Does anyone know the IP address of the node(s) they use? It would be nice to add this to the default banlist in bitcoin core.

https://twitter.com/dmgblockchain/status/1327037069340774400

The problem here is the siren's call of "give me your money, and I'll let you play this game". If you do this, then you have to play by the existing rules.

The solution is to shed the idea of taking people's money and creating software for real p2p trading. Operate your own trading engine and hold your own keys on your own server. Find your own trading partners (Telegram, forums, etc.) and settle trades using interchain or intrachain atomic swaps.

No risk of stolen funds, no risk of the counterparty cheating. No need for accounts or third parties.


 

Create and invest in startup companies. Find other people who think like you do and want to solve the same problem, then use your skills, talents, and capital to help grow a project into something meaningful.

The first killer app for Bitcoin BTC: OTC Trading

Many people ask if there is a "killer app" for Bitcoin. You'll frequently hear "Bitcoin's killer app is that it is sound money". But that doesn't really address the spirit of the question. Bitcoin is indeed sound money, but you can do things with it that you never have been able to do.

You might ask: what is the killer app for Hyper Text Transfer Protocol (HTTP)? Then you could argure there are many killer apps. Hyper Text Transfer Protocol has been around for about 30 years. This technology, along with increasingly cheap hardware, almost eliminated the costs associated with access to and discovery of information (Google, Youtube) and general communication (Facebook, Telegram, Uber). But these household brands only appeared 10 years ago, and HTTP had already been around for 20 years.

What is the killer app for Bitcoin? Bitcoin is much younger than HTTP, it is only about 10 years old. It's taken some time for technologists to understand what is really possible with this technology. In 2000 we didn't have any idea that Facebook would be a household name in 2020, and now in 2020 we don't know what will be a household name in 2040. But if you really understand the fundamentals of Bitcoin then you might be able to make an educated guess as to what will come.

Bitcoin is Capital

There are many arguments over whether Bitcoin is a commodity or a currency. In fact it is both. More importantly, Bitcoin is capital. What is capital? Capital is what you can use to produce things and to create value. It has potential energy, just as a fully drawn archer's bow has potential energy. It's what you use to hire people to help you get more work done than you could do by yourself. Capital is what you use to buy a factory, or to buy farmland, or to start a small business.

Bitcoin is probably the most liquid form of capital in the world, due to the fact that it's movement cannot be constrained. This means that Bitcoin will always be valued somewhat differently according to location, time, and in general: tastes and preferences. This means that the *remote* value of Bitcoin, say in Country A, can change relative to the *local* value of goods, labor, and so on in Country B. Let's say that the risk that this change occurs while in the middle of a business deal is called Divergence Risk. The frequency and magnitude of the change in Divergance Risk is called *volatility*, but let's ignore that for now.

Managing Divergence Risk

Divergence Risk is similar to Foreign Exchange Risk (FX Risk). FX Risk is not new, and there are many techniques to represent and transfer this risk, such as spot trading, options, or futures contracts. But all of these contracting techniques rely on trusted third parties, with *people* performing manual operations. In fact, most capital movement around the world today is done via telephone calls, faxes, and paper records. This leads to all sorts of problems, from unintentional errors or delays (1) to outright manipulation and corruption.

There is no way to guarantee fairness or consistency in such a system. You can only hope that nothing goes wrong, and then hope to find recourse through the legal system if something does go wrong.

Automation Through Smart Contracts

Bitcoin is the only form of capital which allows you to add special encumbrances to each transaction. For example: you can prevent UTXOs from being re-spent until a specific block height has been reached, or until a secret has been revealed. Bitcoin's Proof-of-Work prevents transactions completed on-chain from ever being modified.

If you have another cryptoasset on another chain with a reasonable amount of security, you can exchange Bitcoin for that cryptoasset without ever involving a third party in the trade. This includes not having to use the legal system if something goes wrong. Because if something goes wrong with the trade, both parties are automatically refunded. This is called a *smart contract*, because the conditions of the agreement follow rules which are enforced by computer networks, rather than courts.

The outcome of such a settlement using Bitcoin and another chain is probabilistic and can be quantitatively measured, which is a conceptual departure from the traditional legal system, which (incorrectly) considers itself to be deterministic and ignores all of its human-induced problems which cannot be quantified.

