue was discussed, and there was some interesting ideas there, even though I fear we could easily end up with a cartel like situation if we don't get it right.

TOTALLY WRONG!!  Decentralized is only way to go.....

The only reason you would "rate" a service is because it is centralized.  A decentralized system is trusted by the mathematics and not because someone gave it a star rating.  Hell, do you rate my p2p bitcoin server I am running at my house with a "star rating"!?  Decentralized exchange services will not need any rating by anyone.  It will be trusted because the code running the exchange service can be reviewed and cryptography ensures it's trustworthyness.  

[Armis]

...
1) community validation / certification - I would to see some huge size community group (none anonymous) say 1000+ people, vote give star ratings to service providers.
...

Something simple like star ratings would be nice. This is a feature that usually works really well due to the fact that it represents independent peer reviews, something that could fit bitcoin really well. If nothing else if would make sure the vast majority of newcomers picks a trustworthy service.

There was a session at the Texas bitcoin conference where this issue was discussed, and there was some interesting ideas there, even though I fear we could easily end up with a cartel like situation if we don't get it right.

what are some of the other ideas that were shared at the conference  

http://www.youtube.com/watch?v=oQTM8NkbIVw&t=24m30s


That is more about making exchanges secure though, not necessary efficient or user friendly or decentralized

wow, that was a powerful video, had to watch it twice; and will likely watch it a couple more times

[Beliathon]

just like Taras said, decentralized exchange is what bitcoin needs. However i assume USD conversion will be a challenge since that requires some form of centralization.

What you're missing is that in the not-too-distant future, no one will be converting back to USD anymore...

[Armis]

...
1) community validation / certification - I would to see some huge size community group (none anonymous) say 1000+ people, vote give star ratings to service providers.
...

Something simple like star ratings would be nice. This is a feature that usually works really well due to the fact that it represents independent peer reviews, something that could fit bitcoin really well. If nothing else if would make sure the vast majority of newcomers picks a trustworthy service.

There was a session at the Texas bitcoin conference where this issue was discussed, and there was some interesting ideas there, even though I fear we could easily end up with a cartel like situation if we don't get it right.

TOTALLY WRONG!!  Decentralized is only way to go.....

The only reason you would "rate" a service is because it is centralized.  A decentralized system is trusted by the mathematics and not because someone gave it a star rating.  Hell, do you rate my p2p bitcoin server I am running at my house with a "star rating"!?  Decentralized exchange services will not need any rating by anyone.  It will be trusted because the code running the exchange service can be reviewed and cryptography ensures it's trustworthyness.  

Although I still don't know what you guys are talking about in terms of "decentralized", I can say this: if it can be reviewed, if it can be referred, if more than one person is using it, if it's public, then yes it can, and should, be rated.  

just like Taras said, decentralized exchange is what bitcoin needs. However i assume USD conversion will be a challenge since that requires some form of centralization.

What you're missing is that in the not-too-distant future, no one will be converting back to USD anymore...

I don't know what you call "distant" or "not-too-distant" but as of right now bitcoin itself is on life support, if something serious isn't done quicklly to the infrastructure you won't have to be concerned with conversions.

[Singlebyte]

Although I still don't know what you guys are talking about in terms of "decentralized", I can say this: if it can be reviewed, if it can be referred, if more one one person is using it, if it's public, then yes it can and should be rated.  

OK, I will try to explain.....

Centralized = 1 Entinity Controls = 1 location of server(s) = Government can shut down

Decentralized = Nobody controls = many Servers = Censorship resistant

Example of centralized
  Napster
  Mtgox
  Paypal

Example of Decentralized
  Bitcoin
  Bittorrent

In a decentralized system, if one of the nodes(servers) go down, the others still continue to operate as normal. A decentralized exchange network would give us these benefits.  Nobody could interrupt the system and it would all be trustworthy.  When I mentioned "reviewed" I was talking about the computer code that would be launched to startup a network.  Programmers can view open source code to make sure there are no hidden back doors or sneaky code hiding inside.


Chris Odom, OpenTransactions Project, Explains it better in this video:
http://youtu.be/teNzIFu5L70


Demo of Opentransactions exchange platform
http://goo.gl/i0J3AF



Hope this helps.....

