[Bitcoin-development] Decentralized digital asset exchange with honest pricing and market depth

Peter Todd pete at petertodd.org
Fri Feb 28 01:37:19 UTC 2014

On Fri, Feb 28, 2014 at 12:48:33AM +0100, Jorge Timón wrote:
> First of all, sorry for the delayed answer.
> On 2/10/14, Peter Todd <pete at petertodd.org> wrote:
> > Got this:
> [...]
> Thank you, I knew this wasn't new for us but I doubted we had written
> it anywhere.
> As said in those mails, being only able to offer AAA for BTC and not
> BTC for AAA nor AAA for BBB is enough of a limitation to justify a
> hardfork IMO.

As usual, you don't need a hardfork.

Anyway, one-sided trade is sufficient to get a functioning marketplace
up and running and test out the many other issues with this stuff prior
to forking anything.

> On 2/14/14, Peter Todd <pete at petertodd.org> wrote:
> > You're assuming the seller cares about fairness - why should they? They
> > offered a price for an asset and someone bought it; exactly which buyer
> > willing to buy at that price was able to complete the trade is
> > irrelevant to them. What they do care about is being sure that at
> > whatever given price they offered 100% of the buyers willing to buy at
> > that price actually see the offer in a reasonable amount of time - at
> > the best price the seller will get there will be only a single buyer
> > after all so you need that solid proof that said buyer was actually able
> > to get the offer.
> In fact, I don't think the seller will care enough about this to pay
> the proof of publication fee either. Assuming sellers can either
> broadcast the order on a bitmessage-like network or use your proof of
> publication scheme, the later will be always be more expensive. So my
> prediction is that most people will just use the simplest, fastest and
> cheapest method, but I guess only time can tell.

You can make the same argument against Bitcoin itself you know...

A Bitmessage-like network would be trivial to front-run via a sybil
attack. It's the fundemental problem with marketplaces - the data
they're trying to publish has to be public.

> I don't think this will be a tragedy, because like we discussed on
> IRC, I don't think the primary goal of markets is price discovery, but
> trade itself.
> About historic data, the actual trades are always public, and some
> kind of "archivers" could collect and maintain old orders for historic
> bid and asks, etc.

And again, how do you know that record is honest? Fact is without
proof-of-publication you just don't.

> As an aside, nLockTime would be nice not to always have to
> double-spend the inputs of an order to cancel it.

You mean a reverse nLockTime that makes a transaction invalid after a
certain amount of time - that's dangerous in a reorg unfortunately as it
can make transactions permenantly invalid.

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