Over the Counter Trading using Smart Contracts

How are agreements entered into and transferred today? Over the Counter Trading, or OTC Trading, is the most common way to transfer probable future benefits and obligations directly, from one party to another. But OTC Trading is limited: you have to meet in-person to complete a trade. Even if you use a trusted broker to help you complete a transaction, that broker is limited to doing business within a particular geographic region. Why? Because the broker can only trust his own country's legal system to help him in the event of a contract dispute. This limits capital movement.

But now we have Bitcoin, and we also have Ethereum, which has an unending number of synthetic fiat currency tokens which can be used as "helpers" when it comes to managing Bitcoin's Divergence Risk. These systems used together will be used to completely reshape the ≈ USD $100 trillion global OTC markets (2) in the coming years.


1. https://www.dtcc.com/dtcc-connection/articles/2020/april/15/facing-the-margin-call-tsunami
2. https://stats.bis.org/statx/srs/table/d6

If their servers go down, you won't be able to view your balance and you won't be able to create outgoing transactions.

They also know every UTXO you've ever sent or received. You couldn't develop a better way to spy on Bitcoin users if you tried.

Why Trading Bitcoin Over-the-Counter is Superior to Exchange-Traded Bitcoin

In 2009, trading Bitcoin Over the Counter (OTC) was the only way to buy or sell Bitcoin for US Dollars (USD). In 2010 Mt. Gox was promoted as one of the first venues for buying or selling Bitcoin in exchange for US Dollars, Bitcoin traded using Mt. Gox and similar facilities is called Exchange-Traded (ET) Bitcoin. What are the differences between Bitcoin OTC and ET, and why should you care? If you're like most rational people, you probably care a great deal about collecting as much Bitcoin as possible so you can preserve whatever wealth you have. Using the right market approach at the right time will help you do that.

The fundamentals: two ways to trade an iPhone for cash

The Over-the-Counter iPhone market

Let's start with a greatly simplified and tangible example. When you want to sell something that you're not using anymore, how do you do it? You have two options: one is to communicate your intention to sell your item to your friends or colleagues, maybe by sending a text message to a group chat or an email list. "Hey I'd like to sell my iPhone, would you like to buy it?". You might also write a note on paper, and pin the paper to a bulletin board at your office. These are examples of broadcasting an ask signal. If someone receives your signal and indeed is looking to buy an old iPhone, they will transmit a buy signal to you. This process is called discovery. You will agree on the price and meet to complete the trade. When you meet, this person will give you cash (or bitcoin) for your phone, and this process is called settlement and delivery. That's an OTC market.

The Exchange-Traded iPhone market

What if all of this just sounds like too much work? There are people who specialize in purchasing used iPhones, you can easily find them because they advertise their service. They will buy your iPhone from you at a low price, and then they sell it to someone else at a much higher price. These people are called intermediaries, because they position themselves between you (the seller) and the person who actually wants your old iPhone (the buyer). Intermediaries insert themselves in the discovery and the settlement and delivery processes. In an ET market there's an intermediary between the seller and the buyer.

Getting the best deal

When an intermediary is involved, it's pretty intuitive that buyers and sellers will suspect that they are not getting the best deal. And they are right. After all, the intermediary is incentivized to make as much money out of their involvement in each trade as they can. We also have a problem today where governments demand data from intermediaries; this is done so politicians can profit from information which is supposed to be private.

OTC advantages

    Best possible price for buyer and seller, due to direct negotiation
    Private, only the buyer and seller know the details of the trade

OTC challenges

    How do buyers and sellers find each other quickly and efficiently?
    How can you ensure settlement and delivery if the buyer and seller live in different cities or countries?

In general, people should prefer to trade OTC, because they get the best price possible. But in many cases it's simply infeasible to try to trade with the people who are in your immediate area, so you end up working with intermediaries who specialize in discovery, settlement, and delivery. The intermediary and all of its warts is something that people who are just trying to buy or sell their property don't really want to pay for, but have put up with for centuries. You might be wondering by now: is there some way to bring the benefits the intermediary provides into an Over-the-Counter market? Why yes, yes there is.

Trading magical internet assets

When Bitcoin emerged in 2009, people started to realize that you could do some pretty amazing things with it. It's money, but money that you can control with your own computer. It's money that cannot be silently stolen from the people who work to earn it. It cannot be stolen by politicians and those in power through counterfeiting, inflation, seigniorage, or demonetization. But it's also technology. Before Bitcoin, only wealthy people who had private bank accounts and lawyers could create conditional transactions, and this took a lot of time and involved manual labor. But now this is available to everyone with a computer and internet connection, and can be done in seconds!

