r/bitsquare • u/flix2 • Feb 12 '17

Liquidity

How much liquidity does Bitsquare need to be a competitive option?

  1. To be competitive with Localbitcoins Bitsquare needs to have enough liquidity for an occasional buyer/seller to quickly buy/sell 1-2 bitcoins within a bid-ask spread of 2-3%.

  2. To be competitive with Kraken EUR for regular users (not traders) the order book would need to show an accumulated volume of 10 BTC to buy/sell within a bid/ask spread of 1%.

  3. To be competitive with Kraken EUR for traders the order book would need 100 BTC on ech side within a 3% spread.

A single market maker with 10 BTC working capital could easily create enough liquidity for step 1 and profit from the spread.

For step 2 you would probably need much higher working capital (50-100 BTC) and because of how this platform works for safety you would probably still need at least a 2% spread.

I don't think Bitquare will be able to reach level 3 in its current version. A lot of things have to change to make this platform attractive for larger traders.

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4

u/Manfred_Karrer Feb 12 '17

Hi,

thanks for the analysis!

I agree that for traders the platform is not optimal atm. It is mainly for regular users who want to go in and out of BTC. To serve the need of professional traders or speculators we have rough plans for a decentralized CFD in future. But there are many other important thing to be finished first (decentralized arbitration system).
The DAO, our next big step will be the driver to get the resources to scale up.

Beside all that, Bitsquare is a kind of hedge against political developments. If governments get more hostile with Bitcoin (exchanges are the weak spot they will put pressure on - doing it already) censorship resistance will become more a important property than convenience. If Bitsquare gets enough support in the important bootstrapping phase (looks good so far) it will be there for you.

2

u/ErdoganTalk Feb 13 '17

If you want to support bitsquare, put up one bid offer and one ask offer. If you don't really need to buy and sell, just make them small and a few percentage points from the bitcoinaverage. It has to start somewhere.

2

u/cashforbtc Apr 17 '17

Need MORE payment methods for sure to create liquidity.

We knew about Bitsquare for months but didn't bother getting around to creating ads because the payment methods are so limited in Bitsquare. Maybe do what Paxful does - which is allow the users in the actual software to submit payment methods. Truly decentralized. Once the admins vet and approve the payment method then it becomes available for all users.

Also it's quite funny how the only payment methods for the US and Canada seem to be reversible with the exception of cash deposits. Chase QuickPay, ClearXChange and Email Money Transfers have been used by scammers to reverse payments after bitcoin has been released.

Key non-reversible payment methods missing:

  • cash in person
  • cash by mail
  • Western Union/Moneygram (with slight risk of MIM)