Quote from: gollum on April 10, 2013, 09:20:57 PM

Got an idea after all problems that MtGox often have because of DDOS and huge amounts of order.
Why do we rely on a Server-Client Exchange (MtGox) when the strength of Bitcoin is in decentralization???
We should outsource the exchange to a P2P blockchain and let companies like MtGox only handle the fiat and the client-contact.
If we create an open source exchange platform that is decentralized and inspired by bitcoin it would benefit both brokers and clients.

Any ideas and suggestions?

So about the mtgox DoS or inability so far to scale their servers in line with user demand ramp up:

Gollum suggested I comment on this thread re a short side discussion we had of a subset of this topic. About exchange security model I do have some ideas, that presumably others have already thought of (not read enough of the massive forum back log to know). I tweeted about this a few times (@adam3us). Basically it seems like an easily avoidable design flaw to me that the exchange is holding the bitcoins. That is why exchanges keep getting hacked - they have a big coin float on them and coin transfers are by design irreversible.

Maybe I should create myself a bitcoin address for free advice tips if anyone does a startup or exchange or anything with this stuff Wink

1. My thought is why not handle the money and transfer proofs in two stages so the actual coin flows p2p and never sees the exchange. I reckon you could do that without any bitcoin protocol changes. (eg with the exchange just handling the escrow of the funds, and arbitrating on the basis of the clearance of those funds that the buyers address has been confirmed to have transferred to the buyer's address). QED, simple no? (aka Quite Easily Done:)

2. You can do better than that with bitcoins multi signature option probably, then from the exchange point of view the transaction can complete instantly without waiting for the confirmation if it is one of the signatories on the pre-confirmed first stage. The exchange cant spend the coin because it doesnt have the user private key, and can remove itself from the signature via a second spend and confirm back to the users exclusive control if they wish.

As far as I could see no-one is doing this, nor attempting to do this.

3. Also even within that the exchanges seem not leverage obvious crypto approaches - they dont even use public key crypto to bank coins they dont need immediately with an airgap to the big value stuff. (They can bank over an airgap by paying to their airgapped address).

4 The rest about the mtgox exchange overload is that they for some reason are struggling presumably due to inexperience or too fast a ramp for what they were expecting to keep up. Buy more equipment, hire more really experienced data center engineers (who have handled equipment at real stock exchanges or bi g online trading platforms like etrade where a 5min down time costs millions. These people get per minute mallus on their fat salary for downtime, but they know their shit!) QED3.

5. There were ideas to introduce dnyamic anti-DoS hashcash requirements into TCP cookies and SSL-handshakes. I wrote about it in one of my hashcash papers. It would be easy to put bitcoin in there. That way under attack the exchange just increases its connection fee, and if the attackers persist the exchange makes more money.

http://hashcash.org/papers/

6. about bitcoinx

Its a quite interesting idea, and seems more p2p minded than opencoin. But a limitation is a big part of the contribution of bitcoin is that transactions are final, irrevocable and not subject to seizure, recipient blocks etc. but not too politically controversial as they arent that anonymous. Even more than with bitcoin (if bought via an exchange) getting money into a coloured coin actually has to happen via an exchange to represent offline ownership of a share certificate, a claim on a EUR deposit (who holds the actual while the coin is circulating? - what happens if its a Cypriot bank and the government an EU troika seizes 50% of it). Its like a digital bearer bond (man Bob Hettinga would be drooling over coloured coins). But I think those interesting bitcoin properties are lost because governments can easily require the exchange or bank / broker entity holding the actual stock certificate or bank deposit to revoke ownership etc. However was left holding the coloured coin is holding a worthless clump of hashcash.

(ps I presume though I didnt read far enough that the colouring process starts with a valid bitcoin, spends it down to 0, to buy the instrument, leaving a btc 0 coin with a coloured second use as a claim on the exchange held instrument.)

Adam