On a decentralized bitcoin-based stock market...

[btc_artist]

Let's discuss how a peer-to-peer, decentralized bitcoin-based stock exchange might be best implemented.

Anybody who has a company on GLBSE: if a new exchange opened up and promised to be more reliable, would you move your company there?

I'd like to hear the answer to this too.  An exchange with a much more intuitive interface could be made.

I think the effort should be put into a decentralized stock exchange, not another autonomous one.  One where the tickers, issues, portfolios, contracts, etc are all kept in a blockchain type system.  The entry nodes are merely market makers much like the real stock exchange, you could also route your orders through a preferred market maker etc.. Your portfolio, balance, etc is not actually stored on any of the sites, but in the blockchain unlocked only by your private key.  There is obvious logistics issues to work out here, but I think through the use of PKC and the blockchain system, it is all doable.

I really do love the GLBSE, but it obviously needs alot of work, and the centralization is a blatant problem especially given the politics involved.  However, I think the just like cryptocurrency we are in the infancy on this idea and the development of an idea like i stated above is more or less natural progression given what we know about p2p / decentralization and how it has been implemented in the cryptocurrency world.

I would love to get involved in such a project someday and would be willing to throw some resources at it.

I think the effort should be put into a decentralized stock exchange, not another autonomous one.  One where the tickers, issues, portfolios, contracts, etc are all kept in a blockchain type system.  The entry nodes are merely market makers much like the real stock exchange, you could also route your orders through a preferred market maker etc.. Your portfolio, balance, etc is not actually stored on any of the sites, but in the blockchain unlocked only by your private key.  There is obvious logistics issues to work out here, but I think through the use of PKC and the blockchain system, it is all doable.

For a decentralized stock exchange, one could consider basing it on Open-Transactions:

https://github.com/FellowTraveler/Open-Transactions

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[Red Emerald]

A blockchain implementation sounds nice for keeping everything distributed over p2p, but I see some potential problems (that I hope we can work out).

For the sake of simplicity, lets call our fork stockcoin.

Would you mine stockcoins just like bitcoins or would merged mining be a good idea? (I think merged mining would be smart)

Would stockcoins be destroyed when a stock is purchased?  Would there be a limited number of stockcoins? If there are a limited number, and they are being destroyed, what do we do when they are all gone?

How do we tie the chains together? Right now you buy stocks on GLBSE with BTC. I'm assuming we would want to keep this ability even though our transactions are outside of the bitcoin chain. If we can tie our stockcoin to any other chain (not just bitcoin), I think we will be better off.

Could we somehow tie into namecoin (or at least take their ideas)?  We could use the personal namespace (or a similar namespace) to register an asset and it's pgp keys.  http://dot-bit.org/Personal_Namespace

I think actually using namecoin might not be a good idea as it doesn't really have anything for issuing/selling stocks, but using some of its ideas could give us a head start.

[cablepair]

like I stated on the other thread, BTCWebHost.com would be happy to offer full scale free hosting on our server.

[Red Emerald]

like I stated on the other thread, BTCWebHost.com would be happy to offer full scale free hosting on our server.

Thanks for the support.  If this is done right, we won't need any web hosting for the chain.  However, hosting an e-portfolio service could still be of benefit. Just because we don't need web wallets, doesn't mean they don't exist (see instawallet)

[cablepair]

OK But if you need WebHostng or VPS at all in the development of this let me know!

[cbeast]

I wrote about something similar to this in another thread:
https://bitcointalk.org/index.php?topic=49163.0

[Red Emerald]

So it looks like people have tried to build this before.  Lets actually do it this time

Looks like it's already been figured out how to trade across chains.  https://en.bitcoin.it/wiki/Contracts#Example_5:_Trading_across_chains

[cbeast]

So it looks like people have tried to build this before.  Lets actually do it this time

Looks like it's already been figured out how to trade across chains.  https://en.bitcoin.it/wiki/Contracts#Example_5:_Trading_across_chains

An anonymous contract? That would be an interesting document to try to take to court. It might work for a business like Silk Road. It might reduce the overhead on dark-nets.

[teek]

From this and some of the other threads I have read regarding GLBSE, you guys kinda seem out for blood.  Though I don't know Nefario, I can definitely sympathize with having too many projects on the go and not being able to devote all the time needed.  As well, anybody that has been involved in a bitcoin based business or idea, sure they were gung ho when it was 15-20$ but the negative sentiment sure bumps people down a peg (myself incluided).  Life takes over, whats paying your bills, today, has to take precedence again..  Add to that, if he was infact in a accident, and has recovery ontop of it?? I think working with the existing GLBSE (or at least trying to extend an olive branch), seeing what the roadmap looks like (if any) and seeing if there is any common ground between what is being discussed here and what is already slated for production is a good start.  

