What do you want to see in an exchange?

[mustyoshi]

I want to see time-quantized trading, so I am certain I have no unfair disadvantage against bots with low latency connections.

How do you mean? How do you expect this to be done in a non exploitable way?

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[Singlebyte]

Nearly every suggestion mentioned deals with a centralized exchange.  My question is why do you want a centralized exchange?  Decentralized exchanges would do away with nearly every suggestion mentioned.


Decentralized all the way.....!

[zeetubes]

I would like to see an independent audit schedule: hardware, software, network, financials, procedures etc, preferably by known/trusted members of this forum, with high-level results published in the open - no confidential details obviously, and a plan in place to fix any issues.

Not so sure I agree with the strong password requirements since most passwords are sniffed by keyloggers. 2FA is a way better option if it's implemented well imo.

[subSTRATA]

I've been working with a team of engineers for the last 6 months on a new exchange. We have acquired banking support for 10 different fiat currency.

Wanted to see what the community is looking for in a new exchange, currently we have the following:
- Mandatory 2FA
- Verifiable user funds
- User KYC documents encrypted and stored in Canada, backed-up offline
- On EC2 so that we can sustain DDOS attacks.
- Incorporated outside of the US, so that user privacy is protected.

Ability to setup withdrawal addresses and deadline for when auto-withdrawal triggers. Many things can go wrong and I don't like idea of letting you or
other exchanges just take all my coins. If I die I want my coins to be sent to people I know but do not trust enough to give them my login info right
now (mostly because they are not capable of protecting themselves from trojans and keyloggers), to some charity or whoever else.

Bonuses for adding or removing liquidity.

Ability to turn off trollbox.

High quality graphs.

Ability to generate a new deposit addresses, no forced reuse of always the same ones.

Withdraw coins to multiple addresses in one transaction.

[TheButterZone]

Exchange cannot have exclusive control over users' BTC.

Sounds like a double spend waiting to happen.

Explain how you think an exchange can accomplish this?

http://gendal.wordpress.com/2014/03/02/bitcoin-exchanges-are-more-centralised-than-traditional-exchanges-we-can-do-so-much-better-than-this/

[Singlebyte]

Exchange cannot have exclusive control over users' BTC.

Sounds like a double spend waiting to happen.

Explain how you think an exchange can accomplish this?

http://gendal.wordpress.com/2014/03/02/bitcoin-exchanges-are-more-centralised-than-traditional-exchanges-we-can-do-so-much-better-than-this/

Lol....you got him! People are so clueless because they only know of the old centralized way.  M of N and digital signatures with smart contracts will allow people to exchange without risking their coins on an exchange.  You will not need 2FA on an exchange because the coins are encumbered in a multisig transaction you create and remain with you until the trade is successfully executed.  You do not send coins to a decentralized exchange.  You send a M of N digitally signed contract.  When the trade is executed it passes the digital signatures to the recipients and unlocks its m of n key. (Simplified way of explaining)

I hope people read this!!

"At no point does the clearing house or exchange have the ability to steal or lose your coins.  And the 2-of-3 address prevents you from running away with the coins."


I know this is a new an very difficult concept to understand, but it will be the way of the future.

[QuestionAuthority]

I'd like to see speed and efficiency for fiat transfers in and out of accounts. It doesn't matter how fast Bitcoins can be transferred around the world if it takes longer to buy with fiat and sell for fiat than snail mailing a paper check. Oh, honesty too but if you can't work out honesty then speed and efficiency would be nice.

[Phinnaeus Gage]

I don't want my "KYC documents" stored anywhere. Not even encrypted.  There is absolutely no reason for an exchange to store this type of information. If you want to verify my identity, then ask for a letter from my lawyer (if you are old fashioned) or for my government-issued digital signature.

I want to see time-quantized trading, so I am certain I have no unfair disadvantage against bots with low latency connections.

Is there such a thing as an certified independent KYC documents keeper?

