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Author Topic: Why CETx is needed for FOREX EMULATION  (Read 3706 times)

SwissAlps

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Why CETx is needed for FOREX EMULATION
« on: October 31, 2014, 06:25:58 am »

Forex and CETx, this is huge, needs a thread by itself...

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SwissAlps

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Re: Why CETx is needed for FOREX EMULATION
« Reply #1 on: November 03, 2014, 07:28:30 am »

Let's start with the beginning, a list of the currencies that would be considered by the NXT FOREX PROJECT :

Code: [Select]
Argentine Peso         ARS
Australian Dollar AUD
Bahraini Dinar         BHD
Bermudan Dollar         BMD
Bolivian Bolinviano BOB
Botswanan Pula         BWP
Brazilian Real         BRL
British Pound         GBP
Buglarian New Lev BGN
Canadian Dollar         CAD
Chilean Peso         CLP
Chinese Renminbi CNY
Colombian Peso         COP
Czech Koruna         CZK
Danish Krone         DKK
Egyptian Pound         EGP
European Euro         EUR
Filipino Peso         PHP
Honduran Lempira HNL
Hong Kong Dollar HKD
Hungarian Forint HUF
Icelandic Krona ISK
Indian Rupee         INR
Indonesian Rupiah IDR
Israeli Shekel         ILS
Jamaican Dollar         JMD
Japanese Yen         JPY
Jordanian Dinar         JOD
Kenyan Shilling         KES
Korean Won         KRW
Kuwaiti Dinar         KWD
Malaysian Ringgit MYR
Mauritian Rupee         MRO
Mexican Peso         MXN
Moroccan Dirham         MAD
New Zealand Dollar NZD
Nigerian Naira         NGN
Norwegian Krone         NOK
Pakistani Rupee         PKR
Panamanian Balboa PAB
Peruvian Sol         PEN
Polish Zloty         PLN
Russian New Rouble RUB
Saudi Riyal         SAR
Singapore Dollar SGD
South African Rand ZAR
Sri Lankan Rupee LKR
Swedish Krona         SEK
Swiss Franc         CHF
Taiwanese Dollar TWD
Thai Baht         THB
Turkish Lira         TRY
U.S. Dollar         USD
Uruguayan Uruguaya UYU
Venezuelan Bolivar VEF
Zambian Kwacha         ZMW

If you use a currency that is not in this list, or if you see an error, please say it here.
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monsterer

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Re: Why CETx is needed for FOREX EMULATION
« Reply #2 on: November 03, 2014, 01:34:37 pm »

What is CETx?

You can't have Forex without pegged assets.
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jl777

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Re: Why CETx is needed for FOREX EMULATION
« Reply #3 on: November 03, 2014, 03:26:01 pm »

Forex and CETx, this is huge, needs a thread by itself...
i was planning on a NXT forex project next year, I missed this CETx description. Do you have more details?
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SwissAlps

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Re: Why CETx is needed for FOREX EMULATION
« Reply #4 on: November 04, 2014, 06:50:32 am »

Forex and CETx, this is huge, needs a thread by itself...
i was planning on a NXT forex project next year, I missed this CETx description. Do you have more details?

Hi James,

The CETx is not necessary for the implementation of the NxtForex, but it would allow trustless exchange of NXTEUR versus NXTCHF, for example. You can see the full description here : https://nxtforum.org/index.php?topic=6032.0
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SwissAlps

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Re: Why CETx is needed for FOREX EMULATION
« Reply #5 on: November 04, 2014, 06:57:57 am »

What is CETx?

The CETx is not necessary for the implementation of the NxtForex, but it would allow trustless exchange of NXTEUR versus NXTCHF, for example. You can see the full description here : https://nxtforum.org/index.php?topic=6032.0

You can't have Forex without pegged assets.

