Gini Decentralized Cryptocurrency Exchange

The Problem

The biggest problems that cryptocurrencies are supposed to fix are:

(1) the highly centralized fiat money supply;

(2) the highly concentrated economic power that plagues the fiat banking system;

(3) the corruption of the monetary system that leads to dysfunctional economies and political oppression.

One cryptocurrency team after another since 2008 has claimed that their cryptocurrency would liberate humanity from the tyranny of gigantic, monopolistic banks and oppressive governments. Yet, 10 years later, all the cryptocurrency markets are even more centralized and concentrated than the fiat banking system.

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Cryptocurrency Exchanges Are Highly Centralized. Today, the entire cryptocurrency universe revolves around a tiny handful of cryptocurrency exchanges. These crypto exchanges are highly centralized, for-profit corporations, which have become extremely powerful monopolies. In the U.S., there are only two substantial exchanges that enable users to convert fiat to cryptocurrency. (The same situation exists in most other countries.) This essentially positions these for-profit corporations as central banks at the center of the entire cryptocurrency universe.

Cryptocurrency Exchanges Are Now King-Makers. These centralized exchange corporations now have the power to pick and choose winners in the crypto markets. Specifically, they can arbitrarily determine which cryptocurrencies will be available to the general public; and if you don't pay them a large sum of money (typically between $100,000 to $1 million) to list your cryptocurrency with them, they will simply ignore you.

Governments Have Total Control Over Centralized Cryptocurrency Exchanges. As for-profit corporations with enormous control over other people's money (just like gigantic fiat banks), these corporate cryptocurrency exchanges are now highly regulated by several governments. Currently, humanity's only relatively safe and cost-effective option to participate in cryptocurrency markets is to give our money and trust to highly centralized, for-profit corporate exchanges whose owners often conceal their identities and hide in the shadows. So, of course some government regulation is good in this context because it prevents some of the most egregious crimes that have been perpetrated by corporate cryptocurrency exchanges in the past.

However, the regulation of these exchanges has given governments total power over them. On multiple occasions, governments have forced exchanges to indiscriminately hand over tens of thousands of private user accounts to potentially corrupt politicians and bureaucrats who may or may not have your best interests in mind. The Gini book documents many more egregious examples of governments abusing their power to attack individual citizens. So, this is a very real threat.

It's Difficult for Non-Technical Humans to Obtain Cryptocurrencies. Ten years after Bitcoin's birth, it's still nearly impossible for the average, non-technical human to buy cryptocurrencies beyond the options offered by a tiny handful of centralized cryptocurrency exchanges. Why? Because these exchanges force people to go through a bunch of tedious, privacy-destroying steps just to open an account. Then the accounts are restricted to a tiny number of options. And overall, the exchange user interfaces are not as user-friendly as they could be. These factors are a significant barrier to wide-spread cryptocurrency adoption.

We Have Traded One Tyrant for Another Tyrant. Our nonprofit AngelPay payment processing company serves many thousands of for-profit merchants today; so, we certainly understand and appreciate people who want to make money. However, when central banks, quasi-central banks, and corporate monopolies position themselves at the center of all economic activity throughout an entire economy and use their power to extract fees and arbitrarily pick winners and losers in the marketplace, that is real economic oppression. Anybody participating in the cryptocurrency markets today has simply traded one tyrant (government-controlled central banks) for another tyrant (corporate-controlled central banks). Thus, humanity is no closer to true economic freedom today than we were when Bitcoin was first released in 2008 during the 2008 financial crisis, which was caused by highly centralized and concentrated economic power.

Centralized Cryptocurrency Exchanges Do Not Operate for the Public Interest. These for-profit exchange corporations have a strong economic incentive to encourage high-volume and automated speculative trading because they receive transaction fees for every trade that occurs on their exchanges. This means they have no meaningful incentive whatsoever to impose any meaningful rules that would reduce all the market manipulation that occurs on their exchanges. Moreover, like virtually all other cryptocurrency teams today, they hide behind the ideological shield of laissez-faire economics and Libertarianism to avoid taking any substantive action that would reduce the market manipulation and create more stability in any of the cryptocurrency markets. (Please visit the online Gini School of Economics for important context on this point.)

Rampant Market Manipulation. The two charts below illustrate how huge crypto whales can dominate and disrupt the entire market. The buy/sell walls represent massive amounts of cryptocurrencies that the buyers/sellers will unload on the market if the price hits their price targets.

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Below is a video of "Spoofy," which is an automated A.I. bot manipulating the Bitcoin market in real-time.

What's the Real Purpose of Cryptocurrency Markets Today? We can clearly see that a single trader is able to completely dominate the entire Bitcoin market; and the same thing happens in all cryptocurrency markets today. These crypto whales, professional market manipulators, and superhuman A.I. bots can employ all kinds of predatory tactics (e.g., bear raids, wash trades, spoofing, pump-and-dump, front-running inside the centralized exchanges, and many more) to extract money from unsuspecting traders and destabilize markets whenever they want. This creates massive volatility, which makes it impossible to use any of the existing cryptocurrencies in real-world commerce. What's the point of all of this? To make a few crypto oligarchs and centralized corporate exchanges filthy rich and to concentrate millions of user accounts into a tiny number of choke points for governments to control.

