What is the appeal of this when the rates are so high? The fees on most exchanges are in the .4%-.6% range for low volume. If I tried to run an exchange and had to pay a 3rd party 1% of all transactions, I'd be running at a loss.
Furthermore, you can pretty much already do this by buying/selling on localbitcoins.com[1]. They provide an online wallet, escrow service, and also charge a 1%, but they don't charge a monthly fee.
I almost don't want to mention this, but it could be a "selling shovels" business model. Since they keep their $199 whether your exchange succeeds or fails, it looks like they are offloading all risk onto their resellers.
By hosting the platform, are they trying to avoid licensing/regulation? After all, they are not providing money transfer services, but are providing a platform for others to do it.
I looked into legally building an exchange in Texas, but I would have to get licensed as a money transmission company or a currency exchange company. The fees were outrageous! $2,500 application fee, $300,000+ security deposit and requires the applicant to have over $500K net worth.
The service seems to imply a business model where there are lots of little operators would open an exchange if they weren't so capital constrained such that they can't roll their own.
But how many with 500k to play around with are going to then want to pay 1 percent? Even if there are a bunch of people just waiting to sign up - then the competition is going to see their margins evaporate - with no air to breathe over and above that 1%. What else are they going to compete on besides price?
Either that or I just don't understand this business model at all. Best of luck to them though.
>I looked into legally building an exchange in Texas, but I would have to get licensed as a money transmission company or a currency exchange company. The fees were outrageous! $2,500 application fee, $300,000+ security deposit and requires the applicant to have over $500K net worth.
Doesn't it cost $30 million to get licenses in all the states that required it?
That certainly seems like a broken system. I'm not sure why there isn't a federal law or an agreement between states that one license can be used across states.
I've read that laws like this exist because of lobbying done by Western Union.
Contrasting with the EU. One license in any EU state means you can provide services across the EU.
I don't understand why they want to build a high-performance exchange engine, in Node.js. Even I wouldn't choose my language of choice, but would rather look at either Java, C/C++, hell even Go or Erlang!
Not only that but the people building it have no idea what they're getting into. I tried to provoke them into a discussion of getting some design/spec docs for the matching engine online and everyone insisted it was "obvious" until I pushed them for 20 mins.
Although this might not be the right way to do it, I think the goal of the project is to exemplify bitcoin's "distributedness" and minimize the reliance on a single exchange (ie MtGox).
"Yurii is a software craftsmanship enthusiast with 15 years of professional experience in the industry. Noted speaker in the Erlang community, a core contributor to the Elixir programming language and an eager explorer of distributed systems."
Halvm doesn't (yet!) support recent ghc versions. For high concurrency workloads the ghc rts recently got some nice improvements merged in that will make the mega scale concurrency performance story even more awesome once ghc 7.8 gets released sometime this fall
If you can do so much, why not build a bitcoin exchange directly? It's not like currency exchanges are that much a commodity for you to sell. Mmm... aren't you a bit like making excuses for not trying? ;)
No seriously, if you made a bitcoin exchange site with the same copy, that's the one I would use. Well. If I wanted to buy Bitcoin again. You know, a superhardened style, paranoid exchange. Maybe with its paranoid wallet too, dunno'. So do it.
Do I still need to get licensed as an authorized money-transmitter? Unless you're getting me around that monumental obstacle, you're solving the wrong problem.
This seems incredibly unnecessary, especially since I might actually use their exchange if they ran one. (More design chops than most of the abhorrent exchanges.)
Though an alert() is a rather inelegant confirmation...
I'm afraid this kind of scenario is doomed to failure too. The issue with individual exchanges has been a lack of standardized security and hardware configuration. Many exchanges get broken into and bitcoins get stolen.
The issue with something like bex.io is that now we have many different exchanges, but all running on the same provider. Suppose that bex.io is able to put the best security around their systems. It still will possibly only take one vulnerability to get inside hundreds or thousands of exchanges.
Further, instead of DDoSing one or two exchanges like mtgox and btc-e but leaving the rest of the ecosystem free for trading, it only takes one massive DDoS against bex.io in order to take down hundreds or thousands of exchanges in one go.
The language its written in isn't as important as the fact that its open source. If we get an environment of several open-source exchange engines that can be hardened by their respective communities, we get security. (Yes, individual instances are susceptible to bad server configs...).
By having relatively easy to setup OSS exchange systems, we get distribution.
People have complained that mtgox is a problem because its the largest extant exchange. At least its a single point of failure that only affects btc and money on its systems. Something like bex.io is going to lead to catastrophic losses across any number of customers as soon as they start becoming a target for nefarious people.
DOSS attacks can be overcome with a solid infrastructure like Cloudflare (expensive but possible) and also with the help of modern browser capabilities such as webRTC and offline cache.
Services like cloudflare do nothing for API's, which is the core part of any exchange system. Browser technologies have nothing to do with building out secure, distributed trading systems.
You're mistaken about that. APIs cannot benefit from something like CloudFlare. You need the connection to be live to the backend at all times, which isn't how proxy caches work. They take over serving content when the load is high.
High exchange fees.
Little info about what it is built on.
Suspect timing (and likely too short of a build time)
Likely to have regulation issues in the near future especially if lots of people do it.
Furthermore, you can pretty much already do this by buying/selling on localbitcoins.com[1]. They provide an online wallet, escrow service, and also charge a 1%, but they don't charge a monthly fee.
[1] https://localbitcoins.com/cash_exchange_howto