P2P Bitcoin exchange [pdf]

by luisivan • 13 years ago

52 39 13 years ago

cLeEOGPw2• 13 years ago

How do I know if Lisa provided me with the correct amount of money in OKPay account before transaction?

luisivan13• 13 years ago

Good question! OKPay has an API so we check if the correct amount has been transferred to your OKPay's account. If that happens you sign the transaction and the exchange happens

gotoalberto6• 13 years ago

because OKPay and payments processors proposed, provide an API.

izqui• 13 years ago

That's the kind of stuff we need to make Bitcoin really take off.

I'm really looking forward to seeing more of this.

luisivan13• 13 years ago

Thank you! :)

pfraze• 13 years ago

Don't know the relation, but I've heard https://en.bitcoin.it/wiki/Ripple is catching on as a p2p bitcoin exchange.

gotoalberto6• 13 years ago

Ripple is based on social networks, in many countries these socialnetworks are prohibited as China, etc. Also, PAUV don't have a external dependencies.

cLeEOGPw2• 13 years ago

Ripple premined many ripple coins before releasing and it is distributed, not decentralized.

oleganza2• 13 years ago

Paper is not clear on how their scripts work because they don't show exact scripts per output.

Meanwhile, using bilateral deposits you can insure any sorts of contracts, not just currency exchange. In my scheme scripts are symmetrical: http://blog.oleganza.com/post/58240549599/contracts-without-...

The coolest part is when this sort of thing is used in autonomous programs that randomly connect to each other and establish contracts. In such case there's no place for extortion - there's no human to negotiate with. Based on this idea you can build never-seen before networking protocols. For instance, a micropayment network that propagates IOUs from peer to peer where each pair of peers is mutually insured to repay all accumulated debt when it reaches 50% of insured amount. It'll be like a global distributed clearing house with as little fees as humanly possible (and instant confirmations!).

gotoalberto6• 13 years ago

<<Paper is not clear on how their scripts work because they don't show exact scripts per output.>> You can found more information about contracts and the flags used on Bitcoin Wiki.

oleganza2• 13 years ago

I know how scripts work in general. I mean, it's strange that you display script outside the output. E.g. on page 7 you have two outputs and only one script.

Another remark: what does mean "description message is ciphered"? You mean signed? Because ECDSA does not do encryption (like RSA), only signatures.

luisivan13• 13 years ago

Our exchange works without third parties, anyway that's really interesting, we'll check it out, thanks :)

jpswade• 13 years ago

On a similar line, you may also find this interesting: http://sx.dyne.org/anontx/

luisivan13• 13 years ago

Wow, that's pretty cool, we'll find a way to integrate it :)

M4v3R2• 13 years ago

If anyone doesn't meet the transaction contract (send the money or send the bitcoins), both lose the deposit.

Am I understanding this correctly that if a buyer tries to scam the seller in whatever way (i.e. will initially sign the transactions but ultimately doesn't pay) then the seller will lose his deposit? If that's the case then it won't work. I ran a P2P Bitcoin exchange and it's a pretty common thing to have "fake buyers" who place offers but ultimately don't fulfill them. With a third party you can resolve these kind of situations easily, it's much harder without them.

luisivan13• 13 years ago

If one of the parts doesn't fulfill its order, both the buyer and the seller lose the same amount of Bitcoins. That's the way we prevent scam!

M4v3R2• 13 years ago

The problem is, that in a P2P system you don't have only scammers that will not fulfill the trade. You also have careless people, who will mess something up, forget about the transaction, delete their clients/wallets, etc. With this schema, you are forcing the one party to take responsibility of stupidity of other.

bachback4• 13 years ago

An exchange is not just a transfer, it is a transfer at a price. Sure, you can transfer 1 BTC to 100$, but how do you determine a price? If A wants to buy 1 BTC from B, what is the transaction? 1$,5$,1000$? You need to integrate with the fiat system and you need a limit order book. I would suggest Harris book on microstructure for an understanding of exchange markets (ISBN 0195144708).

luisivan13• 13 years ago

Each peer has to determine a price per Bitcoin when opening the order. Then we match the orders that have the same price using a P2P discovery system. So there isn't a global price but rather each user has to choose a price.

bachback4• 13 years ago

Well, a chosen price is a limit order, which can go unfilled. If I order 1000 BTC for 0.01$ am I going to get filled? At current market prices no, because currently there is no supply of BTC at that price. A market determines the price. If a good is well defined a market will automatically be centralized. Gold and oil are extremely liquid markets traded on exchanges, that means traded based on limit order books.

clarkm• 13 years ago

Thanks for the book recommendation. This has been something I've been thinking about for several months now: how would a p2p exchange possibly implement a time-price priority queue to ensure proper order execution?

The more I think about it, the more I convince myself that it is likely impossible to get network incentives to line up correctly without relying on a trusted third-party (or making other show-stopping compromises). Nodes have no incentive to rebroadcast orders that conflict with their own, and any sufficiently motivated attacker could place nodes in strategic places in the network to manipulate execution in their favor.

If anyone wants to talk about this in detail, shoot me an email.

marcell2• 13 years ago

5. Homer sends to Lisa the transaction and Lisa adds some inputs to the transaction as it happens in this example:

At this point, has Lisa paid Homer yet? If not, what will force her to do so?

luisivan13• 13 years ago

No! No payment has been made yet, because at that point the transference is not valid

marcell2• 13 years ago

I see, that seems reasonable then. What happens in the case of reversed payments, though? Chargebacks is the reason you can't buy bitcoin using Paypal, Google Wallet, etc.

galapago2• 13 years ago

I guess the code should be available in the future here:

https://github.com/pauvorg

luisivan13• 13 years ago

Exactly!

galapago2• 13 years ago

Great. Following.

P2P Bitcoin exchange [pdf]

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