I have read alot of Nefarios past posts and such because the GLBSE really intrigued me.  Like I said in my original post, decentralization of this thing seems like a natural progression to me, and I don't think based on some of the very interesting topics Nefario has talked about etc, that it isn't already in the works or at least on paper..  I do not think "the plan" has even started yet, this is alpha level stuff.  I am not saying don't start any new projects..   I am just saying, don't fragment further what is already very small and half broken without giving it a chance.  The reason why the GLBSE volume is peanuts is because of the lack of trust, if a bunch of different "stock exchanges" come up, well, who is going to invest?  

If any of the core GLBSE crew would like to chime in on this, we're all ears.  I mean if the project is not going to be further developed by the creator, then hopefully he /they  gives it to the community to develop further.  Again though, these things do not happen over night...  Nefario has talked about open sourcing the GLBSE in the past, if / when he does, I think the first logical step is to get an alpha up using a blockchain backend.  After that we could worry about which chain.  My personal thoughts would lean towards it's own chain utilizing merged mining.. There would be network level transaction fees, and the network would operate at a very low level just like bitcoin, just enough to faciliate transactions and not interfere in anyones business.  Broker sites can give users the nice fluffy interface they're after and charge a premium on that to monetize their sites etc.. Premium features = premium fees, etc etc..

Moving a couple companies to an alternate "stock exchange" at the stage of the game though, I think it will set us back quite a bit.  Even more so then glbse dying once a week or something.  However, I sure would like to get some type of commitment from GLBSE management that they aren't just going to up and shut down or on a whim because there is no time or money or something.  As alpha as it is, there is still a metric shit ton of peoples livelihood already tied up in it.. and it is too late too call it quits, if they aren''t going to run it, it has to be given to the community.  They couldn't even issue "refunds" if they wanted too..




 

[sadpandatech]

From this and some of the other threads I have read regarding GLBSE, you guys kinda seem out for blood.  Though I don't know Nefario, I can definitely sympathize with having too many projects on the go and not being able to devote all the time needed.  As well, anybody that has been involved in a bitcoin based business or idea, sure they were gung ho when it was 15-20$ but the negative sentiment sure bumps people down a peg (myself incluided).  Life takes over, whats paying your bills, today, has to take precedence again..  Add to that, if he was infact in a accident, and has recovery ontop of it?? I think working with the existing GLBSE (or at least trying to extend an olive branch), seeing what the roadmap looks like (if any) and seeing if there is any common ground between what is being discussed here and what is already slated for production is a good start.  

I have read alot of Nefarios past posts and such because the GLBSE really intrigued me.  Like I said in my original post, decentralization of this thing seems like a natural progression to me, and I don't think based on some of the very interesting topics Nefario has talked about etc, that it isn't already in the works or at least on paper..  I do not think "the plan" has even started yet, this is alpha level stuff.  I am not saying don't start any new projects..   I am just saying, don't fragment further what is already very small and half broken without giving it a chance.  The reason why the GLBSE volume is peanuts is because of the lack of trust, if a bunch of different "stock exchanges" come up, well, who is going to invest?  

If any of the core GLBSE crew would like to chime in on this, we're all ears.  I mean if the project is not going to be further developed by the creator, then hopefully he /they  gives it to the community to develop further.  Again though, these things do not happen over night...  Nefario has talked about open sourcing the GLBSE in the past, if / when he does, I think the first logical step is to get an alpha up using a blockchain backend.  After that we could worry about which chain.  My personal thoughts would lean towards it's own chain utilizing merged mining.. There would be network level transaction fees, and the network would operate at a very low level just like bitcoin, just enough to faciliate transactions and not interfere in anyones business.  Broker sites can give users the nice fluffy interface they're after and charge a premium on that to monetize their sites etc.. Premium features = premium fees, etc etc..

Moving a couple companies to an alternate "stock exchange" at the stage of the game though, I think it will set us back quite a bit.  Even more so then glbse dying once a week or something.  However, I sure would like to get some type of commitment from GLBSE management that they aren't just going to up and shut down or on a whim because there is no time or money or something.  As alpha as it is, there is still a metric shit ton of peoples livelihood already tied up in it.. and it is too late too call it quits, if they aren''t going to run it, it has to be given to the community.  They couldn't even issue "refunds" if they wanted too..
 

  I couldn't agree more, m8. Incentivise not demonstranize, community peoples.....

