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Bigger than Bitcoin? Peer to peer trading without exchanges.

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 private private,

 Wednesday, December 6, 2017

After 20 years of working on a platform. I have decided now is the time to open the box. Years ago when Bitcoin was conceptualized, I decided to follow suit with a platform that would transform trading in the way that I believed Bitcoin would currencies. It just made sense to me that peer to peer trading made sense. Why would you really need an exchange, nonsense many would say. Yet here we are at 14000 on Bitcoin and I did imagine how big and efficient peer to peer trading would be so off I went into the deep water. Will this platform see the light of day, I don't know but sooner or later it's going to happen. You will be your own exchange.


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38 comments on article "Bigger than Bitcoin? Peer to peer trading without exchanges. "

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 Norman Fastenberg, Managing Director at The Forum Group

 Friday, December 8, 2017



Good idea/concept as long as fraud is obviated.


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 Alex Groisman, Highly experienced software developer/architect with unique hands-on abilities across broad spectrum of technologies.

 Saturday, December 9, 2017



with strengthen and relatively inexpensive technologies, P2P and decentralisation as trend eventually will change the whole world in so many ways... my hope is that socioeconomic and political sciences will be able to catchup and reflect in advance, so we would not have to experience a world wide wild west 2.0


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 Karén Chaltikian, Quant Investor, Researcher, Data Explorer

 Saturday, December 9, 2017



Exchange is primarily needed to eliminate counterparty risk, thus allowing each participant to make their trading decisions solely based on what they think about given security . However, there are plenty of trading going on outside of exchanges, especially in the fixed income world, where counterparty risk is real and present, and is baked into the price. The key is that it is relatively well understood for most counterparties involved. My speculation is if a p2p platform comes around that is able to provide a reasonable estimate of such risk for every transaction it might gain traction especially for less liquid securities with wide bid/ask spreads and for smaller trade sizes


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 Papa Mamadou Bakayoko, Portfolio Manager at Crystalline Management

 Saturday, December 9, 2017



The Distributed Ledger Technology(DLT) associated to the BlockChain (BC)- the same Technology underpinning Bitcoin can remove the counterparty risk, this requires that both leg of a trade (the asset and the fiat currency) can both be properly held on the BC.

The BC by design allows "safe" transaction between untrust parties. Transfer of cash VS securities could totally be secured if both the cash and the security traded are handled by the BC. Virtually DTC/CDS business is under threat .i.e. change at the ASX.

The real challenges now in my view:

- Order matching in compliance with rules like reg NMS in the US on a distributed network.

- Scalability of the BC. For instance the Ethereum BC what i would judge as today's most advanced BC for smart contracts allows less than 100 transactions/s (may improve/Sharding). Some other projects like EOS are targeting over 1000tps. But none of the publicly running BC currently allows high enough throughput. Basket case cryptokitties.


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 David K. Lerner, Managing Partner at Lerner Trading Group, LLC

 Saturday, December 9, 2017



The question is "Bigger than Bitcoin?" The answer is "No."


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 Papa Mamadou Bakayoko, Portfolio Manager at Crystalline Management

 Saturday, December 9, 2017



@jaime Prime Broker could provide margin and you would trade under nominee account something similar to current equity trading.


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 John Devron, Computer Software Professional

 Saturday, December 9, 2017



Imagine the arbitrage opportunities of P2P


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 Boris Altman, Project Manager - Production Support at Citi

 Saturday, December 9, 2017



I think one of the purposes that an exchange serve is to provide some parameters that the company has to satisfy to go public. It probably deserves some compensation for that. A book "Dark Pools" provides some history of how we got from expensive hand-executed equity trades to cheap electronic executions today. I agree that clearing with blockchain will make it instantaneous and efficient - freeing (or sending to unemployment) many back-office workers. I think Goldman already tried to copyright "SettleCoin" or some such. P2P system at least theoretically can improve efficiency still further and probably reduce cost of trading below 20 mills per share or whatever it is right now including all rebates and such. However, will it solve the problem of showing your cards being optimal trading strategy? Meaning if I want to sell 1 million shares of X, I can just say so instead of slicing and dicing the order to avoid influencing the price. Will we still need market makers or DPMs ?


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 private private,

 Sunday, December 10, 2017



Karén Chaltikian spot on! With time people tend to forget that exchanges were created to give guarantees to participants. As always happens some take for granted everything we got without thinking why we got it in the first place


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 private private,

 Sunday, December 10, 2017



read about Iota Distributed ledger technology, it resolves all congestion problems of classical blockchain and enables P2P transactions with no fees at all, most advanced crypto system


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 Papa Mamadou Bakayoko, Portfolio Manager at Crystalline Management

 Sunday, December 10, 2017



IOTA tangle technology makes it look like an interesting project but i have a doubt if they already made the proof of execution of smart contract yet. Not everything on the white paper has been implemented yet and from what i was able to grasp some breakthroughs need to be made to prove the viability of their technology. Potentially a game changer but not the most advanced yet.


