How and Why You Should Set Up Your Own P2P Bitcoin Currency Exchange

[kangasbros]

Saving money is the same as making money. When you build a local network of exchange partners willing to trade the fees go down. I predict the exchange fees will practically evaporate, or become negligible, over time. I don't see exchanging as a sustainable business model for the average person. As it says in the article, I believe making exchanges will eventually be as easy as changing a twenty dollar bill.

It isn't sustainable business model, but many different businesses are not sustainable in the longer time. However, meanwhile they are still making money _now_. It is stupid to evaluate businesses by sustainability, you should evaluate them how much you can make buck over the lifetime of the business model.

For example: business is sustainable, and makes 10 dollars a week + inflation = sustainable but bad business

Business is unsustainable, makes this year 10 millions, next year 100k usd and third year -50k usd = unsustainable business, but might still be really good business

[Elwar]

Why would I want to rely upon other people's needs for BTC or dollars to determine my own ratio of BTC to dollars?

[kangasbros]

Why would I want to rely upon other people's needs for BTC or dollars to determine my own ratio of BTC to dollars?

Hmm, how are you not relying on those things already, if you use bitcoins? After all, if there is no demand for bitcoins, traditional exchanges will stop working as well.

Cash exchanging is probably not for everyone. But there are some advantages over exchanging with the real exchanges - you don't need bank accounts, no need for papers etc, better privacy, etc.

Btw. with localbitcoins.com you can determine your price dynamically with equation, for example: USD_24h*1.05 or mtgoxusd_close*0.95. Values are updated each 5 minutes.

[Trader Steve]

For example: business is sustainable, and makes 10 dollars a week + inflation = sustainable but bad business

Exactly my point. It's not worth it to the average person as a business model to make 3, 4 or even 10 dollars on the average exchange when it costs that much in gas (and time) to meet the other person in the first place. The idea is to build up your own network of trusted trading partners so it becomes as simple as picking up the phone and making the deal. I already have trusted trading partners with whom I can close the deal for thousands of dollars over the phone and settle up via mail, bank deposit, or in person the next time we meet.

[Trader Steve]

Why would I want to rely upon other people's needs for BTC or dollars to determine my own ratio of BTC to dollars?

I think a better question is "why would I want to rely on centralized exchanges thousands of miles away that require the use of the banking system, ID, blood type and first born in order to make a trade?".

[kangasbros]

Exactly my point. It's not worth it to the average person as a business model to make 3, 4 or even 10 dollars on the average exchange when it costs that much in gas (and time) to meet the other person in the first place. The idea is to build up your own network of trusted trading partners so it becomes as simple as picking up the phone and making the deal. I already have trusted trading partners with whom I can close the deal for thousands of dollars over the phone and settle up via mail, bank deposit, or in person the next time we meet.

I think it is impossible to have that kind of situation, unless the other guy is a market maker and is making profit with the deal, eg. selling above market price or buying below market price. Or then he/she wants privacy from banks and other electronic forms of payments, since  he/she would get better deal and less hassle exchanging the coins online.

If you really are able to call your contact whenever you want/need, and able to conduct business at market rate with him/her, it doesn't sound very sensible from the other guys viewpoint.

[Trader Steve]

Exactly my point. It's not worth it to the average person as a business model to make 3, 4 or even 10 dollars on the average exchange when it costs that much in gas (and time) to meet the other person in the first place. The idea is to build up your own network of trusted trading partners so it becomes as simple as picking up the phone and making the deal. I already have trusted trading partners with whom I can close the deal for thousands of dollars over the phone and settle up via mail, bank deposit, or in person the next time we meet.

I think it is impossible to have that kind of situation, unless the other guy is a market maker and is making profit with the deal, eg. selling above market price or buying below market price. Or then he/she wants privacy from banks and other electronic forms of payments, since  he/she would get better deal and less hassle exchanging the coins online.

If you really are able to call your contact whenever you want/need, and able to conduct business at market rate with him/her, it doesn't sound very sensible from the other guys viewpoint.

I agree, it's not for everyone but it is not impossible. For my trading partners and I it is profitable (by way of convenience - not commissions) to provide liquidity to each other and make a market for each other. The ultimate goal, of course, is to arrive at the point where most people carry a bitcoin balance and the stranger next to you (or the local shopkeeper) can make change.

[Trader Steve]

An additional comment: My trusted trading partners and I become friends and we don't charge each other commissions to make change.

There's nothing wrong with people making change as a business for a fee. My goal is to go beyond that as described above. Both can coexist - it's not one or the other.

[Elwar]

Why would I want to rely upon other people's needs for BTC or dollars to determine my own ratio of BTC to dollars?

I think a better question is "why would I want to rely on centralized exchanges thousands of miles away that require the use of the banking system, ID, blood type and first born in order to make a trade?".

Because I may need more Bitcoins or more dollars as any given point.

[Red Emerald]

Why would I want to rely upon other people's needs for BTC or dollars to determine my own ratio of BTC to dollars?

I think a better question is "why would I want to rely on centralized exchanges thousands of miles away that require the use of the banking system, ID, blood type and first born in order to make a trade?".

Because I may need more Bitcoins or more dollars as any given point.

What?  You realize that you can use a centralized exchange AND your friends, right?

I think calling this "P2P" is a bit confusing.  When I see that, I think about my computer communication with a bunch of other computers, not "person to person."  Maybe it should be "How and Why You Should Set Up Your Own IRL P2P Bitcoin Currency Exchange"

[Trader Steve]

Why would I want to rely upon other people's needs for BTC or dollars to determine my own ratio of BTC to dollars?

I think a better question is "why would I want to rely on centralized exchanges thousands of miles away that require the use of the banking system, ID, blood type and first born in order to make a trade?".

Because I may need more Bitcoins or more dollars as any given point.

Yes, that is when you need the major exchanges but the whole point of this thread is to develop trusted trading partners with whom you can trade with away from the centralized exchanges so that you never have to go there.

[dscotese]

The major value to me of this thread is that when there are a lot of people who have their own IRL P2P Bitcoin networks (whether they transact through computers or not), the trading of bitcoin will be much more difficult to suppress.  The expectation in this article that any kind of ban will be ignored is one that the BTC community will want to help realize.  Setting up your own network is a way to do that.

I wonder if alternate currencies will catch on quickly enough to help very many people as fiat currencies harm them.  Having access to wealth with a key locked inside your brain and no evidence that you command that kind of wealth is remarkably powerful, and it's an ability everyone can have - but first they have to work hard to earn that wealth, and find the technology (BTC is only one example) that will support such a "personal off-shore bank".

[Trader Steve]

To keep the party going please see the following announcement introducing TradeYourBitcoin.com:

https://bitcointalk.org/index.php?topic=88181.0