[ripper234]

Let's discuss how a peer-to-peer, decentralized bitcoin-based stock exchange might be best implemented.

Watching this thread, would love to participate in the project.
It should be open source, of course.

I haven't given serious thought to it, I'm sure people have.
If there's a serious effort, and other developers to pitch in, I'd love to dedicate some of my free time to this project
(I'm an experienced programmer with 10+ years of experience)

I wouldn't do it as a full time job, just to be clear, but would love to contribute/kickstart this, if it's technically doable.

[ripper234]

Posted to Stack Exchange: http://bitcoin.stackexchange.com/questions/2039/is-a-distributed-version-of-glbse-possible-how-would-you-design-it

[jtimon]

You may be interested in this thread:

https://bitcointalk.org/index.php?topic=46834.0

A decentralized stock exchange is possible today within the bitcoin chain.

[Meni Rosenfeld]

You may be interested in this thread:
https://bitcointalk.org/index.php?topic=46834.0
A decentralized stock exchange is possible today within the bitcoin chain.

As far as I understand, this only allows essentially OTC stock trading. But to be a stock exchange it should have some mechanism to commit people to their orders. If I broadcast an order and someone wants to take me up on it, I can just decline. I can be required to tie up my coins/shares for the trade but I can't be required to go forward with it. This IMO will lead to inefficiency and manipulation.

[ripper234]

Check out this detailed answer by Meni Rosenfeld.

The idea seem sound. I would want other developers, more versed in Bitcoin protocol than I am, to review his proposal. This seems to be a large project, but one that could be one of the killer features of Bitcoin.

Anyone with free time willing to take the lead on this project?
I'll be willing to donate some BTC towards this end (as well as some undefined portion of my time for dev work).

[jtimon]

You may be interested in this thread:
https://bitcointalk.org/index.php?topic=46834.0
A decentralized stock exchange is possible today within the bitcoin chain.

As far as I understand, this only allows essentially OTC stock trading. But to be a stock exchange it should have some mechanism to commit people to their orders. If I broadcast an order and someone wants to take me up on it, I can just decline. I can be required to tie up my coins/shares for the trade but I can't be required to go forward with it. This IMO will lead to inefficiency and manipulation.

Well, yes. This only serves for representing the shares and trading them atomically for bitcoins.
For the actual market you need another mechanism, but there's lots of possibilities for that.
But, yes, one can always make an offer and then not execute it (just cancel it instead when he receives an accept offer message). I don't see a way around this, I guess I should think more about it.

[Nefario]

Hey buddies.

So my 2c is that this is not a technical problem.

Bitcoin is already the decentralised medium of exchange and works great for that.

The reason GLBSE has been kind of crappy is not because it's centralised but because it's just crappy. I made a much more in dept post as to where I went wrong and where I'll be improving GLBSE here.
https://bitcointalk.org/index.php?topic=52310.msg628049#msg628049

Bitcoin has come along and is the first working non-centralised solution to an already existing very centralised world (banking and money).

Markets ALL markets are by their very definition centralised, that's the whole point, everyone comes to the one place to trade, that way they will find a buy for their sell and vice versa.

The problems here are to do with size, as in the small size of the market (small markets don't thrive).
Enforcing contracts
Anonymity

They are not technical, at least not yet.

Nefario

[Meni Rosenfeld]

The reason GLBSE has been kind of crappy is not because it's centralised but because it's just crappy.

I'm sure we can have a great centralized stock exchange service. This doesn't obviate the need for a decentralized stock exchange.

Markets ALL markets are by their very definition centralised, that's the whole point, everyone comes to the one place to trade, that way they will find a buy for their sell and vice versa.

The "one place" is an abstract concept. It doesn't need to be a single physical location, and it doesn't need to be provided by a single service. If there is a p2p network where I can place a bid and have someone on the other side of the globe accept it, then the entire world is the one place where people come to trade.

[jtimon]

Maybe not all the services GLBSE can be decentralized, but the stock issuance and exchange can be.
That would make GLBSE more resilient and less dependent on government regulations.

[theymos]

It's pretty easy.

Create a separate message system with messages that handle asset creation, voting, transfer of assets, etc. These messages will contain all of the public-key crypto. A centralized message distribution server instead of a P2P protocol would be OK, since the server doesn't have all that much power.

To prevent double-spending during asset transfer, some of the messages need to be timestamped by including a hash in the Bitcoin block chain. You wouldn't even need to modify Bitcoin to do timestamping: just send some BTC to an address that is not real and actually consists of message data. (Modifying Bitcoin would allow you to do this without destroying any BTC.)