BTW, Love how Chris predicted the demise of MtGox early in the video....
 

[Armis]

Although I still don't know what you guys are talking about in terms of "decentralized", I can say this: if it can be reviewed, if it can be referred, if more one one person is using it, if it's public, then yes it can and should be rated.  

OK, I will try to explain.....

Centralized = 1 Entinity Controls = 1 location of server(s) = Government can shut down

Decentralized = Nobody controls = many Servers = Censorship resistant

Example of centralized
  Napster
  Mtgox
  Paypal

Example of Decentralized
  Bitcoin
  Bittorrent

In a decentralized system, if one of the nodes(servers) go down, the others still continue to operate as normal. A decentralized exchange network would give us these benefits.  Nobody could interrupt the system and it would all be trustworthy.  When I mentioned "reviewed" I was talking about the computer code that would be launched to startup a network.  Programmers can view open source code to make sure there are no hidden back doors or sneaky code hiding inside.


Chris Odom, OpenTransactions Project, Explains it better in this video:
http://youtu.be/teNzIFu5L70


Demo of Opentransactions exchange platform
http://goo.gl/i0J3AF



Hope this helps.....

BTW, Love how Chris predicted the demise of MtGox early in the video....
  

thanks so much for the comprehensive explanation


are the "pools" and "escrow entities" centralized, and if so necessary centralized evils for the OT system?

[corebob]

...
1) community validation / certification - I would to see some huge size community group (none anonymous) say 1000+ people, vote give star ratings to service providers.
...

Something simple like star ratings would be nice. This is a feature that usually works really well due to the fact that it represents independent peer reviews, something that could fit bitcoin really well. If nothing else if would make sure the vast majority of newcomers picks a trustworthy service.

There was a session at the Texas bitcoin conference where this issue was discussed, and there was some interesting ideas there, even though I fear we could easily end up with a cartel like situation if we don't get it right.

TOTALLY WRONG!!  Decentralized is only way to go.....

The only reason you would "rate" a service is because it is centralized.  A decentralized system is trusted by the mathematics and not because someone gave it a star rating.  Hell, do you rate my p2p bitcoin server I am running at my house with a "star rating"!?  Decentralized exchange services will not need any rating by anyone.  It will be trusted because the code running the exchange service can be reviewed and cryptography ensures it's trustworthyness.  

The current exchanges are centralized, but I completely agree. If we can make a decentralized coin2coin exchange it would be great

[mobile4ever]

Decentralize the platform. It should require no trust and be peer to peer.

↑ This. ↑

This was talked about extensively but we got nowhere.


https://bitcointalk.org/index.php?topic=172705.msg2235263#msg2235263

[Taras]

Decentralize the platform. It should require no trust and be peer to peer.

↑ This. ↑

This was talked about extensively but we got nowhere.


https://bitcointalk.org/index.php?topic=172705.msg2235263#msg2235263

We've got to make it happen. Satoshi did it, so can we - his peers.

[Armis]

Decentralize the platform. It should require no trust and be peer to peer.

↑ This. ↑

This was talked about extensively but we got nowhere.


https://bitcointalk.org/index.php?topic=172705.msg2235263#msg2235263

wow, reading all of that plus these:

https://bitcointalk.org/index.php?topic=212841.0
https://bitcointalk.org/index.php?topic=172705.0
https://bitcointalk.org/index.php?topic=145389.0

I'm surprised there isn't an OT proof of work thread

I was surprised at how Ripple got shot down at every turn even though they apparently are a decentralized exchange (or are they)

[franky1]

the point of failure is the conversion to fiat.

the only solution is a p2p client program that accepts bitcoins and another coin that is designated as always having a $1 value. to avoid multiple bank transfers just to make multiple trades. (100+trades, day trading).

i can see it working where jack can see Jill request btc for DollaCoin on skype, facebook or even this forum. and they simply link up with a keyphrase. i can even see how the program requests the individuals to individually type in a passphrase that combines to make an 2 escrow addresses. and once both parties put the funds into the dollaCoin and BTC escrow the program then shows payment sent and then forwards the funds to the recipients own address.

