What do you want in a new Bitcoin Exchange?

[TheMarketAnarchist]

A friend of mine is thinking about opening a Bitcoin exchange and I told him I'd see what the community is looking for. I know a lot of the exchanges have problems so I'm wondering what you would like to see in the 'perfect' exchange?

TMA

[nmat]

People using it?

I'm sorry if I sound pessimistic, but I don't know if we need yet another exchange that no one uses. Here's some info on previous attempts:

- ExchB offered same day bank deposits for free and they had to close.
- CampBX has shorting implemented and tested, but they need more volume to enable it. After 5 months they have ~1% of MtGox's volume.
- Ruxum had 'wall street security' and support for lots of currencies (the last trade at Ruxum was 2 days ago).
- CryptoExchange is the most recent one. Everyone was talking about it, but their current volume is also very low.

You need to offer something that will disrupt the market. Something like credit card deposits (note that other people are probably already working on this). But even if you had a cool idea, it will be hard for you to steal customers from well established exchanges. This is a small market and MtGox is where the action is at.

[kangasbros]

People using it?

I'm sorry if I sound pessimistic, but I don't know if we need yet another exchange that no one uses. Here's some info on previous attempts:

- ExchB offered same day bank deposits for free and they had to close.
- CampBX has shorting implemented and tested, but they need more volume to enable it. After 5 months they have ~1% of MtGox's volume.
- Ruxum had 'wall street security' and support for lots of currencies (the last trade at Ruxum was 2 days ago).
- CryptoExchange is the most recent one. Everyone was talking about it, but their current volume is also very low.

You need to offer something that will disrupt the market. Something like credit card deposits (note that other people are probably already working on this). But even if you had a cool idea, it will be hard for you to steal customers from well established exchanges. This is a small market and MtGox is where the action is.

I disagree, we always need new exchanges. However I believe it will be shut down pretty quickly, if it is not profitable. Therefor you need some kind of new features which are gonna attract people.

My feature lists:

- Create at least some minimal bot, integrated with mtgox which keeps asks and bids close to the market price (arbitrage)
- physical location with cash exchange would be cool
- as many withdraw/deposit methods as possible with as little costs as can be

There could be lot of improvement on country-specific exchanges.

[Bitcoin 100]

People using it?

I'm sorry if I sound pessimistic, but I don't know if we need yet another exchange that no one uses. Here's some info on previous attempts:

- ExchB offered same day bank deposits for free and they had to close.
- CampBX has shorting implemented and tested, but they need more volume to enable it. After 5 months they have ~1% of MtGox's volume.
- Ruxum had 'wall street security' and support for lots of currencies (the last trade at Ruxum was 2 days ago).
- CryptoExchange is the most recent one. Everyone was talking about it, but their current volume is also very low.

You need to offer something that will disrupt the market. Something like credit card deposits (note that other people are probably already working on this). But even if you had a cool idea, it will be hard for you to steal customers from well established exchanges. This is a small market and MtGox is where the action is.

Therein lies the key: Disruptive Technology or Disruptive Innnovation



This, I believe, is the Holy Gail of Bitcoin.

[Littleshop]

Cheap withdraws.  Deposits can be more because there is more risk. Btc to $ to dwolla carries little risk for the exchange.  Both gox and tradehill do withdraws cheap and have higher volume because of it.

[Isosceles]

 - Dark-pool auction settlement every N seconds (eg. 30+), rather than continuous settlement, to reduce fees for people who don't want bitcoins immediately, just at some time.
 - Scheduled buy/sell orders, (eg. buy $10 of bitcoins every hour, +/- 10 minutes, or VWAP trades)
 - OpenTransactions support, so fiat money & bitcoins aren't stored on the exchange
 - BTC/Gold trading or quantos
 - Margin trading
 - Yubikeys
 - Pre-filled forms for US tax reporting

Also, the Bitcoin community needs to prefund organisations to support future legal issues with Bitcoin. There will be legal cases in future, and we will need at least one organisation to stand against the vested interests of fiat money. At the moment the best origin for this organisation is one of the exchanges, where the money is being made.

[koin]

btc<-->xau (gold)  and btc<-->xag (silver)  markets.  maybe xau funds are held w/ pecunix.

liberty reserve withdrawal without having to go through aurumxchange.  two fee levels, ... 48 hours (low fee) and instant (whatever fee level is needed to ensure that you have funds)

[zhoutong]

You need a very robust trading engine and very friendly user interface.

Volume is not a problem if you can persuade Bitcoinica to use it. But unfortunately, Mt. Gox is the best exchange ever, without even considering the volume.

I have been thinking about building a killer exchange, but now I'm not that interested in grabbing the pie from Mt. Gox, so I'd share my ideas:

- Use things like Redis for order book to make trading super fast. (At least 10,000 orders per second.)
- Build very good APIs, like TCP APIs.
- You don't have to accept Mt. Gox codes, but you can be the first exchange to accept Mt. Gox green address for instant funding.
- Put your bank in Singapore or Hong Kong. Singapore banks can sometimes do amazing same-day wire transfers.
- Give incentive to developers who develop bots, and give them flexible authentication options.
- Very cheap fees, at most 0.1%. Remember, 0.6% for currency trading is ridiculous. ICBC Bank (China) charges individual customers 0.2% spread for USD/CNY exchange, and CNY is not even a free market currency like USD.