[Cryddit]

Time quantized trading - definitely.  

It's a simple thing; you collect buy and sell orders for a period, then at the end of the period, execute all orders in one big transaction, at the same price - whichever price allows the greatest amount of trade.  No high-speed trading, no edge given to trading bots, no exploits against those whose system doesn't run as fast.  

The timing of the periods should not be constant or predictable; if you do that you get silly people trying to exploit the end of the period. So if, say, you want the trading periods to average ten minutes, just let the probability of the period closing during a particular second be one-in-six-hundred.  



Other than time quantized trading, the basic feature is that nobody should ever have to trust the exchange.  An exchange is not supposed to invest the customers' money other than on command, nor do a darn thing with it that the customer does not command them to do.  So there is no point in the exchange having the ability to lose the customers' money in the first place.  The customer who does entrust money to the exchange, ought to at the very least get a huge red security message if for any reason the exchange has moved his funds out of the deposit address.  And if it's not a movement the customer ordered, then it is strongly to be suspected that the exchange is cheating.

[freequant]

Ripple deposits for every traded currencies
Ripple withdrawals for every traded currencies

[theecoinomist]

You gotta have a trollbox!

[D05GTO]

There is already one that meets all the criteria here already.  No bots, transparent, USD FINCEN License.   Atomic-Trade

https://www.atomic-trade.com/about

[itod]

There is already one that meets all the criteria here already.  No bots, transparent, USD FINCEN License.   Atomic-Trade

https://www.atomic-trade.com/about

I like the fee structure, much better than the BTC-E and Bitstamp, but I don't like not being able to see the current prices and a volume before making an account. How's that transparent?

[ByronP]

There is already one that meets all the criteria here already.  No bots, transparent, USD FINCEN License.   Atomic-Trade

https://www.atomic-trade.com/about

I like the fee structure, much better than the BTC-E and Bitstamp, but I don't like not being able to see the current prices and a volume before making an account. How's that transparent?

For security the trade page is not accessible without authentication (i'm a ltl crazy when it comes to security). However I do plan on making a non functioning clone page to solve that problem.

[fran2k]

Access to my private keys or multisignature wallets.

[ChristopherPoile]

http://gendal.wordpress.com/2014/03/02/bitcoin-exchanges-are-more-centralised-than-traditional-exchanges-we-can-do-so-much-better-than-this/

Lol....you got him! People are so clueless because they only know of the old centralized way.  M of N and digital signatures with smart contracts will allow people to exchange without risking their coins on an exchange.  You will not need 2FA on an exchange because the coins are encumbered in a multisig transaction you create and remain with you until the trade is successfully executed.  You do not send coins to a decentralized exchange.  You send a M of N digitally signed contract.  When the trade is executed it passes the digital signatures to the recipients and unlocks its m of n key. (Simplified way of explaining)

I hope people read this!!

"At no point does the clearing house or exchange have the ability to steal or lose your coins.  And the 2-of-3 address prevents you from running away with the coins."


I know this is a new an very difficult concept to understand, but it will be the way of the future.

I have two questions about this... How would any multisig contract be practical if it takes 10-40 mins to confirm anything on the blockchain?
Second, in any multisig system you still have to place trust in a third party. In the link above, you actually have to place your trust in *two* third parties. Both buyer and seller have to trust the arbiter to be honest. The buyer and seller both have to trust the clearing house--the seller has to trust that the clearing house will give them the buyer's cash after the seller signs the multisig transaction, while the buyer has to trust the clearing house not to take the cash and run.

Multisig seems like it would be too slow to be practical, and doesn't remove the need for trust between parties, just places the trust in others. Granted, those others (a long-standing clearing house, a long-standing professional arbiter) would be more trustworthy than an individual buyer/seller. But, the clearing house and arbiter aren't going to do this for free. So now you're back to the system we have now--CC companies are the trusted clearing house and play arbiter as well, that's what chargebacks are.
Way of the future?

