"A global direct Fiat-DAC exchange handling all major (more than 3 or 4) fiat currencies is not needed and will not be profitable.
Doing two trades (first your local fiat-BTC exchange, then a global BTC-DAC exchange) is cheaper. Economies of scale for fiat-crypto-exchanges require that there are as few competing exchanges as possible. Trading n fiat currencies directly against m altcoins/DACs requires n•m markets, going through bitcoin requires n+m markets. If 2(n+m)<n•m the narrower spreads of the large exchanges will make trading via the largest crypto-currency (i.e. Bitcoin) cheaper."
One of the reasons why I think that there is still space for another fiat-exchange is because the current platforms are lacking functionality and services. There are "horror-stories" circulating on reddit/bitcointalk daily; people losing their money on Cryptsy/BTER/Coinbase or how their withdrawal from 6 weeks ago did still not go through.
Personally, I prefer to work with 1 company that solely focuses on one subject (DAC) and pursues to become that best at what they are doing. There are companies like cryptsy that can be used for BTC<->DAC exchange, but personally, I think that their current platform is quite inefficient and does not offer what we intend to do and guarantee to the community.
There are obviously several more fixes that need to be done before mainstream adoption can start. We think that we can work on that and influence other start-ups as well by showing how we can bring this opportunity to the masses with new concepts and ideas.
Competition in every industry is better for the consumers: companies need to be able to compete with other companies (e.g. lower fees, more features, better support) in order to gain a proper market share. The more people that are working on making crypto-currencies easier accessible and reducing the buy-to-receive process, the better for all of us.
Because DAC's (e.g. Bitshares) are inherently different to what Bitcoin intends to do I think that a platform like this will be essential to change the public's perception of 2 different systems. Right now, altcoins mainly rely on the value of Bitcoin and they show now inherent distinction. That's what I want to change for DAC's.
The way the trading platform could function:
- All DAC's are traded against Fiat. This means that potential investors know exactly the value of which they are investing and they only have to go through 1 process to get to their investment
- We (the trading platform) created our own coin that is issued and will be used to weigh DAC's. Not really an advocate of this and I think it is inefficient.
- We will work with current or new alternatives to Bitcoin that try to fix the current problems in an elegant way. This will then be used as the "go-to" coin for DAC's. Longer process until you get to your investment, but I think that this allows the creation of a decentralized and anonymous trading platform to be built on top of ours.
We can use a mix between option 1 and option 3. For projects like Bitshares we can open up a direct Fiat exchange (could be a separate, independent market for visibility and clarity), for projects like Memorycoin we can use existent coins (with monetary value) to value the DAC.
Why are all major commodities traded in USD only?
Here we could argue about the influence of the United States on international institutes and organizations (such as the IMF), their leading economy and their dominance as a standardized world-currency (which was established after the 2nd World War). Basically, the US was the dominant figure in the world as the largest economy after the 2nd World War (compared to the British Empire and the pound sterling during the Imperialism). Because of this the United States and the US Dollar had great influence on markets and USD was used as a kind of "norm" in commodity prices and Forex.
Now we are seeing a shift away from this. Countries like China, which are on par to the US with their GDP, are using their own currency on markets.
Why did Cryptsy roll back from having direct markets between all alts to having only BTC-alt-markets?
Because it is a lot easier to value altcoins to something that has a direct monetary value. Bitcoin is exchanged against Fiat, therefor it will be a lot harder (and more inefficient) if Protoshares was traded against Peercoin instead of being valued against Bitcoin which has a clear value ($800 right now). And it would cause a lot of confusion to the market if each coin can be traded against a different set of other coins.
Why can Mt. Gox charge 5 % fees for cross-(fiat)-currency trades and get away with it?
They once were the major trading platform that allowed BTC to be bought for USD without much hassle. As more players joined the market and competition for market share started, Mt. Gox had to adapt and lower their fees.
Why are there so many BTC-altcoin exchanges but so few doing fiat-altcoin directly?
The entry barrier as a fiat-altcoin exchange is a lot higher than using already provided infrastructure (Bitcoin exchanges) to allow Altcoins to be traded for BTC. As a BTC-Altcoin exchange you do not require any specific licenses (as of now) and you won't even need a bank account or a company to get started.
As a Fiat exchange the list of requirements is much longer: You need a working bank account (preferably in several locations to lower the waiting time for Deposits/Withdrawals), an incorporated company, Licenses, AML (Anti-Money-Laundering) policies and you need to comply with the law. Obviously because of the huge demand of Fiat to Altcoin, the reward for such a company is much higher than an Altcoin-BTC exchange.
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