Anyway, let's get back to the topic at hand: OTC trading. One very cool thing you can do with Bitcoin is you can specify that only someone who knows a particular secret can spend their bitcoin after a certain amount of time. Imagine that you agree to send someone some Bitcoin, on the condition they send you some other asset. The sequence for doing this was first outlined here.
Programmable money solves OTC Challenges

What's so great about this property of "programmable money"? You can use it to answer the most vexing problem in OTC trading, mentioned above: How can you ensure settlement and delivery if the buyer and seller live in different cities or countries? If you want to trade cryptoassets like Bitcoin or USDT, you don't need to give your money to an exchange operator. You can trade Bitcoin/USDT OTC with anyone, anytime, anywhere, just using the Bitcoin and Ethereum chains!

There's one more problem that we haven't addressed: how do buyers and sellers find each other quickly and efficiently? For that, we can use another software and network. You can use chat groups or email lists. But ideally this is a network which is optimized for trading OTC, just as bittorrent is optimized for file sharing. The first network built for this purpose is SIBEX, which was first released in November 2019.

Q: Will the be support for margin trading in the future?

A: How would you do margin trading on SIBEX now? Because SIBEX is a tool for trading P2P, you'd simply ask someone to lend you some Bitcoin, Ether, or USDT. After the terms of the loan are agreed upon and you receive the funds, you would start trading. This breaks down to:

- Finding someone you want to do business with
- Entering into a standard contract with that person
- Using the Bitcoin and Ethereum blockchains to enforce that standard contract

You already do these things when you trade one type of cryptoasset for another using SIBEX, so borrowing and lending cryptoassets is a natural next step.

 

Correct. Banks, custodial exchanges, and other organizations who do chainanalysis will reject these users and maybe even report them to the police.


You are right again. Again, there is a human third party becoming involved in your transactions.

Here is what you need to do to maintain good privacy when you use Bitcoin:

1) Always use Bitcoin Core.

2) Always use a Tor Proxy with Bitcoin Core. It's very easy to setup, it takes about 1 minute. There are many people out there linking IP addresses to Bitcoin transactions.

3) Always label incoming transactions. This is how you can separate UTXOs which may be tracked (i.e. which came from custodial exchanges or a bank) from UTXOs which are not (i.e. you bought them with cash, you sold an item or got paid directly in BTC). This is the opposite of mixing!

4) Keep UTXOs separate. Do not mix UTXOs from untrusted sources (see item #3 above).

5) Never use a hardware wallet or other product where you trust someone else with your UTXO history. Hardware wallets can be a good solution for security in some cases but are very poor for privacy.

6) If you want to get really serious and take things to the next level, you can use multisigature schemes to move UTXOs. See: https://bitcointalk.org/index.php?topic=321228.0

7) If you want to trade, use a real P2P system to move cross-chain, where the only metadata remains on-chain. *Do not* use custodial exchanges or any  product or service that touches fiat, ever!

Custodial exchanges are the antithesis of Bitcoin and cryptoassets. Why even bother with these new technologies if you're not even going to use the benefits they offer?

The list of useful trading technologies should actually be pretty short:

• Bisq
• SIBEX

Custodial exchanges are basically all grey market, as they are offering securities trading but are not licensed. Many will exit scam. All of them take your money, and can do whatever they like with it. And they have the power too easily trade against you.

I tend to agree, although I think Bitcoin is a better investment for several reasons:

Gold Advantages:

• Can't lose your private keys
• No learning curve, it just sits there
• Looks nice and feels good to the touch 

Bitcoin Advantages:

• Shipping/transport cost is much lower than gold
• Much easier to buy/sell anytime and anywhere
• Much easier to make sure it is not counterfeit

Q: How do you handle the "free option" problem?

A: The "free option" problem is when the counterparty in a cross chain atomic swap has the ability to wait for some length of time before deciding whether or not to send their funds.

In SIBEX there are always only two parties to a trade: the "Initiator" and the "Participant". Who sends their funds first? In SIBEX, the parties to the trade decide this randomly. In some trades you will be the Initiator, in some you will be the Participant. When the Initiator sends their funds, the trade has started. Now, the Participant must send their funds.

