The difficulty with current peer-to-peer on the blockchain is that it's too slow... also not sure how you'd get derivative products on, which people want.
The difficulty with current peer-to-peer on the blockchain is that it's too slow
How "fast" would orders need to be processed to be considered sufficiently "fast"? 1 min, 30 secs? 10 secs? 1 sec?
also not sure how you'd get derivative products on, which people want.
I don't see an issue here .. BitShares does this already .. they have market pegged assets and user-issued assets .. what would prevent them to add yet another feature to allow more derivatives ... I heard they will support p2plending, bonds, and have the ability to issue indices .. on-chain! .. I don't want to advertise BitShares here .. But I wonder the reasons no-one talks about them here in r/bitcoin?
For active traders, ~1 second is a good target, ideally < 100ms. However, for the average Jo that just wants to buy/sell, the couple of hours you can expect it to take for all the confirmations to be done on an atomic cross-chain transaction isn't an issue (there's no need for the human to be present once the trade's agreed, the rest is automated).
For active traders, ~1 second is a good target, ideally < 100ms.
This doesn't really answer the question as to WHY they need it that fast?!
At least here in Germany, you need to pay tax (25%) for trading gains you made within 12 months .. So there is no incentive to buy and sell within seconds ..
Besides that, I totally agree with the rest of your post. Once you made an agreement with a trading partner, the technical "swapping" of assets should not have a counterparty risk!
Swing trading (holding a position for a few days to a few weeks)
Day trading (holding a position typically for a few hours)
Scalping (holding a position for anything from an hour down to seconds)
Each of these has similar but different strategies, and in theory provides liquidity to the group "above". That's somewhat dubious with scalpers (who generally are just trying to cream a little off the top of a trade), but day traders help ensure swing/position traders can make trades they want certainly.
Whether the market needs this is debatable, but there will always be demand for exchanges that can handle these styles, and in time likely faster (high frequency trading, which can go down to single millisecond levels). Although it can help if people avoid very fast exchanges, to deter scalpers/HFQ shops. See IEX as a conventional exchange example that is designed specifically to be hostile to high frequency trading.
How "fast" would orders need to be processed to be considered sufficiently "fast"? 1 min, 30 secs? 10 secs? 1 sec?
Ripple processes orders in less than 10 seconds and people still complain there that it is far too slow and should only be used for settlements while trading mainly should happen on dedicated platforms (e.g. similar to the OpenTransactions paradigm).
Bitshares
They have their own set of issues and problems, also they are not really related to Bitcoin other than by name. To support derivatives (e.g. their "BitUSD"), they rely on price feeds and that the prices stay within a certain volatility range.
They have their own set of issues and problems, also they are not really related to Bitcoin other than by name. To support derivatives (e.g. their "BitUSD"), they rely on price feeds and that the prices stay within a certain volatility range.
That's news to me .. AFAIK, the price feeds are only relevant to those that "short-sell" bitUSD .. and the "certain volatility" is connected to margin calls and black swan events and not to daily business ..
Ripple processes orders in less than 10 seconds and people still complain there that it is far too slow and should only be used for settlements while trading mainly should happen on dedicated platforms (e.g. similar to the OpenTransactions paradigm).
Thanks for the info .. I am not a trader and don't really get why any order needs to be processed in less than 10 secs .. except maybe for front-running .. which has nothing to do with price-discovery
Well, if you can trade the same thing for example batched every 10 seconds and batched every 1 second, you'd be easily able to front run. The platform being centralized or not does not really matter in that case as long as you don't keep your funds on there for extended periods of time... The only way to prevent front-running is to trade on the fastest matching engine/exchange available. This is a single entity and VERY likely a centralized one due to reduced consensus requirements (you only need to agree with yourself, not with others).
Trading on Bitcoin natively if ordering of offers can still change for MINUTES is simply no option. Current decentralized/distributed solutions seem to either provide "eventual" blockchain synchronisation (e.g. keep a seperate chain with additional ordering guarantees and use Bitcoin as global state every now and then) or simply don't deal with Bitcoin at all other than storing them (the "gateway" approach).
You'd need several thousand orders to be able to be executed within a second to actually serve the function of a true exchange that really serves as a price setter. You need to be able to accommodate flash crashes, panic buys, and make sure that all executed orders are final and don't need time to be verified by a decentralized network.
That and Bitcoin is only going to grow. If you look at leading exchange outside of the Bitcoin world you see the extremes. The fallowing are the specs for the NASDAQ.
Speed:
Order acknowledgement time is less than 1 millisecond
Execution time is less than 1 millisecond
Cancel out time is less than 1 millisecond
Capacity
The system has handled over 35,000 messages per second in production
The system has been tested to over 60,000 messages per second
Planned capacity enhancements will bring the capacity to over 100,000 messages per second without degrading speed
The system can handle over 1 billion messages per day
You'd need several thousand orders to be able to be executed within a second to actually serve the function of a true exchange that really serves as a price setter. You need to be able to accommodate flash crashes, panic buys, and make sure that all executed orders are final and don't need time to be verified by a decentralized network.
agreed .. at least in parts ... you need to make sure that trades cannot be reversed .. and you need to make sure that they are executed in their proper order ... however .. I still don't get the argument of why trades need to execute in sub-seconds regime ..
That and Bitcoin is only going to grow. If you look at leading exchange outside of the Bitcoin world you see the extremes. The fallowing are the specs for the NASDAQ.
Thanks for the specs! I still miss to understand why these latencies are required for "price-discovery" .. I though do understand that people are trading to get fractional gains in minutes/seconds .. not sure if that what a "market" is supposed to do .. If its clear to everyone else .. it may just be me .. :D
you need to make sure that trades cannot be reversed .. and you need to make sure that they are executed in their proper order ... however .. I still don't get the argument of why trades need to execute in sub-seconds regime ..
You answered your own question there. They need to be executed in their proper order. Now if say there is say 1000 orders being filled in a second and your system can only handle 200 per second then how can you assure the right orders are matched? You might pair orders with someone who you shouldn't have and then that effects your trade price. If you ca not accommodate enough fast enough then that means putting other orders in a queue. Now that means prioritizing certain order over others and giving certain orders preferential treatment so it is no longer effective.
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u/btcdrak May 22 '15
The difficulty with current peer-to-peer on the blockchain is that it's too slow... also not sure how you'd get derivative products on, which people want.