i have read where people want orderbooks in this program listing peoples offers and bids.. which is more complicated to kee updating p2p style

so the lesser problems i see.
1. how to operate the escrow, which is not corruptible by people tweaking their client sourcecode. yet remain open source
2. how would the orders be communicated throughout the network at a reasonable speed where all the nodes get a active list instantly

[Armis]

the point of failure is the conversion to fiat.

the only solution is a p2p client program that accepts bitcoins and another coin that is designated as always having a $1 value. to avoid multiple bank transfers just to make multiple trades. (100+trades, day trading).

i can see it working where jack can see Jill request btc for DollaCoin on skype, facebook or even this forum. and they simply link up with a keyphrase. i can even see how the program requests the individuals to individually type in a passphrase that combines to make an 2 escrow addresses. and once both parties put the funds into the dollaCoin and BTC escrow the program then shows payment sent and then forwards the funds to the recipients own address.

i have read where people want orderbooks in this program listing peoples offers and bids.. which is more complicated to kee updating p2p style

so the lesser problems i see.
1. how to operate the escrow, which is not corruptible by people tweaking their client sourcecode. yet remain open source
2. how would the orders be communicated throughout the network at a reasonable speed where all the nodes get a active list instantly

in the situation that you posed, when would the automated escrow release the funds, upon receipt or upon x# of confirmations ?

[franky1]

I was surprised at how Ripple got shot down at every turn even though they apparently are a decentralized exchange (or are they)

ripple was the closest solution i could see. but most people ignored the whole point of exchanging bitcoins and dollars which were the important thing, and xrp was just a small thing sitting in the background where less then one xrp was removed from your holdings as a transaction fee (they gave people free xrp, so it was not meant to be a big deal)

instead thogh, everyone thought xrp was an altcoin and only traded xrp for btc via WTB thread posts on the forum. and then complained that xrp was not a altcoin..

they totally missed the point that xrp was not a currency and just a transaction fee.. much like cash in the mail.. xrp was the postage stamp and everyone started trading stamps, instead of exchange funds in the mail. and complaining that the mail service was making money out of stamps..

.. the mind boggles sometimes

[franky1]

in the situation that you posed, when would the automated escrow release the funds, upon receipt or upon x# of confirmations ?

preferably when both escrows (dollacoin and BTC) had one confirm. the protocol would wait for both single confirms then auto send to the recipients addresses.

but you have lead me onto the further issue i was going to mention later (although i mentioned it before in different posts) confirmations cause trading delays and day traders hate that

but in a open source p2p program that is sat on someone hard drive. how do you prevent one user tweaking their source code to release funds instantly? or make it so they cant doube spend so confirms are not required.

i think localbitcoins is another close option option that works. but we still need to decentralise the escrow and order list to be perfect system

[Armis]

I was surprised at how Ripple got shot down at every turn even though they apparently are a decentralized exchange (or are they)

ripple was the closest solution i could see. but most people ignored the whole point of exchanging bitcoins and dollars which were the important thing, and xrp was just a small thing sitting in the background where less then one xrp was removed from your holdings as a transaction fee (they gave people free xrp, so it was not meant to be a big deal)

instead thogh, everyone thought xrp was an altcoin and only traded xrp for btc via WTB thread posts on the forum. and then complained that xrp was not a altcoin..

they totally missed the point that xrp was not a currency and just a transaction fee.. much like cash in the mail.. xrp was the postage stamp and everyone started trading stamps, instead of exchange funds in the mail. and complaining that the mail service was making money out of stamps..

.. the mind boggles sometimes

Wow, thanks for that pieces of cryptocurrency history ... I guess having XRP sitting at the top of the Market Cap List Of Cryptocurrencies sorta ingrains the notion that they are a CC (even if they really aren't)

[Singlebyte]

in the situation that you posed, when would the automated escrow release the funds, upon receipt or upon x# of confirmations ?

preferably when both escrows (dollacoin and BTC) had one confirm. the protocol would wait for both single confirms then auto send to the recipients addresses.

but in a open source p2p program that is sat on someone hard drive. how do you prevent one user tweaking their source code to release funds instantly?