I'm giving almost all my ideas out and wish you all the best.

[Pontius]

[...]
- Ruxum had 'wall street security' and support for lots of currencies (the last trade at Ruxum was 2 days ago).
[...]

Isn't Ruxum running a "private beta"? So this should be a low user/volume site by definition.

Anyway to me the funding/withdrawing methods and the fees are essential. SEPA transfers are a must.
From a merchants point of view FX forwards (via API) and instant buy/sell (via API) would be great. Interests on the fiat currencies would be nice.

[Cryptoman]

The main thing I've wanted to see is BTC<-->pecunix, at reasonable rates (<3%).

[DeepBit]

- You don't have to accept Mt. Gox codes, but you can be the first exchange to accept Mt. Gox green address for instant funding.

There is no green address stated on the MtGox website, so it cannot be used yet.

[Fireball]

You need a very robust trading engine and very friendly user interface.

I was exploring this possibility almost since the beginning of this year. I also tried making polls like this before, and it's good to see much improved response over time.

Anyway, the exchange I decided to build (ICBIT) bases around totally new subject in Bitcoin economy.
The community should NOT focus just on currency exchange, because a currency exchange is just a service, not a way to earn money or produce something useful. Instead, Bitcoins should be used to buy/sell something else.
The most interesting way, in my opinion, is the derivatives market.

Imagine the possibilities:
- You want to speculate on the BTC/USD or BTC/EUR rate, for this you just sell/buy the corresponding futures contract (thus saving a lot on fees, when you don't need the exchange but just want to speculate). Also this is perfect for trading bots.
- You want to trade S&P 500 index futures contract using Bitcoins. Impossible? No, that's possible. More complex than trading via American broker using US dollars, but IT gives advanced opportunities to use your Bitcoins, to remain anonymous, etc. In real world a similar practice is used in Russia, where futures on RTS index trades on the united "MICEX RTS" exchange. The RTS index is denominated in US dollars, however the futures contract trades happen in Russian Rubles.
- You want to arbitrage between S&P, DAX, RTS, etc. Also possible, because those futures contracts could also be added on demand.

Also please note, this is not any kind of prediction market. The futures contract being traded will have real-world impact because the market makers and arbitragers would hedge their position by buying/selling the corresponding position on real-world exchanges. So you're not "betting" on the event, you're actually trading futures contracts.

As for the technical stuff, I will comment on what I came to think about:

- Use things like Redis for order book to make trading super fast. (At least 10,000 orders per second.)

I built ICBIT on my HFT experience, and it bases around in-memory and on-disk data structures. For on-disk a normal database is used, and in-memory is a highly-optimized storage (optimizations are implementation specific, Redis just can't have them). Snapshots are saved to the on-disk database periodically. In case of a failure, only small amount of last trades would just be rolled back, without losing any money/balances information.

- Build very good APIs, like TCP APIs.

Absolutely, one dev from my team is already developing an advanced high-performance desktop trading client, plus the useful API library for automated trading.

- You don't have to accept Mt. Gox codes, but you can be the first exchange to accept Mt. Gox green address for instant funding.

Yes, ICBIT will support green addresses transactions according to the standard proposed by DeepBit.

If you're interested, more information and discussion is here: https://bitcointalk.org/index.php?topic=50817.0

[BitcoinPorn]

Built in Bitcoin laundry mixing services every money is put in or taken out.    The exchange that implements this and promotes it will set a new standard.

[Stn]

Exchange should be distributed as Bitcoin itself. Private transactions between pears will reduce risk of potential legal actions. And exchanger would act similar to torrent tracker.

[allten]

Here's my wish list:
    An exchange with complete anonymity. That would make registration a pain as well as resetting passwords, but I would like to see it.
Everyone's Bitcoins get's mixed up making it very hard to trace.
Allow exchange for 100% backed precious metals.

Each one of those would come with a lot of challenges, but that is what I would like to see happen.

[anu]

Exchange should be distributed as Bitcoin itself. Private transactions between pears will reduce risk of potential legal actions. And exchanger would act similar to torrent tracker.

That would require distributed national currencies. Now how is this going to work?

[Fireball]

Built in Bitcoin laundry mixing services every money is put in or taken out.    The exchange that implements this and promotes it will set a new standard.

If ICBIT uses DeepBit's merchant service, then all transferred money would be going mixed via a wallet having tens of thousands of BTCs transactions per day.

[BitcoinPorn]

If ICBIT uses DeepBit's merchant service, then all transferred money would be going mixed via a wallet having tens of thousands of BTCs transactions per day.

I am not familiar with your name or that site, will look into. 

Off first glance, it does not look as though you are putting the focus on the site to compete with Tradehill or Mt. Gox, but rather.. something else.  Bitcoinnica (sp?) maybe.

[genjix]

No offense, but if you're asking what is needed in a new exchange then you probably shouldn't be in this already saturated market. It should be blindingly obvious.

[Raoul Duke]

No offense, but if you're asking what is needed in a new exchange then you probably shouldn't be in this already saturated market. It should be blindingly obvious.

Yes, because market research is so last century...