
Zero Reserve - A distributed Bitcoin Exchange - sathishmanohar
https://bitcointalk.org/index.php?topic=295930.0
======
adrianwaj
How I see it, the most important exchanges increasingly from now onward are
those between cryptocoins. Btc is just an onramp and offramp into the
cryptocurrency ecosystem.

Such exchanges can be totally anonymous, including who runs them. They don't
deal with people or fiat currency. Just usernames and blockchains. People
trust them based on their history, like an ebay seller, and admins realize
there's no need to rip off users because it's not worth it to them in the long
run (let alone what might happen to them if they are personally outed for
doing so.) People can go in and out of them for very short periods of time to
lower the risk it should disappear during that time, ie to lower their
"exchange risk." They could also have a set lifespan... "we will operate from
2015-2018" this might lower risks as well.. imagine if Silk Road had a fixed
shelf life that expired before it was caught.

~~~
javert
There is an ecomomic law (that I identified, not sure if economists actually
recognize it) that people use the currency that is most convenient for
whatever kind of trading they are doing.

There is no reason for anyone to prefer altcoins for trade unless they are
useful for something bitcoin isn't (which I haven't really seen yet).

Demand for trade is the only difference between bitcoin and a hot potato stock
in a company with 0 earnings and 0 capital. In other words, _in the long run,_
absolutely essential.

In summary, altcons have no reason to exist unless they can do something
bitcoin can't.

~~~
simondlr
Unless altcoins can freely float with any other altcoins. Then an altcoin
simply becomes a stock in a network effect that altcoin can sustain. There's a
reason why Dogecoin (as a "joke" as it is), has almost a $10 million market
cap, and it just over a week old.

Next year, we'll start seeing altcoins pop up for anything and everything. The
marketcap doesn't have to be millions.

~~~
steveklabnik
> has almost a $10 million market cap

A few days ago, I was talking to my co-workers about DOGE, because I'm pretty
into it. This morning, when I walked into work:

"Hey, remember how I was saying DOGE had a $2MM market cap the other day and
you were laughing? Today it's $12MM. It's now the 8th biggest altcoin (and is
almost 7th)."

[http://coinmarketcap.com/](http://coinmarketcap.com/) has the whole list of
altcoins and the numbers and graphs for them, if anyone is interested in this
kind of thing.

DOGE specifically has changed my entire perspective on cryptocurrency. It's
incredibly interesting.

~~~
genwin
Perhaps the market cap is based on one purchase of 1000 DogeCoin for $1.50.

~~~
steveklabnik
This happened early on, but there's pretty significant volume being traded. A
quick add-up of a bunch of the orders shows about 40 BTC that you could
actually get. And there's one seller on Cryptsy willing to buy 44 BTC worth of
DOGE alone.

[https://coinedup.com/OrderBook?market=DOGE&base=BTC](https://coinedup.com/OrderBook?market=DOGE&base=BTC)

[https://www.cryptsy.com/markets/view/132](https://www.cryptsy.com/markets/view/132)

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nhaehnle
It is notable that this project, which is advertised as something related to
Bitcoin, introduces itself on the Wiki with the concept of money-as-IOU. There
is a serious clash of underlying philosophies of money here.

On the one hand, you have Bitcoin, which is essentially an attempt to
replicate a gold/commodity-like currency in a distributed, electronic fashion.

On the other hand, you have the notion that all money is ultimately an
abstraction of who owes who. That is, money models social relationships.

A project that successfully combines these two notions could be quite
interesting.

~~~
dualogy
> introduces itself on the Wiki with the concept of money-as-IOU

That's what money is. You don't eat a coin or bill, it's an "IOU some future
tangible good or service".

Think about it, you either have barter -- no money concept involved. Or you
have money-facilitated trade -- then the money (whether coins or bills or
seashells) is always a "debt" of sorts for deferred/future "trade settlement".
That IOU characteristic automatically happens to whatever emerges (or is
decreed) as the unit-of-account+medium-of-exchange of the day. And that's
fine, this and only this allows trade beyond immediate barter.

~~~
Guvante
You are oversimplifying. You can either have a currency with intrinsic value
or a fiat currency.

The USD is a fiat currency, it only has value because the US government says
it has value. Fiat currencies are very close to debt basises.

Non-fiat currencies like Bitcoin are a little different, since there is actual
value to a Bitcoin. It is similar to how gold and silver were once used.

The benefit of fiat currencies is they can't be used for other things
affecting the monetary supply, they are always in circulation (pretty much,
obviously there are exceptions).

Bitcoin is in a weird spot, it is a non-fiat currency without having to worry
about the destruction aspects, as Bitcoins can't be destroyed. There is the
whole getting lost thing, but that is unavoidable without implementing a use
or lose it scheme (which some altcoins are trying).

~~~
Dylan16807
USD would keep going for a long time even if the US government disappeared.

Bitcoins do not have value. I've seen two arguments for it, and I'll counter
both.

1\. 'value because mining, network uses' Bitcoins are not mining, they are a
reward for doing it. If nobody wants to trade for bitcoins, they have no more
use than yesterday's lotto numbers.

2\. 'bitcoins have qualities that make them good for trading' You cannot apply
those qualities to anything other than the bitcoins themselves, so they become
null in the scenario where nobody actually wants to trade for bitcoins. This
is not intrinsic value.

