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You may want to read further about the Buttercoin project. The promise is an open source exchange software that runs on commodity servers. It's still in the ear

by jyu 14y ago

You may want to read further about the Buttercoin project. The promise is an open source exchange software that runs on commodity servers. It's still in the early days, but seems pretty possible. If this project were successful, then multiple exchanges could sit on top of this software and in effect decentralize the exchanges.

EGreg 14y ago
What are the main challenges that explain why it hasn't been completed yet? Seems like a clear win over centralization, kind of like git/mercurial vs svn.
- Throwadev 14y ago
  buttercoin literally just started 2 days ago (on 4/13). It's coming along quickly, a lot of developers have shown interest. It might be a while before we see an exchange based on this project. There are other high performance exchange projects starting up too. I don't think buttercoin vs any of the existing exchanges has any proper analogy that would match your git/mercurial vs svn example. The only diff between buttercoin and those is that it will be open source. It doesn't actually decentralize. You might even see MtGox take buttercoin and use that to run their exchange.
- dragonwriter 14y ago
  > What are the main challenges that explain why it hasn't been completed yet? Because its pretty hard to define even what "decentralized currency exchange" means, and, particularly, to identify a mechanism by which you could do order matching in such a system so that wouldn't leave you with just a bunch of disconnected exchanges that are far less efficient at market clearing than a centralized exchange.
Throwadev 14y ago
It's not a decentralized exchange. It's an open sourced exchange. It will be up to entrepreneurs to take the buttercoin code and set it up as the engine for their exchanges. The majority of the work will not be in the systems, but in setting up the exchange as a proper legal entity. There is significant cost in operating in the US, because you have to register as an MSB at the fed level, plus once with each state. Fees run in the thousands per state, per year. So I think the OP's question was why there aren't decentralized exchanges. I took that to mean why there aren't P2P style exchanges. I'm not sure what the answer is. I think people have been tossing that idea around for a while but I'm not sure if they have started code for it. There are many exchanges now, but for some reason people choose to use MtGox, which is AWFUL.
- chris_dcosta 14y ago
  I agree with this - I think it's the fact that MtGox is the main exchange that's wrong. There should be multiple exchanges with proper backing.
wmf 14y ago
multiple exchanges could sit on top of this software and in effect decentralize the exchanges. This model leads to failure. Each exchange would have a small order book which would discourage anyone from using it, ensuring that liquidity never reaches critical mass. Small exchanges cannot afford security audits so they are guaranteed to be hacked. Small exchanges also cannot afford FinCEN compliance, so if they touch USD then they're illegal.
- Throwadev 14y ago
  Agree that lots of small crappy exchanges with incorrect legal status will pop up, but that doesn't mean that at least one or two or three large-ish buttercoin ones won't start up. I think that will happen. So your point is partially correct, but it doesn't matter, because larger ones will pop up. There is nothing to stop Gox from migrating to buttercoin either. I think the first credible implementation that doesn't have any major red flags in terms of trustworthiness or being run by amateurs will quickly siphon off volume from Gox.

by jyu 14y ago

EGreg 14y ago

What are the main challenges that explain why it hasn't been completed yet? Seems like a clear win over centralization, kind of like git/mercurial vs svn.

Throwadev 14y ago
buttercoin literally just started 2 days ago (on 4/13). It's coming along quickly, a lot of developers have shown interest. It might be a while before we see an exchange based on this project. There are other high performance exchange projects starting up too. I don't think buttercoin vs any of the existing exchanges has any proper analogy that would match your git/mercurial vs svn example. The only diff between buttercoin and those is that it will be open source. It doesn't actually decentralize. You might even see MtGox take buttercoin and use that to run their exchange.
dragonwriter 14y ago
> What are the main challenges that explain why it hasn't been completed yet? Because its pretty hard to define even what "decentralized currency exchange" means, and, particularly, to identify a mechanism by which you could do order matching in such a system so that wouldn't leave you with just a bunch of disconnected exchanges that are far less efficient at market clearing than a centralized exchange.

Throwadev 14y ago

It's not a decentralized exchange. It's an open sourced exchange. It will be up to entrepreneurs to take the buttercoin code and set it up as the engine for their exchanges. The majority of the work will not be in the systems, but in setting up the exchange as a proper legal entity. There is significant cost in operating in the US, because you have to register as an MSB at the fed level, plus once with each state. Fees run in the thousands per state, per year. So I think the OP's question was why there aren't decentralized exchanges. I took that to mean why there aren't P2P style exchanges. I'm not sure what the answer is. I think people have been tossing that idea around for a while but I'm not sure if they have started code for it. There are many exchanges now, but for some reason people choose to use MtGox, which is AWFUL.

chris_dcosta 14y ago
I agree with this - I think it's the fact that MtGox is the main exchange that's wrong. There should be multiple exchanges with proper backing.

wmf 14y ago

multiple exchanges could sit on top of this software and in effect decentralize the exchanges. This model leads to failure. Each exchange would have a small order book which would discourage anyone from using it, ensuring that liquidity never reaches critical mass. Small exchanges cannot afford security audits so they are guaranteed to be hacked. Small exchanges also cannot afford FinCEN compliance, so if they touch USD then they're illegal.

Throwadev 14y ago
Agree that lots of small crappy exchanges with incorrect legal status will pop up, but that doesn't mean that at least one or two or three large-ish buttercoin ones won't start up. I think that will happen. So your point is partially correct, but it doesn't matter, because larger ones will pop up. There is nothing to stop Gox from migrating to buttercoin either. I think the first credible implementation that doesn't have any major red flags in terms of trustworthiness or being run by amateurs will quickly siphon off volume from Gox.