It is a very common misconception, people have a very hard time grasping the intrinsic concept of value, in general, and in particular when applied to currencies (and Forex). You can have a currency without pegging assets to it, the USD is an example.
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monsterer

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Re: Why CETx is needed for FOREX EMULATION
« Reply #6 on: November 04, 2014, 12:16:33 pm »

The CETx is not necessary for the implementation of the NxtForex, but it would allow trustless exchange of NXTEUR versus NXTCHF, for example. You can see the full description here : https://nxtforum.org/index.php?topic=6032.0

This is not a description, this is a list of features. We still don't know what it is.

Quote
It is a very common misconception, people have a very hard time grasping the intrinsic concept of value, in general, and in particular when applied to currencies (and Forex). You can have a currency without pegging assets to it, the USD is an example.

Yes, but the USD is centrally controlled by the US government. In a free market you need another way.

Cheers, Paul.
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SwissAlps

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Re: Why CETx is needed for FOREX EMULATION
« Reply #7 on: November 05, 2014, 06:59:54 am »

The CETx is not necessary for the implementation of the NxtForex, but it would allow trustless exchange of NXTEUR versus NXTCHF, for example. You can see the full description here : https://nxtforum.org/index.php?topic=6032.0

This is not a description, this is a list of features. We still don't know what it is.

Quote
It is a very common misconception, people have a very hard time grasping the intrinsic concept of value, in general, and in particular when applied to currencies (and Forex). You can have a currency without pegging assets to it, the USD is an example.

Yes, but the USD is centrally controlled by the US government. In a free market you need another way.

Cheers, Paul.

Hi Paul,

You are right when you say that https://nxtforum.org/index.php?topic=6032.0 shows a list of features of CETx.

It is just a proposal, the features are very simple to understand, and with a few examples, I show how we could use it.

The implementation would provide a very simple basic building stone for client programs.
For the moment, nobody knows if it will and if it can be implemented in the core.
Probably devs will analyze this, when they have time, and decide about it.

 
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monsterer

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Re: Why CETx is needed for FOREX EMULATION
« Reply #8 on: November 05, 2014, 09:31:50 am »

Hi Paul,

You are right when you say that https://nxtforum.org/index.php?topic=6032.0 shows a list of features of CETx.

It is just a proposal, the features are very simple to understand, and with a few examples, I show how we could use it.

The implementation would provide a very simple basic building stone for client programs.
For the moment, nobody knows if it will and if it can be implemented in the core.
Probably devs will analyze this, when they have time, and decide about it.

Can you ELI5 - what is CETx?
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SwissAlps

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Re: Why CETx is needed for FOREX EMULATION
« Reply #9 on: November 06, 2014, 05:17:15 am »

Hi Paul,

You are right when you say that https://nxtforum.org/index.php?topic=6032.0 shows a list of features of CETx.

It is just a proposal, the features are very simple to understand, and with a few examples, I show how we could use it.

The implementation would provide a very simple basic building stone for client programs.
For the moment, nobody knows if it will and if it can be implemented in the core.
Probably devs will analyze this, when they have time, and decide about it.

Can you ELI5 - what is CETx?

Yes, very easy (For non english natives, ELI5 stands for Explain Like I'm Five).

CETx stands for Compound Entry Transaction

This means a single transaction contains 1-n debits and 1-n credits.
The total of the debited amounts must be equal to the total of the credited amounts.

This is how it works in standard accounting.

For the Nxt world, I have twisted it a bit by allowing using NXT and/or assets and/or MS (the new Nxt currencies) in the same transaction. Also, for people that are only Five, they would not like this credits and debits thing, so I have replaced them by + and -

For example, if you want to give to Paul 10, to John 5 and to Mary 1, you will have one - and three + in the same transaction. The total of the + amounts and the total of the - amounts is the same, 16.
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monsterer

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Re: Why CETx is needed for FOREX EMULATION
« Reply #10 on: November 06, 2014, 09:14:55 am »

Yes, very easy (For non english natives, ELI5 stands for Explain Like I'm Five).

CETx stands for Compound Entry Transaction

This means a single transaction contains 1-n debits and 1-n credits.
The total of the debited amounts must be equal to the total of the credited amounts.

This is how it works in standard accounting.