(bitcoin is fiat)

~~~
kylebrown
USD is gov-fiat, decreed by the laws ("legal code") of government.

Bitcoin is crypto-fiat, decreed by the laws of cryptography and computer code
(Lawrence Lessig's "code is law").

~~~
Dylan16807
USD is used outside the US plenty. A lot of its value is simply people
preferring to use it, the same kind of potential value that bitcoin has. And
that value works with or without cryptography and math and code, so I find
crypto-fiat a silly term. All it needs is a ledger, and crypto is merely one
(rather secure) method of creating one.

------
adrianwaj
I mentioned on another thread about using company-specific intracoins to
facilitate intra-company resources and commerce. I've had a longer think about
it, and realized that an exchange can be the focal point of a company's entire
finances. Let's say a company gets funded, those funds are lodged onto the
exchange into the management's exchange account, and a certain number of coins
are minted. Departments request these coins from management who sends them to
various departments. Intra-company transactions are facilited by these
intracoins for factors-of-production. For departments that earn revenue, these
funds are deposited into that department's exchange account, and they can buy
more coins, to spend further. At times, management can demand the Sales
department transfer them coins (or funds) so they can move them back around
the company as they deem fit (like a tax). As the company grows in sales, the
price of the coins can either rise, or more coins are issued so it remains
fixed to fiat.

So basically, I think this exchange could be used in such an idea. It'd have
to tie in with an accounting information system, and other systems. Possibly
an ERP. Management can approve of all intracoin/fiat trades on the exchange,
because it means a department will need to make an external purchase, and
management may want to approve of it... to see and approve where its real
money is about to go. Also, a conglomerate of companies tied into 1 exchange
and 1 intracoin would be interesting.

add: company exchange can also hold bitcoins/??coins for spending at other
companies that accept cryptocoins. And sales can be received in cryptocoins.
If that was the case all the time, fiat would only be needed to pay government
taxes.

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gizzlon
" _Abstract_ :

    
    
        A P2P market place for Bitcoin would permit trading and price
        discovery even in the absence of cooperation from the legacy payment
        infrastructure. Orders get signed and published through the network and matched
        by each node. A buyer sends a Ripple like payment to the seller who sends
        Bitcoins as part of one single transaction. The system requires trust in friends,
        but no further."

------
dobbsbob
Best exchange is IRC #bitcoin-otc with the gnupg web of trust. It's p2p, hard
to shutdown, hard to fraud since logins don't rely on flimsy passwords so you
know you are not trading with an impersonator, escrow can be used and market
decides what the price people are willing to exchange bitcoins for.

~~~
sneak
> hard to fraud since logins don't rely on flimsy passwords so you know you
> are not trading with an impersonator

It is not hard to defraud people on #bitcoin-otc. In many senses it's not an
exchange at all, simply a discovery mechanism, as there is no settlement
offered. It's just a lead-gen system.

------
Tenoke
I like decentralization as much as the next guy but even with this type of a
setup you often end up needing something central that can connect you to more
users. This is also the case with ripples - it uses this system but in order
for you to trade with others you don't know or in order to cash out you need
to trust an exchange which is trusted by others.

I'd be interested in seeing what happens but I'd be surprised if this manages
to capture more than a portion of the otc trading market.

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ama729
I don't know much about bitcoin, so can someone explain me what's the point of
having an exchange if there is no way of ... actually exchanging that money.

~~~
em3rgent0rdr
Read the description on their github. There is no need for exchanges as a
central component. People who want goods or services essentially issue IOU's
for bitcoins to the seller. Which is why you only deal with trusted people
(either people you know or people who have acquired a reputation). Those IOU's
can then change hands (but not on a fractional reserve basis).

~~~
foobarqux
> Which is why you only deal with trusted people

Which makes it far less useful than a conventional exchange.

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DennisP
Ripple and related efforts really should talk less about loans between
personal friends, and more about the potential for business. Using ripple IOUs
or bitcoin colored coins, a business can easily sell exchangeable vouchers for
products as a way of getting financing. Instead of getting bank financing or
selling equity, sell discounted vouchers to your existing repeat customer
base.

~~~
patio11
You can do that with a SQL transaction or, heck, paper, and never have to
involve your customers with Alpha Black Lotus depository certificates as a
transport protocol (!).

My local coffee shop in Ogaki will sell you 11 200 yen vouchers (conveniently
equal to one cup of coffee) for 2,000 yen. How precisely does Bitcoin improve
this for buyer or seller?

~~~
DennisP
Sure, of course you can. I know a small business that did, very successfully.

But you might want to give some thought to how you'll prevent counterfeiting.
A voucher for a cup of coffee is one thing, but if you want to raise a lot of
money then security is a bigger concern. As far as I know there's no
established infrastructure or service for this sort of thing. If you do it,
you're pretty much building something from scratch.

Bitcoin has the potential to make it as simple as installing client software,
and telling your customer base about it. If bitcoin gets to common usage, and
people succeed in building decentralized exchanges, then your customers could
buy your vouchers using the app they use already, and resell them later with a
button click or two.

------
maaku
There are other ways to do this which stay within the bitcoin protocol which
keep pseudoanonymity and do not place all their security and do not place all
their security in the unaudited Retroshare network:

[https://bitcointalk.org/index.php?topic=280292.0](https://bitcointalk.org/index.php?topic=280292.0)