The funds would never sit on a server & escrow would not be needed.  They stay in your wallet until the transaction is performed.  The server acts as a notary to the transaction using M of N to pass the keys once the contract is fulfilled.  You client software would digitally sign the keys so they are not intercepted.  No one other than the two parties involved would ever have access to the coins. 

[franky1]

The funds would never sit on a server & escrow would not be needed.  They stay in your wallet until the transaction is performed.  The server acts as a notary to the transaction using M of N to pass the keys once the contract is fulfilled.  You client software would digitally sign the keys so they are not intercepted.  No one other than the two parties involved would ever have access to the coins.  

so you say you want server involvement..

ok then.

so lets say the server is the one that takes Jacks passphrase: k46d3n6b8mfi4nfif9nfwlg and Jills: rmertkdf034mgsdfkdg and combines them to make a escrow address for the DollarCoin and the Bitcoin. it does not save the passprase or the privkeys. just saves the public key and posts back the public keys to be filled.

once the server sees the funds are confirmed jack and jill resend their passphrases and the server uses them to make the privkeys to send the funds to the recipient.

so all the server saves in the database is public keys, although given a bit of trust to atleast process addresses.

or do you mean funds move away from available balance into a locked in address still in the client program. which then when other person also moved funds to the locked address. then funds transfer..

again how to prevent sourcecode tweaking to unlock funds (finding the hidden privkey)

[Singlebyte]

The funds would never sit on a server & escrow would not be needed.  They stay in your wallet until the transaction is performed.  The server acts as a notary to the transaction using M of N to pass the keys once the contract is fulfilled.  You client software would digitally sign the keys so they are not intercepted.  No one other than the two parties involved would ever have access to the coins.  

so you say you want server involvement..

ok then.

so lets say the server is the one that takes Jacks passphrase: k46d3n6b8mfi4nfif9nfwlg and Jills: rmertkdf034mgsdfkdg and combines them to make a escrow address for the DollarCoin and the Bitcoin. it does not save the passprase or the privkeys. just saves the public key and posts back the public keys to be filled.

once the server sees the funds are confirmed jack and jill resend their passphrases and the server uses them to make the privkeys to send the funds to the recipient.

so all the server saves in the database is public keys, although given a bit of trust to atleast process addresses.

or do you mean funds move away from available balance into a locked in address still in the client program. which then when other person also moved funds to the locked address. then funds transfer..

again how to prevent sourcecode tweaking to unlock funds (finding the hidden privkey)

I am not the best at trying to explain this difficult concept in a thread.  The first video I posted of Chris Odom explains the complete procedure using voting pools and multisig and how it would be accomplished.  I think if you fast forward to about the 9 min mark he will hit on the subject.  (But best to watch the entire thing however!)

[franky1]

I am not the best at trying to explain this difficult concept in a thread.  The first video I posted of Chris Odom explains the complete procedure using voting pools and multisig and how it would be accomplished.  I think if you fast forward to about the 9 min mark he will hit on the subject.  (But best to watch the entire thing however!)

open transactions is not decentralised.

whether a business has all their systems in one office building or in 50 different locations does not make it decentralised. its still owned, monitored by a single company. so its possible to extort funds.

open transactions appears to want you to deposit your funds, which then get spread across several of THEIR servers which then gives you a balance in their desktop client. and funds would only move if the majority of those dispursed servers see the trade agreement has been made and athenticated.

well if i had 10 servers and you sent me 20 bitcoin then each server would receive 2btc each and you are told that fnds wont move unless you have signed an agreement that jill should receive the 20btc.

... yet all it takes is for the server owner to update the servers to simply send all the funds to his address.. you still have to trust that they wont tinker with THEIR servers and that they wont change the server code yet make you believe that thecode on the server matches the open source code on github.

(a few webwallet people showed sourcecode that their webwallet generated and address and only the users had access.. months later without warning they changed the code and stole the coins)

open transactions owns the servers and the source. you have to trust that they wont change anything. we need to find a trustless solution. and thats the problem

ithought of many different ways. and i think the way that bitcoin-qt nodes validate transactions is the only way. where it has to be validated by 200+ users (not a centralised company) for the transaction to happen.. (im still knitpicking the physics of this plan)