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 Chris Warburton, eFX Consultant

 Sunday, December 10, 2017



Most Bitcoin transactions are done via market makers. FX has exchanges where clients can trade p2p so most trades going to market makers. Even doing $100bn per month you only get around 2% of clients crossing.


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 Andreas Aigner, PhD, Founder of TradeFlags. Auto-Alerts, -Signals, -Flags. -Technical Indicators. Free for Everyone. Robo-Algo-Automat

 Monday, December 11, 2017



What about taxes? Stamp duty?


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 Gilbert Yeo En Wei, Trainer | Wealth Management | TA Specialist

 Tuesday, December 12, 2017



Sounds great


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 Steven J Hatzakis, 🌐 Global Director of Research at Reink Media Group [ForexBrokers.com] 📊 |

Finance Editor 💻 Fintech Consultant 📞 📧

 Wednesday, December 13, 2017



I agree the individual will eventually be their own exchange, market-maker, and bank. Decentralized exchanges are already popping up, I just tested the beta version today of Airswap's token trader platform which is decentralized and allows market makers to give/take liquidity. Etherdelta is another.


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 Eric Hatley, Director - Electronic Trading Fixed Income

 Friday, December 15, 2017



Cool idea


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 private private,

 Sunday, December 17, 2017



I’m not convince that BC technology is ready to replace the exchanges yet. As referenced above, some of the Counterparty risk can be managed via smart contracts that represent a swap of asset vs money but until a major international currency moves to the BC, we are stuck with having to hold assets in bitcoin etc.

I haven’t seen a good model for how price discovery, liquidity and market making will work without an exchange. For me these are harder problems to solve than a distritubted ledger with smart contracts.

The key risk to mange is a DDoS attack on the ledger. The consensus mechanisms that are used in BC work well but I think would suffer under a sustained effort to slow down the consensus process across nodes. I’m not aware of any robust testing or protection against this. People trust exchanges because they manage these risks well. When you place a trade, you know almost instantly that it has been received and the same for execution. For large sums of money, this is important


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 John Devron, Computer Software Professional

 Thursday, December 21, 2017



Nice concept to cut out the middle man. However, implementation details may not be straight forward. Offering a quote on your own side is relatively simple. But locating a trade partner at the best price on the other side of the trade before their quote fills by someone else requires smart routing with iterative retry until your order fills. Seems like it would cause a network broadcast storm of epic proportions to have a million traders all smart routing orders for the best fill price. The race conditions due to waiting for a peer to reply while you receive other better prices that just popped up would be interesting to manage. Traffic for cancels would be huge. Consider one person posting a quote at a superior price that everyone sees and thousands of people trying to grab it. Level 2 on steroids. Network congestion and latency could become an issue.


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 James Niosi, Director, Midnight Integrated Financial

 Sunday, December 24, 2017



Like your view on this. I have always maintained quotes are the property of the investor yet the investor does not always receive any economic benefit. That benefit accrues to the exchange, sometimes the broker and in small numbers, the investor via rebate. Why not be your own exchange?


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 jaime B, Owner at My Family Office

 Sunday, December 24, 2017



What about leverage I can get 20-1 on ES for a 2$ commission who will provide that ? This peer to peer is a pipe dream


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 jaime B, Owner at My Family Office

 Sunday, December 24, 2017



These Blockchain kids that started to dream how to remove the middleman on their mother's couch did no do competitive analyses :)


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 Robert Wilbarg, Vice President - Operations IT Global Architecture - Credit Suisse

 Sunday, December 24, 2017



“I haven’t seen a good model for how price discovery, liquidity and market making will work without an exchange”

The core mechanics, a bit of a draw back to removing the middle man.


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 Scott Boulette, Algorithmic Trading

 Monday, December 25, 2017



Robert, I would imagine not having a central order book would be challenging in the same way FX has issues relative to the currency futures centralized at the CME.


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 Evgeny Zandman, Founder, CEO at Euro Trust Asset Management

 Monday, December 25, 2017



an exchange and exchange members are secure counterparts, at least we think so... what about trades size 100 mln.- still peer to peer, or regulated exchange ?


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 Jon Grah, Trading Signals Automation Expert AwarenessForex.com

 Monday, December 25, 2017



jaime B The p2p ECN could set whatever rules they wanted ECN wide or on individual products in terms of minimal collateral needed. Also commissions, trade cancellation rules, etc. I imagine ultimately the contracts traded would be multisig, with certain active parties or people who identify themselves having certain additional privileges, such as deal modification or cancellation. It would have to be 100% mechanical (electronic).


