I'm open to the idea of distributed IOU issuers holding the fiat but it goes beyond an issue of just trust... IF you can get ppl to trust these people/businesses, (Publically-traded companies on the bitcoin stock exchange?) then you've still got the problem of sending THEM the fiat... How would Tim or Bob send THEM the value of their fiat any faster than they can send each other fiat from their desktops otherwise?

...And if that's not a bad enough problem for you, these companies would very likely be targeted for government persecution... Which is of course not something a publically-traded company would allow into their biz plan.

So we we can come up with a way around these inherent problems I'm certainly willing to accept that substitution in criteria #6.


I think you're both mixed up here.

The only time an IOU would need to be created it when it's fiat. So if the IOU issuer is a company named "FiatRUs," then it would be an IOU that is redeemable only at FiatRUs... Unless somehow all of these such companies banded together to make a pool somehow. (I doubt that's feasible though.)



Software, no websites anywhere.

Just like bitcoin.



Ooh, that's nice... Bookmarked for further reflection.

Like a Paypal dollar, they'd need to simultaneously represent the value of a USD while being made into a digital medium to be used on any sort of exchange.

I personally don't want to go this route but until the day comes that we've figured out how to transfer the value of a fiat dollar instead of the IOU it's something to explore.


Actually, I'm pretty sure that the regulators would see this as infringing upon money laundering laws. They'll try to shut the business offering the IOUs down for the same reasons they shut egold down.



Already answered here.

Other factors could be used too. I've got bigger fish to fry at the moment but it should be included sometime, if for no other reason than to act as a tiebreaker... Since this thing is self-promoting, we may need to develop some more for tiebreaking because we're talking about thousands upon thousands of possible midpoints varying from second to second...

If we can transmit the value and not just an IOU, then I don't see any reason that anyone but Tim needs to verify his holdings until escrow time... And when his trade doesn't show up then the trade fails, pure and simple, and of course in knowing that fact in advance, the programmers don't allow the environment to attempt to send money it doesn't have. (Bitcoin wallets can't either.)


Yes, it's also my conclusion that no matter how we arrange the network, there will never be a way to get around the initial fiat "uploading" delay. You've got to use one of these methods to upload your fiat to something... Be it this software, or liberty reserve, or OK Pay, or a crypto-IOU issuer, anything at all. It's the 'price' of getting fiat out of their system. It is the same with MtGox now.

The good news is that once that amount is in your wallet, you theoretically should be able to trade as much or little of it as you want from your wallet without delays from that point forward.

Colored coins is not as bad but similar. You can't send satoshis instantly anymore.

Yay! Responding to page 3 now! (You guys are frigging killing me...!)

Wow, that's an obtusely complicated way to duplicate part of the functionality of the program described in the OP.

You didn't even attempt to tackle the Fiat problem? Why would you go through all that work??!?


BMOT's got promise but it does not solve the fiat problem either.


We've got to try bro. It's the whole ballgame.

Both my client idea and BMOT would make great P2P exchanges as is if you don't want to deal with fiat here... But the goal has to be to replace MtGox and the other CPOFs... You can't do that trading cryptocurrencies for cryptocurrencies.


No, nor could there ever be.

Basic economics, something I understand is not taught in schools anywhere on this planet anymore, shows you why it takes evil men with guns pointed at you to fix a price.

An IOU, however, can be cryptographically signed. I'd still rather not deal in IOUs but crypto-IOUs could serve the purpose you are looking for here.



If you're willing to take the effort to meet face to face, why not just use a Lamassu ATM or even Localbitcoins?



I did in fact consider this, and was even thinking about making such a business publically traded over at BTCT.CO, for added security. However, what can this system offer over a simple "IOU" business? (Which isn't nearly as illegal and would have the same bottlenecks into our client software.)




Please refrain from doing LSD before posting in my thread. It takes my mind away from what's important reading this kind of nonsense!

The human race has a average IQ that is FAR far far far lower than you'd ever believe if I told you. 99/100ths of them DO NOT know how to value their existing money NOW. They must have guns pointed at them TELLING them what it's worth, and sometimes even that doesn't work!

Asking them to learn some math and economics before learning to value a cryptocurrency is so far beyond laughable it's just painful. Sadly, if you want bitcoin to be traded by more than just us nerds, then you've got to make a product that these morons can at least interact with, if not semi-understand.



Do you have some banking knowledge that you'd like to share with us? I'm all ears.

I have only speculated that existing value-transfer services like SWIFT, SEPA, and ACH could move value into our software if we find a way to receive it. I admit fully that I don't understand how they work otherwise.

Any hard info you have on how those move Value would be greatly useful.

Having said that, we're still not dead in the water if we can't use those at all. The apparent fallback plan of the moment is a cryptographically-signed IOU issuing business that sells us fiat, and is perhaps publically traded on btct.co. Other fallback plans exist too but aren't as good IMHO.


I hold no ill-will to the BMOT plan, but I don't see this Fiat solution as being adequate for real-time trading.

The "trusted OT server issueing contracts" does sound a lot like the cryptographically-signed IOU mentioned above. -

Meanwhile, being your own trusted server would seem to mean a free license to counterfeit fiat like crazy! -I don't see how that could work either.


Lamassu ATMs are going to deliver that promise in full soon enough... But it's still not going to enable real-time trading.

