Is Bitcoin Better Suited to Replace Stock Markets?

[twiifm]

Market makers are important for liquidity.

You can have a market without market makers but it will be like ebay.  Not nasdaq

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[Beliathon]

This is retarded.   Bitcoin can't replace stock MARKETS.   A market is where people go to exchange.

Bitcoin can't, no. But I'm not talking about bitcoin. But you are forgetting that the blockchain - the protocol - is like HTTP back in the early 90s, a foundation layer upon which nearly anything you can think of can be built.

It's like saying, "this is retarded, you can't replace MONEY with HTTP, you need MONEY to pay for the servers which HOST the internet!"

And yet, without the advent of HTTP two decades ago, there would be no blockchain today. Get it?

If not, read Bit-therium.

[DannyElfman]

Maybe colored coin can replace an actual stock certificate but who has those anymore?

Think Mastercoin, Sidechains and Ethereum for a few examples of possible implementations
A sidechain with a fixed value could easily allow for the flow of assets that have a fixed value back and forth on a blockchain
The ledger would record the transactions and miners get the incentive through a merge mine.
Mastercoin would raise capital on the blockchain and then have it converted to fiat as happened in the Maidsafe IPO
Ethereum promises those things but is still a developers gardenshed with the infrastructure and technology still being made.

Do you even trade stocks?   Without a market maker who matches orders?  How do you do stops,  limits and OCOs?   Can you see the other bids and ask coming from other exchanges?

A side chain could in theory record the transfer of ownership of stocks  and the prices (via a public note embedded into the TX) and even the payment for the assets (both parties could sign part of a TX whose inputs are the payment for the asset and the sidechain asset and the outputs would be to an address that the buyer and seller controls). AFAIK there would not really be a way to manage the negotiation of prices

[spainful]

I don't think bitcoin competes directly with stock markets. Bitcoins are more like a check