For the Nxt world, I have twisted it a bit by allowing using NXT and/or assets and/or MS (the new Nxt currencies) in the same transaction. Also, for people that are only Five, they would not like this credits and debits thing, so I have replaced them by + and -

For example, if you want to give to Paul 10, to John 5 and to Mary 1, you will have one - and three + in the same transaction. The total of the + amounts and the total of the - amounts is the same, 16.

Ok, thanks for the explanation. So these are like standard transactions (which also have multiple inputs and multiple outputs), except that you can have different currencies in each slot?

How do you ensure this transaction occurs atomically?
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alxx77

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Re: Why CETx is needed for FOREX EMULATION
« Reply #11 on: November 06, 2014, 11:09:53 am »

"How do you ensure this transaction occurs atomically?"

An appropriate transaction type must exist in nxt core...??
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SwissAlps

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Re: Why CETx is needed for FOREX EMULATION
« Reply #12 on: November 07, 2014, 05:54:10 am »


Ok, thanks for the explanation. So these are like standard transactions (which also have multiple inputs and multiple outputs), except that you can have different currencies in each slot?

How do you ensure this transaction occurs atomically?
Hey, I did not know that a standard transaction can have multiple inputs and multiple outputs, where is it in the current clients ?  how do we do that ?
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monsterer

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Re: Why CETx is needed for FOREX EMULATION
« Reply #13 on: November 07, 2014, 04:31:06 pm »

Hey, I did not know that a standard transaction can have multiple inputs and multiple outputs, where is it in the current clients ?  how do we do that ?

Sorry, I was thinking of bitcoin. Seems NXT doesn't work that way.
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SwissAlps

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Re: Why CETx is needed for FOREX EMULATION
« Reply #14 on: November 11, 2014, 03:57:47 pm »

"How do you ensure this transaction occurs atomically?"

An appropriate transaction type must exist in nxt core...??
For the moment, it is not implemented.

If it is one day implemented, I believe it will have one specific transaction type in the core for the CETx header and another one for the CETX line.

I do not know what you mean by "atomically"; the entire CETx is valid as soon as all individual CETx lines have been posted, and match exactly what figures in the CETx header; the header can be seen as a kind of contract that will be fullfilled by different individuals posting their individual lines (only when there is a '-' sign).

Note the good thing about it, everything is trustless, even for very complex transactions !

The deadline should normally not be too far in the future, it seems that there is a non negligible computing cost for open transactions (they speak about it in the Shitstorm thread).
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monsterer

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Re: Why CETx is needed for FOREX EMULATION
« Reply #15 on: November 11, 2014, 04:05:17 pm »

I do not know what you mean by "atomically";

Well, you're talking about transferring assets of one kind for assets of another (which isn't possible, so you have to go via NXT), so there are must be two operations involved?

In addition, I really don't know how you expect the core developers to consider your proposal for adding this new system when your assets rely on a central authority or market maker to control the price?

The market maker would have to be built into the core as well.
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SwissAlps

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Re: Why CETx is needed for FOREX EMULATION
« Reply #16 on: November 12, 2014, 07:31:13 am »

Well, you're talking about transferring assets of one kind for assets of another (which isn't possible, so you have to go via NXT), so there are must be two operations involved?
Yes, that is exactly what one of the CETx examples shows :  https://nxtforum.org/index.php?action=post;quote=122655;topic=6032.0;last_msg=126974

In addition, I really don't know how you expect the core developers to consider your proposal for adding this new system when your assets rely on a central authority or market maker to control the price?
The market maker would have to be built into the core as well.
We are not speaking here about quotations. When we start a new CETx by creating a CETx header, each participant has already agreed to the terms of the contract (amounts, currencies, etc...).
Market makers, etc..., are part of another story.