As I understand it, Coinflash simply verifies that localbitcoins-type sellers are legit... There is no service there to make them completely liquid. Am I missing something?

I read this thread, some related threads and though about it for a few hours (have not read newer posts).

FIAT is toxic to an automated distributed P2P exchange.

The traditional banking system relies heavily on trust. If something goes wrong, transfers can be reversed. Even Wire transfers can be reversed up until the time they clear; which is apparently not very instantaneous anyway.

The traditional banking system is also heavily regulated. You may need a Money Service Business license. You may need a license to act as an escrow. If a trade goes wrong, the disinterested third party may not have enough information to make a decision (has been mentioned in this thread).

In person meet-ups only solve some of those problems (by using cash).


I am not sure point 3 is possible without virtual tokens and the resulting central point of failure. If you want to wait for 1 confirmation while trading with bitcoin: the wait will be anything from seconds to over and hour; with the expected wait time being 10 minutes.

As recently as March 2011. Microsoft was still recommending against setting your hardware clock to Universal Time (there is now a hotfix for Windows 7). This means that Windows machines can not guarantee that the clock is more accurate than within 2 hours (during a time-change). POSIX systems, such as GNU/Linux can not guarantee that the clock is more accurate than within 1 second (during leap seconds). As a result, choosing the arbitrator based on combined latency may be problematic. You would have to find a way to compute third-party latency without trusting all of the nodes.

The delays of getting fiat in and out of the system are not important. Once I have a fiat balance represented in crypto-coin I can perform instant trades. I dont care if it takes me 2 days to cash out my IOUs into USD, my BTC to USD-IOU trade was instant.

You will never be able to clear fiat transactions instantly because you have to work with the existing flawed banking system.

I don't really understand how you want to represent fiat in your magical system without them being IOUs. You realise that your bank account is just a number in a database representing the fact that the bank owes you X amount of currency? Everything today is an IOU. You have to trust your bank to keep your savings safe, just as you would need to trust a crypto IOU issuer to redeem your tokens for cash.

So it is unavoidable.

You mention the fact that since "the actual value of fiat can and already is held in software now"  we ought to be able to hook into the bank's system directly and instantly transmit the digital information representing a quantity of fiat to a piece of software.

Seriously? Yes your bank balance is just a number in your bank's database. But that does not mean we can transmit it to a piece of software! The bank does not store money as exchangeable cryptocoins! They are just numbers.

If I send you the number '10000` and say that I took this number from my bank, would you give me 100BTC for it?!

Essentially, your reasoning is going round in circles.

You are saying that you need a crypto representation of fiat money that can be transferred quickly, cannot be reversed and has no counterparty risk.

You have just described Bitcoin.

You are right this trust system with the fiat is indeed quite tricky.
IOUs like the ones back in the 1700's Banks? Promissory notes I think they called them; It may be a good idea to look into how paper fiat came into being.

I think we do act like a group think session, but we definitely learn; I know I do, some of us choose to be silent and weigh the idea until we know more, some like you are actively learning from every last attempt... but who knows maybe somebody reading is already tinkering with it, a decentralized exchange that has solved the fiat problem.

Human ATM machines that's a good idea, advertise your Currency find buyers on the street... doesn't work in remote areas... hmm

IOU's with Bitcoin?hmmm sounds like a wallet exchange. You create a wallet a paper bitcoin wallet or send the amount for exchange only using the private key. Instant no need to wait, if someone does a transaction with you, you use a third member to release the funds once the money transfer has gone through, using international orders will require more interconnects for speed the local exchanger will have to send money from their account to another.

it's really tricky: you are in africa you need cash you have BTC. You make interconnect with los Angeles and tell them to send that cash fast! They get in contact with a local looking for BTC for his cash in his bank account. the local does the transaction to you, you have cash, they get bitcoins , the person in los angeles gets BTC it is a win win situation. a three way transaction everyone has the same to lose. I know this makes matching people even worse! It's a 2 way escrow. you simply choose to become one and ask for a fee, willing parties who just wish to make some money off the escrow fees, that's all.


This system would have to be p2p, there would be no room for central points, it has to be international and function with the most basic devices: phones.

For those who believe that small organizations and single websites are a kind of answer to a distributed or decentralized exchange, please compare them with this:


https://i.imgur.com/P2ZI1Ty.png



Bitcoin is in the third category. We deserve to have our markets in the third category as well.

I agree with your feelings, but believe me: unless you manage to invent teleportation, you are still trading IOUs.
Put IOUs back into the equation and it may start making sense...

Then the bitcoin funds have to be held until the money arrives. Also the agent of escrow as to then resolve disputes in the event you claim the check was lost in the mail.

Regarding the IOU "issue," I'm with Timo Y on this one: the IOUs that you receive after depositing your cash with a trusted safe/escrow provider is no different from the "dollars" that you use to trade on MtGox after you deposit dollars into their account.  Just have to make sure you work with a trusted depositor. And heck, you can even stay anonymous if someone establishes a good localbitcoins reputation, takes in cash anonymously, and issues untraceable but trusted dollar-backed certificates which can be traded for certificates of other depositors.
Other scenario is to trade IOUs for future trade, as in, trade me your BTC for my dollars instantly, and I'll Owe You a Dwolla/Wire transfer once we contact each other directly.