anyone here at all familiar with hawala? money transfer system from the arabic world going back a long ways. i don't understand it fully, but it seems like it's applicable here.

http://en.wikipedia.org/wiki/File:Hawala.png
ie: (1) A customer (A, left-hand side) approaches a hawala broker (X) in one city and gives a sum of money (red arrow) that is to be transferred to a recipient (B, right-hand side) in another, usually foreign, city. Along with the money, he usually specifies something like a password that will lead to the money being paid out (blue arrows). (2b) The hawala broker X calls another hawala broker M in the recipient's city, and informs M about the agreed password, or gives other disposition instructions of the funds. Then, the intended recipient (B), who also has been informed by A about the password (2a), now approaches M and tells him the agreed password (3a). If the password is correct, then M releases the transferred sum to B (3b), usually minus a small commission. X now basically owes M the money that M had paid out to B; thus M has to trust X's promise to settle the debt at a later date.

wiki: http://en.wikipedia.org/wiki/Hawala

thoughts?

well, color me stupid.

Yes we need to market our p2p exchange to many many potential brokers in every country in the world.
The beauty of the this exchange is that bitcoin can be used as the maincurrency to pay the exchange fees regardless of what assets are traded.
My vision is that small cap companies will rather trade their stocks in the p2p exchante than ordinary stock exchanges.

But first of all we must agree on a system architecture and then build the platform, it will take months or maybe over a year even if we got several guru programmers in the project

A design contest is absolutely the most useless route to choose.

It is endless wanking, without any real engineering proof that the design is practical in the real world.

Wow, there are a lot of threads popping up today on new ideas for Decentralized Exchanges. (I can't imagine why...) I started one myself 5 hours ago.

Allow me to throw some ideas on the fire, as this thread seems to have gotten further than the others.

1. Your concerns about how to port in real-world cash are unfounded. There already exists an industry of businesses that will take cash in many forms and give virtual credits, including bitcoins, for them... BitInstant, Dwolla, OKPay, coinbase, ArumXchange, and many others can upload cash into this exchange in one or more forms. Let them deal with this headache; there are many of them so there is no central point of failure there.


2. To really replace MtGox and have real-time graphs and trades like we all want to see, the core of this beast must always determine the other clients running within a short enough pingtime's distance. (So trades can happen in milliseconds, not multiple seconds.)

If a client logs on, looks around for other clients, & notes all of their pingtimes, the client can be a real-time, graph-displaying trading platform for everyone within a decent pingtime of you!

True, this means that someone in Kansas isn't likely to see the trades of someone in Perth... But that's the nature of decentralization. The going price of a bitcoin would therefore not be global, but regional... Although the regions are likely to be continents, not cities. You'd trade quickly with those closer to you (pingtime-wise) and if you can't find your trade there, I guess it would be a good idea to include an OTC board in the package too, or port in #bitcoin-otc somehow.

(Note: VPNs could be used for people that live far away from population centers to reduce pingtimes, too!)


3. No marketing will be needed. (!) If each client for this exchange gives the fees to the person running the client where the trade happened, then it is self-incentivized to spread much like how bitcoin miners get paid to mine. I've got some very specific ideas about how to make this part work, but for now all you need to know is that everyone with an internet connection would want to run this client because it would literally pay them to just run on their PCs. (And they wouldn't need expensive GPUs.) More details on this step later.


4. No miners needed. A lot of the data that runs across these clients need not be encrypted... You want the world to know what the current price for each currency is, for instance... It's just the ownership of things on it you must secure, so no processing of SHAs here, just good, secure ledger keeping.

Every client should be both a place for you to log in and make trades, and a place for other people to trade on. If run this way, it will use a bit of bandwidth (think: bittorrent) but not any advanced hashing that requires special equipment like GPUs.


Enjoy the ideas; I'll add some more later.

What about a darknet powered by the current miners?  Does that offer enough speed to solve this geographic problem?

the problem with hawala is that it runs afoul of all sorts of AML laws in most 1st world countries. it is indeed a good system for informal transfers but does not scale over a few mln USD.

if you look around online, you can find many examples of "hawalas" that have been shut down inside the US. in many cases they were laundering money for drug cartels in south america.

Hi Guys

Just saw this thread. Please see my post here:

https://bt.irlbtc.com/view/174464.msg1817649#msg1817649

Basically Exchangers become what Verisign is to a browser. My post explains it better

These points are important, but you are missing one big issue.

A decentralized exchange with regional brokers will mean that we get best of both worlds

The decentralized aspect is for the actual price discovery, where the regional brokers will do the admin of matching bitcoins and currencies to the right places.

For instance

Bob visits USAEx.com and buys some currency tokens with real dollars
He then places an order which is sent to the p2p exchange
That order is matched with an order placed by Han on the YellowRiverEx.cn
The deal is done electronically, and at the end of the day, the task is added to the brokers list of things to do.
YellowRiverEX.cn sends all the BTC to USAEx.com - minus a commission
USAEx.com send all the dollars for orders to YellowRiverEX.com by bank transfer - minus a commission
Bob gets his BTC sent to his wallet and Han gets his currency tokens which he can convert to CNY through the YellowRiverEx.com



The end result is that individuals get to only deal with their local brokers, but their deals are world wide, using a mechanism which isn't going to be killed by a DDoS, or regulations or popularity!

Does this make sense - and what have I missed out?

Would it be possible to build a P2P exchange based on Namecoin?

sort of like a unified Bitcoin payment ledger, (Fiat currency IOU's for BTC amount), written in the namecoin blockchain, possibly built around an open source cloud based escrow.  Its merged mined so limit the risk of attack.  The obvious flaw in this here would be the bottleneck of still requiring a physical bank account address to get fiat in and out of the system. Thats where I ran out of ideas??? could bitinstant or similar provide a clearing pool?

I'm probably way off the mark here and can't code so don't ridicule me too much, it was just an idea afterall