bitsquare.io - The P2P Fiat-Bitcoin Exchange

[k99]

A few months ago, I started working on a P2P Fiat-Bitcoin exchange project (initially called BANK RUN!).

After a few iterations and refinements of the concept I created a proof of concept prototype demonstrating that the basic use cases are working both from a technical point of view as well as from usability.
The project uses Java8/JavaFX with the BitcoinJ library and TomP2P as messaging/DHT solution.

At the moment, we are two developers working fulltime on the project; currently, we are discussing and setting up a funding model.

We are still looking for more developers to join, especially people with experience in P2P networking.
If you feel like contributing, please drop us a line at team@bitsquare.io or join us at our IRC channel @freenode #bitsquare.io.

Here are the main points of the bitsquare project:

• Pure P2P, cannot get shut down by a central authority
• Fiat money will be transferred from one users bank account to the others bank account without any intermediary party
• Open source, open communication, open development, continuous deployment
• Arbitrator system as primary protection mechanism
• Collateral as additional incentive for fair behavior
• Contract holds all trade details and signed by both traders helps in case of disputes
• Account registration with a fee and blinded bank account details attached makes sock puppet accounts more expensive and difficult
• Fraud reports as protection against bank charge-backs and crime (stolen bank accounts)
• Fees as protection against fake orders and spam
• At least for the first phase there will be a limit for the trade volume, to limit the risk exposure
• Compliant with the legal framework (at least as long Bitcoin is legal)

For more information, please check out these resources:
Webpage: https://bitsquare.io
The source code at Github: https://github.com/bitsquare/bitsquare
Whitepaper: https://bitsquare.io/whitepaper.pdf
Graphical overview: https://bitsquare.io/overview.png
Videos: https://vimeo.com/getbitsquare

Payment protocol diagram: https://bitsquare.io/payment_protocol.png
Risk analysis: https://bitsquare.io/risk_analysis.pdf
Arbitrator system: https://bitsquare.io/arbitration_system.pdf

Old bitcointalk thread (BANK RUN!): https://bitcointalk.org/index.php?topic=462236

[Hisham]

Cool idea
I'm a developer , count me in

[k99]

Cool, lets get in contact: IRC @freenode #bitsquare or team@bitsquare.io.

[madmat]

I don't do java development anymore but I am an experienced tester. If you need any help, I would be happy to help.

[k99]

Great! For testing its still way too early, but I will remember you later ;-)
Any feedback/analysis of the concept is welcome as well!

[Mikez]

Sweet concept!

A few first-glance questions:
Will will the fees be?
Do you thing having a fee for creating the account is the best way to fight spam?
Will there be escrow?

Looking forward to seeing P2P exchanges everywhere .

[k99]

Sweet concept!

A few first-glance questions:
Will will the fees be?
Do you thing having a fee for creating the account is the best way to fight spam?
Will there be escrow?

Looking forward to seeing P2P exchanges everywhere .

There will be trading fees (offer creation, offer taking). Those are necessary to prevent spam and market manipulation (fake offers).
The registration fee helps also to prevent scam. In serious scams (bank charge backs) the account and the bank account data will be published to a fraud report, so he cannot use his account anymore (lose his registration fee) and cannot use his bank account anymore (he cannot create endless bank accounts).
There are arbitrators resolving disputes. They hold the 3. key in the 2of3 MultiSig fund, so they cannot run away with teh money they just can decide who gets the money in case of dispute.

The fees will also be used to help developing the project. Supporters donating for the development will become the fee receivers. So it is a kind of collective ownership. That at least is currently planned, but it is still in discussion and need more feedback from the community.

[instacalm]

Watching!

[kittucrypt]

Interesting. If there is no fees for exchange, how do you make money?

Will the P2P bank account transfers be limited to US?

[k99]

Interesting. If there is no fees for exchange, how do you make money?

Will the P2P bank account transfers be limited to US?

We ask for donations from the community (kind of crowdfunding).
No it is not limited to any region. Global support for languages and currencies. In the beginning it will be launched in a few main languages (clinet software language), but a large language support is planned.

[kittucrypt]

Interesting. If there is no fees for exchange, how do you make money?

Will the P2P bank account transfers be limited to US?

We ask for donations from the community (kind of crowdfunding).
No it is not limited to any region. Global support for languages and currencies. In the beginning it will be launched in a few main languages (clinet software language), but a large language support is planned.

My question was not related to language support as such. I wanted to know how would the bank to bank transfers take place? Will you be taking bank details of the users and exchanging it with the others?

[k99]

Interesting. If there is no fees for exchange, how do you make money?

Will the P2P bank account transfers be limited to US?

We ask for donations from the community (kind of crowdfunding).
No it is not limited to any region. Global support for languages and currencies. In the beginning it will be launched in a few main languages (clinet software language), but a large language support is planned.

My question was not related to language support as such. I wanted to know how would the bank to bank transfers take place? Will you be taking bank details of the users and exchanging it with the others?

