Tor Running Decentralized Bitcoin Exchange Handles Millions a Week

0

Bisq decentralized exchange, Dec 2019

There’s a DAO, there’s Tor, there’s a bitcoin node, and unlike many other exchanges that do not require AML or KYC, this one deals with fiat too.

Bisq, a little known localbitcoin like exchange is now handling $1-$2 million a week, with it at times reaching as much as $8 million.

That’s peer to peer, and unlike localbitcoin or other likewise alternatives, this one doesn’t quite have a website, it has a node.

Bisq bitcoin decentralized exchange interface, Dec 2019
Bisq bitcoin decentralized exchange interface, Dec 2019

On the surface, this looks slick, but you know it’s decentralized because it might require quite a bit of your computer resources to begin with as it synchronizes.

You can see we have a connection to nine bitcoin nodes. You can configure it to connect to your own node if you want, with these connections happening over tor.

Our internet is pretty fast, so this loads quickly and synchronizes fairly quickly too, but sometime when changing options you might need to wait a minute.

Still, it is not inconvenient to use. It’s not instant like a website, but it is near instant, at least with a decent computer and internet connection.

The software itself creates the bitcoin address, which is necessary because you can’t use this if you don’t have bitcoin as a bitcoin deposit is required for a trade.

That can be a barrier to entry, with the deposit set by the seller, ranging from 2% to 5%.

Arguably one could potentially wave this deposit requirement if the seller wanted to take the risk, but it is part of the game theory that allows this exchange to run by itself.

In an ordinary trade, a potential buyer accepts a sell offer, sends the fiat through the many payment methods available which include Alipay, the seller confirms the fiat has been sent, the bitcoin are transferred from a multisig address where they were held.

Supposing the seller does not confirm, or the buyer lies in claiming he sent the fiat, we now send this to an arbitrator.

The arbitrator makes a judgment, but does not enforce it. It’s only a suggestion. If the judgment is not followed, however, the deposit is forfeited.

This “seized” deposit goes to an insurance fund. The “innocent” party, as decided by the arbitrator, is paid not only the cheater’s deposit, but is actually paid in full through the insurance fund.

There are “signed” accounts. So if you are a new user, once you complete your first successful trade, other side being “signed” account  should sign yours. That’s kind of light rating mode. So we’re told.

Meaning you can have a reasonably good idea whether the counterparty is trustworthy in addition to the insurance fund providing some protection.

This is at the cost of around $10 per trade. This $10 goes to the Decentralized Autonomous Organization (DAO) in a roundabout way.

There’s a bitcoin based token through the Colored Coins protocol, kind of like ERC-20 tokens or like Tether, but on top of bitcoin’s blockchain.

That token, BSQ, is burned. So in line with supply and demand, if all else is equal then all BSQ holders in combination should be $10 richer.

“BSQ tokens are issued every time a contributor’s compensation request is approved through voting, and the tokens are destroyed every time a trader uses BSQ to pay trading fees,” they say.

So the token is to compensate the arbitrators with this handling around 500 trades a week, so about $5,000 worth of BSQ is burned every week.

One BSQ token is currently worth 50 cent with it unclear how many tokens there are at any one point, but it is constantly traded on Bisq.

The exchange itself is open source and has been running since 2016, but it might be attracting more interest now because Localbitcoin’s volumes have been falling following the implementation of strict identity requirements even in places like Venezuela where they might not have a passport.

Many centralized services ban countries all together, including their own country in some cases. While Bisq is more code that runs by itself through node connections.

That places it outside of ICAN and the like, making it fairly unstoppable which can be useful in places where centralized exchanges have been banned or are under a banking blockade.

It can also be useful if you want a quick buy or sell without having to go through all the signups and verification, with 16-17 year olds also potentially able to get some play bitcoin money through this decentralized exchange for steam packs or whatever else.

Making this quite interesting because through the same node-like connection you could potentially extend it to incorporate an actual real trading exchange, maybe even with margins, and potentially even stocks futures trading settled in BTC.

So making SEC’s job ever more difficult, and in this case even that of FinCen, as the cat and mouse race continues with the march of the tech revolution.

Copyrights Trustnodes.com

Comment

100000
  Subscribe  
Notify of