It is of course impossible to force the Participant to send their funds  
Nobody has access to the Participant's funds except the Participant! But it is in the best interest of both parties to send their funds as quickly as possible, in order to achieve the fastest possible settlement time and free up their available funds. That's exactly what using SIBEX software helps you to do. When both parties are operating sibexd (the SIBEX client daemon) in a professionally managed cloud environment, like AWS, the likelihood that this swap fails due to one of the parties unintentionally going offline becomes very small. That's one big reason why we've developed a simple AWS Cloudformation script for you to use. 

Additionally, the SIBEX Trading Interface is designed to prevent users from entering into a trade and then bailing out. Once you've committed to a trade, you're in it until it completes. This removes access to the "free option" for 99% of users.

But what about a sophisticated user, who is operating sibexd on their own hardware, and controlling their trades using the sibexd API? Can't this person take advantage of this "free option"? Yes. 

Users can always move their funds "out from under" their SIBEX client, even if they are in the middle of a trade. However, this is again where License Keys are helpful. At this embryonic stage of the SIBEX network's development this is not an issue, as most people are happy just to try trading BTC/USDT completely P2P! If this becomes a problem in the future, we can always try to find out who is doing this, and then revoke their License Key so they cannot continue to abuse the network.

Eventually, we'd like to turn the "free option problem" into a "tradeable option". But that's something for the future. 

Gold selling out, private persons are going to have trouble taking delivery:
https://newsroom.proaurum.de/pro-aurum-schliesst-edelmetall-shop-vom-23-bis-einschliesslich-25-maerz-2020/
 
https://www.handelsblatt.com/finanzen/maerkte/devisen-rohstoffe/edelmetalle-mangelware-gold-nachschub-aus-der-schweiz-geraet-ins-stocken/25672404.html?ticket=ST-511794-2IgeAmgrQz4Q730T9Yxt-ap1

Refineries in Switzerland melt 70% of all gold, all are shut down:
https://www.aargauerzeitung.ch/wirtschaft/schweiz-schmilzt-das-gold-der-welt-die-groessten-raffinerien-sind-hier-129626667

https://goldswitzerland.com/swiss-gold-refiners-cease-production-end-of-paper-market/


Limited supplies and great demand can drive prices very high. Which will be worth more in a year, Bitcoin or Gold?


 

Q: Are there some jurisdictions or regions which prohibit the use of SIBEX software or access to the SIBEX P2P network?

A: There probably are, but there are many different jurisdictions and we don't know which ones might suddenly decide that people living there should not use this software.

SIBEX AG will provide a software license to anyone who is legally allowed to do business with Swiss/Hong Kong companies. If you have licensed SIBEX software, it is your responsibility to comply with whatever additional rules you need to comply with. Some products, such as our AWS CloudFormation guide, consider infrastructure provided by other companies, and these companies might have other policies and rules. Again, it's your responsibility to comply with the terms and conditions of those services. Professional users of the software will also have different record keeping and reporting rules; those users should also comply with their professional rules and standards.

People who were facing margin calls had to sell of their liquid assets (Bitcoin and Gold) to meet their obligations. Many of these people were "professional" investors.

Now, Bitcoin is artificially cheap, and real hodlers are loading up before the upcoming massive price pump.

Q: How do I use a trading bot (for trading automation) with SIBEX?

A: Normally, you would need to go to the trouble of setting up a server of your own where your bot can live. But because you've likely already setup a personal server for SIBEX (see https://docs.sibex.io/#/guides) you can simply install your bot on that server. This is going to save you some money on server costs and it's going to reduce your attack surface. SSH into your SIBEX server (see https://docs.sibex.io/#/guides?id=using-a-keypair) and then you can configure and operate your bot directly on your server.

When you log into your SIBEX server you will have access to your sibexd API. If you are a trader, not a developer, you will want to use an API Client to save yourself a lot of time on topics like authentication, and functions like "get all orders". There is no need to re-invent the wheel. We have just such an API Client written in Go, it's available here:

https://gitlab.com/sibex/sibex-go-api-client

For examples, see the tests: https://gitlab.com/sibex/sibex-go-api-client/-/blob/develop/api_test.go

With this API client traders can comfortably "talk" to the sibexd API. If you need help you can always send a support request to our mail list: support@sibex.io or join the telegram group and ask there: https://t.me/joinchat/EXmUulWxkrE-WMxD60IAkQ

Happy algo trading 

Something to consider is price volatility on different exchanges. If your bot communication is delayed at all with the exchanges, it might get stuck holding a heavy bag when prices begin to move quickly.


