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    Author Topic: [ANN][XCN] Cryptonite | 1st mini-blockchain coin | M7 PoW | No Premine  (Read 578576 times)
    yeXIABC
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    November 25, 2014, 02:07:49 AM
     #2721

    Yes exchanges are clearly the weakest link in the whole cryptocurrency ecosystem, so I can understand the desire for a decentralized trading platform. Over the last few years I've read about at least a dozen such platforms but I'm not sure how many of those actually manifested into a real solution. I'm fairly sure there is at least one P2P trading solution in existence right now but this is another topic I haven't been keeping an eye on lately. The main problem with any decentralized trading platform is the inherent latency which P2P networking brings with it. Although Cryptonite can handle a larger number of transactions I don't think it would have a low enough latency to handle high frequency trading and I still don't think it would be a great idea to cram all the HF trades into the blockchain. The best solution would probably be to create a specialized side chain to hold all the trading transactions because then you can easily solve the problem of how to create trading pairs between different altcoins, you just need the sidechain to be connected to multiple altcoins and the ability to track which type of assets exist in the side chain. Now that I start thinking about this topic more I'm getting all sorts of ideas about how to design such a side chain.

    EDIT: actually I think the mini-blockchain scheme would probably be the ideal type of system to use in such a side chain because when you think about it, trading just boils down to balances. When you're trading on an exchange all you really care about is your coin balances. When you make a trade one of you balances will decrease and another will increase because you're selling one type of asset in return for another type. So when it comes to trading I don't think there is a need for advanced scripting capabilities. The mini-blockchain scheme uses a simple balance system instead of scripting so it seems like the ideal solution to this problem. We don't really need the withdrawal limit feature in this type of side chain, so we could just use the withdrawal limit field in the account tree to represent the type of asset. So for example a value of 0 might be BTC, a value of 1 might be LTC, a value of 3 XCN, etc. That way it would be super easy to know how much of each coin you are holding and it allows us to track which coins are being sent into and out of the side chain. To trade between different coins you'd just need to create a transaction with the appropriate outputs signed by all parties involved in the trade.
                     

    Good stuff.  I understand block/propagation times are a constraint for on-chain HF trading.  Now that I think about it, tx fees would also add friction as the equivalent of a Tobin Tax!  Perhaps we will see the emergence of hyper-localized coins with extremely short block times.  NASDAQcoin, NYSEcoin, and COMEXcoin would be limited to NYC and Chicago based nodes and feature <1 second blocks, low (or zero) tx fees, etc.  The very low latency HFT networks already exist; we just need to provide the tools so they can create beneficial blockchain overlays which replace their current (problematic) centralized clearinghouse model.

    Of course these specialized coins should be non-malleable sidechains of XCN...if we build it they will come!   Cool

    Another approach would be to metacast tx across several interoperable/compatible chains, so it's a safe bet at least one of them will pop a block very soon afterwards.  Maybe Supernet type schemes will provide such functionality.
          What was your longterm vision for XCN?
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