Mt. Gox and TradeHill are like stock markets, which are okay for a relatively small market like Bitcoin. But what if we want to make it larger? This is how abstraction comes in.
My design approach is to take out the noise: If Bitcoin is really a currency, why should we care so much about BTCUSD's volume? Why should we even see the order book? I know these are two important components for every market, but it's not important to everyone. Here, Bitcoinica guarantees liquidity, gives people the opportunities to use margin and do short selling, and giving quotes with acceptable spreads.
The reason brokerages exist in the stock / forex markets is because the exchanges charge large fees to have a seat at the table. Since the Bitcoin exchanges are free for everyone to use, this reduces the role of a brokerage. Now, you are providing a valuable service to people by allowing short and long positions as well as the different types of orders. I think you will have success with your clients, but there is a shade of mistruth about what you do.
My position is one of a fundamental philosophical difference. I think that short selling should actually produce an effect on the market. I think that every order should touch the market. If someone sells short, you are not actually lending them the Bitcoin as happens in the stock markets. If someone gets a margin call from you, it's not because your clearing institution is asking you to settle your account before close of business.
Without touching the market, it's all just numbers in your database.
That's not really true. We hedge most of the transactions in Mt. Gox. However, I do have to use a bit of smartness to write an algorithm to manage the hedging. I can see the actual trading data of Bitcoinica - way too many people are transacting at different directions nearlyat the same time. I also checked my Mt Gox account history, even with the algorithm, I'm still selling to myself most of the time.
I would rather save these commissions and offer lower spreads by taking a little bit of risk. I'm okay with losing money on some transactions while making them back on others. In the long run, we may offer better rates than any other exchange. This will be a competitive edge for Bitcoinica.