A Proposal for Bisq + Social Trading: My Thoughts and Ideas

So quite a while ago, I made a proposal Bisq. It got rejected, and to be honest, I don't blame them. I had an overarching goal to make a social trading integration within the Bisq platform and allow for this great use of blockchain tech and a decentralized financial ecosystem. It was all fairytales, and bliss, except for one thing. How will this possibly work?

In this article, I want to talk a bit about the idea, its architecture and what social trading is in general. I also want to reiterate a key important detail. What are some ways you can make a privacy-preserving or anonymized social trading platform? In fact, is the concept of social trading or copy trading incompatible with privacy and anonymity?

Social Trading is the concept of allowing others to copy your trades, and in some instances or platforms, a commission might be involved (depending on financial regulations, the platform, and your country's jurisdiction). The concept of social trading has become much more popular over time in finance, and it is what allowed for powerhouses like eToro or Darwinex to exist.

That being said, the idea of social trading can be quite intriguing. It feels empowering in the world of finance that there is an idea of a nobody becoming a well-recognized quant. After all, in a fair market system where many of the rules aren't rigged, it feels like the best mathematician should be the clear winner when it comes to algorithms or figuring out the market.

What enticed me about Bisq is that it is one of the platforms that I believed was a truly decentralized exchange and ecosystem. Its code is open source, it utilized P2P market pricing and stability, and it was direct wallet to wallet. There wasn't really a centralized entity, or a signup, and it ran with BTC nodes. Most importantly, since it is open source, anybody can audit the code.

Something that really pushed me was the idea of combining the free market philosophy behind Bitcoin with the financial empowerment that I thought a concept like social trading could bring. This is why the proposal was originally conceived.

From the proposal, here is what was said in relation to the privacy preservation involved for a social-trading concept:

Integrations for privacy and privacy preservation are of the outmost importance. That is why instead of just focusing on reputation, one must also focus on numerous privacy layers in regards to reputation. Currently, even given the P2P compatibilities and the difficulty to store data without sacrificing privacy, comes new ideas centered around tackling these issues. These issues can not be tackled in a way that isn't decentralized or doesn't make sense through the lens of technological compatibility.

As mentioned, privacy preservation is of the outmost importance. While, transactions are still hashed on Bitcoin's blockchain, there are still other layers of privacy that can be integrated beyond this. This is especially true in relation to preservation of trade history or other related data.

An example integration can be an anonymity layer or custom sidechain, that focuses on preserving and hashing data or being like a secondary shield. This can be custom coded and built as a P2P decentralized feature with no central authority or database.

Numerous data and validation mechanisms can be put into place. This includes how Bisq already completes market orders, as well as variations of privacy-preserving transnational escrows for different forms of trades. Instead of over-complicating the solution, the focus should be on technological protocols that don't integrate a form of data collection, but do integrate a form of data shielding and encryption without actually storing the data.

The same formalities can apply to reputation. There could be voting mechanisms given profiles are anonymous. However, taking this a step further, if one properly integrates various forms of transnational escrows and already shields data, then reputation shouldn't be an issue. If you can rank trades anonymously and also not push invalid trades through, then that is already the primary focus. Bisq already does a great job in many of these things, but integrating extra layers of privacy while having something such as social trading, can really reiterate both the privacy-preserving and network compatibilities that make Bisq a great contender.

There needs to be further clarification on this, and the architecture that a privacy-preserving mechanism should have. If you Intergate a hashing layer, how will all that data be hashed? What will be the resulting computing power? What about a simple cryptographic layer? Is data sharding to be involved? All these questions or potential explanations need further clarification.

Anonymity layers and data validation mechanisms also need further explanation. The potential for social trading within the blockchain is there. Doing so in a privacy-preserving manner might be possible. In regards to how, there are multiple potential routes to go to for a solution on the table.