The bank details are only exchanged between the 2 traders (after they have paid the trading fee). As in the bank tx the privacy is leaked anyway, so that is not an issue but a basic limitation (just like with localbitcoin or bitcoin.de). When you place an offer you define which bank transfer types (SEPA, intern. OKPAY,...) and from which countries (wher the bank is located) you are willing to accept. In your setting you also define which bank transfer types/countries you accept, so the (global) orderbook will be filtered to only display the matching results to your preferences (include more attributes like language,...).

[BitSpot]

I'm very excited about the development of this project. I believe decentralized applications are truly the way of the future for Bitcoin. I will be following this project very closely!

[kittucrypt]

How is collateral decided? Is it some specific portion of the trade size? Is there a minimum trade size?

[k99]

How is collateral decided? Is it some specific portion of the trade size? Is there a minimum trade size?

The offerer defines a min. collateral (% of trade volume). If this is lower then the arbitration fee then the arbitration fee will be used as collateral value. Arbitration fee is only paid in case of dispute and only from the trader who was behaving unfair. The collateral will be typically in the range of 5% -20% of the trade volume.

[anu]

Watching

[k99]

Watching

Ah nice to see you here! Your project seems to be one of the very few other serious attempts to create a P2P exchange.

[anu]

Watching

Ah nice to see you here! Your project seems to be one of the very few other serious attempts to create a P2P exchange.

Yes. Sorry, I find it hard to comment on bitsquare other that I wish you the best of luck. And that I find it regrettable that you did not consider to join ZeroReserve. My reason not to join Ripple were quite obvious - 3 letters suffice to explain it: XRP. May I ask, what was your reason not to join ZR?

[k99]

Watching

Ah nice to see you here! Your project seems to be one of the very few other serious attempts to create a P2P exchange.

Yes. Sorry, I find it hard to comment on bitsquare other that I wish you the best of luck. And that I find it regrettable that you did not consider to join ZeroReserve. My reason not to join Ripple were quite obvious - 3 letters suffice to explain it: XRP. May I ask, what was your reason not to join ZR?

I am not experienced with c++ (unfortunately), so that would be one reason I could not join ZeroReserve.
I am more or less familiar with the basics of Ryan Fuggers ripple system, but never delved deeper into it. Basically I find it a very interesting idea but I have some concerns with it:
For me it always felt a bit limited and hard to reach wider adoption due the difficulty of bootstrapping it. It would only work well if there are already a lot of people in...
My main interest was to create an excahnge which deals with the real fiat money not with IOUs. I know fiat is IOU as well but it the more universal accepted IOU. With all those crypto IOU systems I miss the part how they enforce and audit the reserve of the IOU. If I issue 100 000 EUR_IOUs, who checks/enforces that I am really be able to convert them to EUR if anyone wants that? Even if I have the 100 000 EUR as reserve, price volatility would need a constant update of that reserve. 1 EUR_IOU is not necessary equal to 1 EUR. We have seen that with MtGox, the funds there where basically low quality IOUs for BTC and Fiat. When it crashed much of those IOUs became worthless.
So I am missing the interface to the classic fiat world. I cannot pay my bills with EUR_IOU, so some conversion point is necessary, at least as long not a majority of real life entities are accepting crypto currencies.
Another problem I personally have with ripple style concepts is the combination of friendship relationships with money.
If I lend money from a friend and I am unable to pay it back, my friend can get in trouble as well and that could have influence to the friendship. All that can easily happen without any bad intention (accident, cannot work anymore,...). I prefer a system which is more abstract and handle those risky with insurance, like the banks are doing it. That does not imply that I am fan of Banks ;-)...

But I did not find time yet to read your whitepaper, so my concern might be wrong with your system, and as I said before, I am not soo familiar with the ripple concept.

[k99]

I presented yesterday at a local BTC meetup my idea for a funding model (https://docs.google.com/presentation/d/1OXuqPHMAESPbTvymAyn2uqko8R9X32yGOb9yCRVLMP0).
The feedback was very positive and there were interesting discussions following.

So I am going to continue with that funding model, but I would need some help for preparing the funding process.

Basically I need help in those areas:
- Communications
- Webpage
- Video

Communications:
I need someone for the communication with the community, explaining and presenting the concept.
Sombody like Stephan Tual (who do communications for Ethereum) would be a perfect fit.

Webpage:
We need a webpage with all relevant information.

Video:
The classic info-graphics style is kind of over-used but as long we don't find a better solution for explaining the idea, I would consider it as the way to go.
That video is pretty well done: https://www.youtube.com/watch?v=ETCP8NeXasY

The funding model will consists in several funding rounds. Eeach round will take place after a milestone is reached (continuous deployment).
The funding target in every round will be the money needed for the reached milestone. So basically the payment to developers and other contributors (communications, webpage, video).
People who are stable contributors and share the mindset of the core team will be invited to become members of the non-profit organisation.
We cannot guarantee any payment, but if the funding is successful you get paid for your efforts.

Feel free to contact me at: team [at] bitsquare.io or in our IRC channel #bitsquare.io (at freenode).
More details to the funding model you can find here: https://docs.google.com/document/d/1MysGJcPydv3EabshTFiFTtwQC86_4-HG7dSPp0_YhHc/edit#heading=h.q7h5twnzf2u0