A related issue to be aware of is intentional rate limiting. Some exchanges will mess with your API response timing to screw over your trades. Many algo traders have left entirely due to some of the more popular exchanges doing this.

Q: Who should trade using SIBEX software?

A: If you are used to trading on BitMex, Binance, Bitfinex, or similar "retail trading" platforms, and you expect the same experience on SIBEX, you will be disappointed. Why? These platforms are designed to encourage you to 1) deposit as much money as possible (it's their money then, not yours, and they can do whatever they want with it), and 2) trade as much as possible, as often as possible. These two things are never in a trader's best interest. These platforms treat Bitcoin as a currency, and therefore give you an FX currency trading experience. But Bitcoin is commodity money, and even has been legally designated as such in the US.

Professional commodities trading software, the kind that people who move trillions of $ worth of commodities each day use to make a living, looks and feels like something that was made in the 1990s. Probably because it was. But there's a reason it hasn't changed much: it works well and makes the people who use it enough money to make a good living.

SIBEX is the first professional commodities trading software which is available to anyone. Here's an example of what is different: the "Markets" view is where you interact with the global market for BTC/USDT.

Notice that individual offers are grouped together into tranches, so you can better understand the current environment (data from regtest):



When you click on a tranche, you will see individual offers that other people have made. Remember there is no way to fake these offers - the money must exist, because the SIBEX software queries your wallet balance and does not allow you to create offers unless you have sufficient funds to complete a trade. Here is an example of individual offers:



What is happening here is people are broadcasting offers through the SIBEX P2P network. It's like a "bulletin board system", where you create an offer, ad everyone can see it. If you want people to *not* see your offer, you can make it "dark", by choosing the "darkpool" option. This means the network sees the offer, but the user does not. This can be helpful if you want to sell a large amount of coins but don't want to affect the price.

Q: How can I have any privacy, if you are asking for personal information to get started?

A: Imagine it is 1997, and you go to a retail electronics store to buy the new Age of Empires game for your PC. You pick up the box, take it to the sales counter, give the person some cash, and you get a receipt. Then you walk out the door, go home, and install the game on your PC.

This is basically what you are doing when you use SIBEX software. However, two things change at the sales counter. The first is you don't have to pay any money for a license of SIBEX software. The second change is this: because the software publisher (SIBEX AG) is a Swiss company, and also does business in Hong Kong (SIBEX LTD), these governments ask that companies not do business with anyone who is sanctioned. So, instead of money, you need to present some personal data which demonstrate you are not a sanctioned person. Then instead of a physical copy of the software on a disk, we give you a software License Key, and you can download and use SIBEX on any machine you like. Easy!

When you first install SIBEX on your desktop or in a cloud server, you'll be asked for your License Key. That's it- there is no other connection to your identity. Nobody knows what you are doing with the software, nobody can see your balances. The only thing SIBEX AG can do is revoke that License Key. Even then, this action would not block you from accessing your Bitcoin and Ether, because SIBEX software (sibexd) is connecting to your existing Bitcoin Core and Geth APIs in order to do operations such as get those wallets' balances and broadcast raw transactions.

Since the creation of Bitcoin there have been countless Bitcoin copies. One of the more famous "Air Drops", where a coin was given away for free to a specific group of people, was done with AURORACOIN in 2014. (Auroracoin is actually a copy of Litecoin, which is a copy of Bitcoin).

The idea was to create a virtual currency for everyone living in Iceland. Like a "central bank digital currency", this virtual currency was supposed to be a replacement for cash and credit transactions of all sizes.

But it was a complete failure. The price of Auroracoin plummeted from a high of 0.1 BTC to 0.00001 BTC today, which is about $0.07. Which stores in Iceland accept it today?
Why aren't people in Iceland using Auroracoin? Anyone in the world can buy Auroracoin. Why didn't people outside of Iceland buy Auroracoin?

Icelanders each got 31 free Auroracoins. With today's exchange rate, that's about $2 for every Icelander.

Now, governments around the world are doing "air drops" of their own tokens. Soon, every person in the US will receive 1000 Trumpbucks. Maybe other governments will also do the same thing. What will be the outcome?
 
https://en.wikipedia.org/wiki/Auroracoin

Governments might try to prevent people from offering securities in the form of tokens. But this just hurts them. People will create the securities in a different jurisdiction where it is legal.