All These Problems Are Philosophical Governance Problems, Not Technical Problems. These problems are not caused by any technical or legal barriers; it's a philosophical barrier. The teams behind these cryptocurrencies and exchanges have broken incentives and ideological blindness, which makes it impossible for them to ever fix any of these significant problems. (See the Gini School of Economics for a deeper analysis of the philosophical and ideological issues.)

Humanity is Still Waiting for Solutions. While existing cryptocurrency markets are mutating into new and even more powerful systems of economic oppression and political tyranny, the rest of the planet continues to wait for a cryptocurrency team that is serious, trustworthy, willing and able to fix all these problems. That's why Gini was born.

Please jump to the Gini Solution section and view Gini's realistic and practical solution to all these problems.

The Gini Solution

If you haven't read The Problem section and the Gini School of Economics Introduction, please read those first. That will give you a deeper understanding of why the following solutions are the only realistic way to fix the problems that plague the cryptocurrency markets today.

What Does Economic Freedom Look Like? If humanity had a reliable, safe, decentralized, peer-to-peer currency exchange that enabled market participants to easily buy/sell crypto and fiat currencies directly with one another without any middlemen, then there would be no need for the cryptocurrency universe to be dominated by any centralized exchanges at all. There would be no need for any potentially corrupt government regulation in the cryptocurrency markets because there would be no centralized entities to regulate. There would be no need for centralized corporations or governments to demand your ID and passport simply to exchange value directly with other humans. There would be no need or legal justification for governments to interfere with the direct, peer-to-peer exchange of value between market participants. That's what true economic freedom looks like.

A Decentralized, Peer-to-Peer Exchange is Resistant to Tyranny. All democratic countries have some kind of constitution that protects an individual citizen's right to engage in private transactions with other individuals. Politicians in those countries would likely never attack their citizens' right to engage in direct peer-to-peer trade because that would cross the line into the most extreme form of economic and political tyranny. That kind of extreme tyranny would have many far-reaching and long-term political and economic consequences inside their countries. No politician within a democratic country would be able to endure that kind of political pressure for long.

Gini's Decentralized, Peer-to-Peer Market Exchange. For all the reasons above, Gini is building a fully decentralized, peer-to-peer cryptocurrency exchange. This works like peer-to-peer file-sharing, but instead of exchanging files, Gini stakeholders exchange currencies. The Gini Exchange is designed to be very user-friendly; so, even your grandmother could learn to exchange value with other Gini stakeholders without too much difficulty. A screenshot of the Gini Exchange prototype is below.

Gini-Exchange-buyer-mode-med-res-ginifoundation.org

The Gini Exchange Has Many Important Advantages. The Gini Exchange is designed to resolve all the significant problems that plague all the centralized cryptocurrency exchanges today. Below is a partial list of features:

No central authority can steal or lose anybody's money.
A.I. bots and professional market manipulators cannot manipulate the Gini Exchange market because transactions are executed directly with other peers on the exchange at the time of their choosing.
The Gini Exchange is designed to be a safe and easy way to exchange fiat or other cryptocurrencies directly with other humans. (What about high-frequency trading?)
Crypto-to-crypto transactions are completely anonymous and private. No central authority (not even the Gini Foundation) can peek into your Gini Exchange account. (What about crypto-to-fiat and vice-versa?)
The timing of the release of crypto or fiat funds to the transacting parties is controlled by the parties at all times.
All transactions are protected by automated smart contracts and/or cryptographically secure escrow features, which prevents fraudulent trades.
No human intervention from the Gini Foundation occurs unless one or both of the transacting peers requests direct arbitration of a dispute.
It's unnecessary for governments to regulate the Gini Exchange because there's no central authority controlling other people's money.
It's technically impossible for governments to regulate the Gini Exchange because there's no entity to regulate; the transacting peers do not transact through any centralized server or company. The Gini Exchange software connects them directly to each other just like peer-to-peer file sharing software.
Individual users always retain complete control of their own currencies in their own accounts.
The Gini Foundation does not charge any exchange fees for Gini currency transactions; so, our incentives are aligned with the best interests of all Gini Exchange market participants.¹
The Gini Exchange will include the option to purchase precious metals (gold and silver) directly from small- to medium-sized mining companies in the developing world without any middlemen. This is a huge benefit for the poor communities where these companies operate and it's a great way for buyers to obtain precious metals more affordably than they could find it at retail stores.

The Gini Exchange is an exciting project. We hope the partial list of features above gives Gini stakeholders hope that there truly is a realistic path forward to fix the problems that plague the cryptocurrency markets today. We still have a lot of work to do before the Gini Exchange is available to the general public, but we are fully committed to making true economic freedom a reality for Gini stakeholders and this project is a crucial component of Gini's mission.

To be alerted when we reach important milestones, please follow Gini on Twitter and/or join the Gini Newsletter.

Notes:

1. Of course, there are still Gini blockchain transaction fees just like in Bitcoin and virtually all other cryptocurrencies because every crypto and fiat market must be economically sustainable, which means they must be governed by supply and demand forces. But Gini's blockchain fees are substantially lower than Bitcoin's and all other major cryptocurrencies today. The only time there is any fees associated with the Gini Exchange is if a transaction requires arbitration support from the Gini Foundation. In this case, a small fee to offset Gini staff resource consumption is charged to the losing party in the dispute. This also creates an incentive for parties to treat each other fairly and to avoid any potential malicious behavior.