 

[Cryddit]

Second, in any multisig system you still have to place trust in a third party. In the link above, you actually have to place your trust in *two* third parties. Both buyer and seller have to trust the arbiter to be honest. The buyer and seller both have to trust the clearing house--the seller has to trust that the clearing house will give them the buyer's cash after the seller signs the multisig transaction, while the buyer has to trust the clearing house not to take the cash and run.
 

Actually, the deal with the 2-of-3 multisig is that each person has to trust that *at least one* of the other parties is honest -- it takes two parties colluding to commit a fraud.  And the roles are carefully crafted such that no party has much of an incentive to cooperate with one of the others against the third. A single instance of such would not net very much money compared to the destruction of business it would entail.  

Also, nobody could simply claim incompetence and thereby profit; without collusion you couldn't get "oh we lost the keys" meaning "I just took all your money and I'm *claiming* I just lost your keys."  If somebody *actually* loses the keys, (a) he doesn't profit and (b) the coins aren't lost because the other two actors can still cooperate to spend them.  

It really is a much better system than what we've had going so far.

[ChristopherPoile]

Actually, the deal with the 2-of-3 multisig is that each person has to trust that *at least one* of the other parties is honest -- it takes two parties colluding to commit a fraud.  And the roles are carefully crafted such that no party has much of an incentive to cooperate with one of the others against the third. A single instance of such would not net very much money compared to the destruction of business it would entail.  

Also, nobody could simply claim incompetence and thereby profit; without collusion you couldn't get "oh we lost the keys" meaning "I just took all your money and I'm *claiming* I just lost your keys."  If somebody *actually* loses the keys, (a) he doesn't profit and (b) the coins aren't lost because the other two actors can still cooperate to spend them.  

If I understand how this works (and maybe I don't), as buyer or seller you would only need to corrupt one of two of the parties, because it's not just the transaction we're talking about--there is the good that the transaction relates to. Corrupt the exchange (get the money/good they are holding in escrow), or corrupt the arbiter (2 of 3 of the keys). That's still having to trust 2 actors, isn't it?

And wouldn't multisig introduce a brand new problem: if a key is lost, and/or there is no evidence one way or the other for the arbiter to make a definitive judgement, the transaction is lost forever?
 

[Cryddit]

Nah.  If the key is lost, the guy who lost the key doesn't get a vote as to how it goes.  There may be laws about that later, but for now the consequences are no worse than losing your key in a regular bitcoin transaction -- you don't get paid. 

And yes, that is still two different agents having to collude to defraud the third, even if you are one of the two.  The arbiter's risk is reduced because if either you *or* the exchange is honest, he's okay.  The exchange's risk is reduced because if either you *or* the arbiter is honest, he's okay.  Your risk is reduced because if either the exchange *or* the arbiter is honest, you're okay.

[ChristopherPoile]

Nah.  If the key is lost, the guy who lost the key doesn't get a vote as to how it goes.  There may be laws about that later, but for now the consequences are no worse than losing your key in a regular bitcoin transaction -- you don't get paid. 

And yes, that is still two different agents having to collude to defraud the third, even if you are one of the two.  The arbiter's risk is reduced because if either you *or* the exchange is honest, he's okay.  The exchange's risk is reduced because if either you *or* the arbiter is honest, he's okay.  Your risk is reduced because if either the exchange *or* the arbiter is honest, you're okay.

I see now what you mean, good point. The risk of the exchange is checked and balanced by the arbiter. But, being honest, is this really different than the escrow services we have today? Purely digital transactions with objective arbitration rules = new, better, I can see that. Anytime there is a real world good = ?? I'm having trouble seeing where multi-sig actually helps whenever people are involved. I want to find a technical solution to this human problem, I just can't see that we have it yet.

Anyway, I think we've derailed the thread enough. I'll start another thread in a bit. Thanks Cryddit.