I really don't know how you expect the core developers to consider your proposal...?
I expect nothing, I am just showing how it would function and what benefits we could get from it; I have no idea about core developers schedules, I suppose that they are tight and may be they just do not see as I do the benefits of this thing. This "atomic" thing is not needed when you use CETx (well, as I said, I do not know "atomics").
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NxtFreak

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Re: Why CETx is needed for FOREX EMULATION
« Reply #17 on: December 04, 2014, 09:13:45 pm »

I`m an economist so let me explain a bit. Actually FOREX isn't centralized nor decentralized, it's actually a hybrid system, because inbetween smaller parties it's centralized but there is always a clearing house/MM that will collect the small orders and execute them with big orders, this is why price delay/lagg etc will happen, and this is why CFD's are used to trade FX because it cant be a direct exchange as there will be always some price lagg between 2 exchanges no matter how well it's synced.

With NXT it's very much different as here obviously you can't execute anything until the system isn't in sync, i mean each block has it's prev block's information or something like that (as i understand) so the whole system is always in sync, except your client is not, but the system is. Also you can't arbitrage.

So you don't need CFD's here, because there is no lagg between parties, the entire system looks like centralized, yet the orders inbetween are decentralized, you just put the BUY/SELL and it executes instantly, there is no need for MM to carry the risk, or be the backstop of a lagg/price sudden drop/crash situation. You just buy and sell the item and it will execute at it's fair price. Also there is no manipulation (like in FX there is a lot of manipulation).

The one way i imagine to do this is to just simply make the quote NXT/EUR for example, and then it will execute on the fair price from the NXT side, but the party that holds the EUR, will carry the risk of the fiat currency's side (since even the NXT system is perfectly synced, the EUR is not) so someone must always hold the risk of lagg on the fiat currency side, and that one will be the one which hold's it until the last (at a NXT/EUR buy the seller is the risk holder, and vice versa).

Of course you need a real bank account to hold the EUR and reglementation ,etc etc, it wont be that much anonymous once you add real money into the game, but it's a nice concept and definitely worth exploring.

Offtopic: Damn i would really like to see a NXT/JPY quote i would buy the sh*t out of it, considering the inflation in Japan  :D
« Last Edit: December 04, 2014, 09:22:05 pm by NxtFreak »
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SwissAlps

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Re: Why CETx is needed for FOREX EMULATION
« Reply #18 on: December 19, 2014, 07:53:20 am »

I`m an economist so let me explain a bit. Actually FOREX isn't centralized nor decentralized, it's actually a hybrid system, because inbetween smaller parties it's centralized but there is always a clearing house/MM that will collect the small orders and execute them with big orders, this is why price delay/lagg etc will happen, and this is why CFD's are used to trade FX because it cant be a direct exchange as there will be always some price lagg between 2 exchanges no matter how well it's synced.

With NXT it's very much different as here obviously you can't execute anything until the system isn't in sync, i mean each block has it's prev block's information or something like that (as i understand) so the whole system is always in sync, except your client is not, but the system is. Also you can't arbitrage.

So you don't need CFD's here, because there is no lagg between parties, the entire system looks like centralized, yet the orders inbetween are decentralized, you just put the BUY/SELL and it executes instantly, there is no need for MM to carry the risk, or be the backstop of a lagg/price sudden drop/crash situation. You just buy and sell the item and it will execute at it's fair price. Also there is no manipulation (like in FX there is a lot of manipulation).

The one way i imagine to do this is to just simply make the quote NXT/EUR for example, and then it will execute on the fair price from the NXT side, but the party that holds the EUR, will carry the risk of the fiat currency's side (since even the NXT system is perfectly synced, the EUR is not) so someone must always hold the risk of lagg on the fiat currency side, and that one will be the one which hold's it until the last (at a NXT/EUR buy the seller is the risk holder, and vice versa).

Of course you need a real bank account to hold the EUR and reglementation ,etc etc, it wont be that much anonymous once you add real money into the game, but it's a nice concept and definitely worth exploring.

Offtopic: Damn i would really like to see a NXT/JPY quote i would buy the sh*t out of it, considering the inflation in Japan  :D
Hi NxtFreak,

Thanks for these nice explanations...

and what about the NXT/RUB these days ?
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