Ask HN: I want to create a new bitcoin Exchange.

by captaincrunch on 2/5/2013, 2:02 AM with 4 comments

I know security and trust would all be EXTREMELY important factors, but if I could get past those hurdles...

Is there room for another bitcoin exchange?

  • by redegg on 2/5/2013, 6:23 AM

    There are dozens of exchanges. None of them have the liquidity to make my time there worthwhile.

    Doing your best at security is not good enough. Bitcoinica is a good example of this. You'll need to make sure everything is locked down, or the day when you announce to your users their funds are gone awaits.

    Ability for users to easily get funds in/out of your exchange is a must. If you choose to obey AML laws, your users will curse at you for making their lives miserable. You're going to be stuck with bank wires/LR because accepting ACH is a ton of risk.

    I either go on Mt. Gox for day-trading or Coinbase for buying/selling.

  • by gus_massa on 2/5/2013, 2:30 AM

    I don't know your background, but remember to be very very very careful with the security. At lest, first read the Bitcoinica threads:

    Show HN: Bitcoinica - Advanced Bitcoin Trading Platform (515 days ago) : http://news.ycombinator.com/item?id=2973301

    Bitcoinica lost customer database, has no up to date record of trading balances (254 days ago) : http://news.ycombinator.com/item?id=4026255

    And if you still need more (yes, there is more): http://www.hnsearch.com/search#request/submissions&q=bit...

  • by speeder on 2/6/2013, 12:24 PM

    Room? Yes, there are, of course, specially if you do it better than the current ones.

    Granted, what you need, first, Security.

    Do it wrong, and you are screwed, even legally.

    Second, a way to handle fiat money, Bitcoinica famously sidestepped that because they were not a true exchange, and were more of a sort of "betting" platform.

    Some exchanges negotiate with banks, to do their thing.

    Third, making a software that is not buggy enough to be exploited.

    I know of a exchange where it was possible to withdraw USD twice (you deposit say, 1000 USD, then withdraw 1000 USD, and 1000 USD again).

    Another one, calculated your fees only after you requested a withdraw (so, suppose you wanted to transfer 1000 BTC, and the fee for withdraw was 1%, it would allow you to transfer 1000 BTC, keep the BTC, and then would set your account to -10 BTC)

    Or Bitcoinica once that had negative spreads, thus just buying and selling like crazy had outrageous profits (and outrageous losses to bitcoinica).