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 Jon Grah, Trading Signals Automation Expert AwarenessForex.com

 Monday, December 25, 2017



not sure about 100% pure p2p ECN. Would certainly be less centralized and more mechanical, with less spoofing orders. And lessens G7/G20 wealth concentration....or rather opens up capital markets to emerging and unbanked populations as long as there is decent mobile internet access in majority of major/minor cities of that country.


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 Itai Schweitzer, Information Technology and Financial data systems specialist

 Wednesday, December 27, 2017



The combination of what once was a Market Place Of Exchange + the know how and knowledge base we all have by now on how to exchange assets, can actually solve a solution for a P2P based exchange. Any participant would both participate in trading and take part of the collective risk based on a voting mechanism which would determine how big any single trade can be hence crowd based risk would evolve.


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 Joe Wang, Foreign Exchange Software Developer

 Wednesday, December 27, 2017



With regulations, it makes more sense to have few large central entities rather than many small p2p entities.


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 Chris C Yu, Entrepreneurial Investment Management Professional

 Wednesday, December 27, 2017



Centralized large exchanges still create synergies and attract flow orders than small p2p entities.


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 Avram Perlmuter, CEO at Trading Hedges

 Wednesday, January 10, 2018



When you say to open the box. Do you have the platform or are you just surprised it hasn't come out yet?


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 Maggie Hsu, Business Development at AirSwap

 Sunday, January 14, 2018



+1 for AirSwap (https://www.airswap.io/) - we are a decentralized, peer-to-peer exchange started by an ex-Virtu trader who is bringing traditional OTC and dark pool trading to cryptocurrency. As others have stated, there are many downsides to having a centralized order book (allows for front running, etc.) AirSwap also doesn't hold user funds or charge a fee. Please reach out if interested in beta testing.


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 private private,

 Saturday, January 27, 2018



http://www.tiqpit.com/ - decentralised commodity trading. Advantage over centralised trading: fair and open matching engine, data belongs to the customers, regulation and authority can be part of the blockchain, dataReg can be implement, many MiFID II issues are solved by nature.


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 Dave Banerjee, Financial Services Regulatory Compliance Professional

 Wednesday, January 31, 2018



I only focus on regulations with SEC, CFTC, NFA and FINRA (on committee) and am keen to look at a platform to assess the regulation requirements. If there is a working platform, I would have an interest


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 Steven Rusko, Senior, Global IT Business Analyst at Marsh & McLennan Companies

 Thursday, February 1, 2018



IOHK Cardano (ADA) project is working on peer to peer trading solution


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 M. Bouziane BSc. MSc., Financial Engineering & Portfolio/Risk management. Cryptocurrencies investor/trader. Professor/Consultant

 Friday, February 2, 2018



It seems to me like a natural application of the blockchain technology. An exchange with no third centralized entity, hence, very low fees.

Cardano has some solutions for that kind of application because as you might imagine, the ledger of the massive transactions creates a huge scalability problem. They address the problem by assigning fragments of the blockchain called “epoch” to some “maintainer of transactions” or node administrators if you like. This way, it speeds up the process of confirmations and you can have multiple parallel blockchains simultaneously . This system is then very suitable for a decentralized P2P exchange! ;)

Look also at some cryptos who clearly want to be the “Ebays or Alibaba” of the blockchain with P2P business exchanges. It is a similar model with exchanges between two individuals bound by a smart contract hence no third party involved.

Very interesting indeed! ;)


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 Boris Anderer, Associate Partner at Wintergerst Societät für Unternehmer-Beratung GmbH & Co. KG

 Monday, February 5, 2018



there is a company http://www.spotquoting.com/ founded by Sam Balabon which is targeting P2P Trading of Stocks. They believe Desktop Stock Exchanges are the Future. The Company believes all “negotiations” and “trade executions” for trading stocks should occur at the desktop of the Investor and NOT at a broker/stock exchange/ATS computer. Why turn over buy and sell orders to third parties when you can do all your trading cheaper yourself even if you’re a huge mutual fund ? So P2P trading is not only an idea ...


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 Gabe Harris, Principal Natural Gas Analyst at Wood Mackenzie

 Friday, February 9, 2018



The main factor I see in favor of p2p trading is that when parties go through an exchange, the exchange has a valuable stream of data that they can sell. It is likely that the alpha rich data will be utilized by someone who is a trading competitor to most of the other parties using the exchange. P2P changes that. I'd be interested to hear other/opposing views.


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 Ke Huang, Flow Rates Front Desk Quant at BNP Paribas

 Sunday, April 22, 2018



I totally agree, with blockchain it is totally feasible. The only problem is collateralization and regulations

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