MetaLair FAQ: Answers to frequently asked questions about MetaLair
On the MetaLair decentralised exchange who holds the users’ currency?
Users hold their own bitcoins, litecoins, other cryptocurrency and fiat. This is a significant step change as users no longer need to trust our exchange. In the first three months of 2014 alone two exchanges have frozen users funds or forced them to take a ‘haircut’ and two have filed for bankruptcy taking all users’ funds with them.
What are the benefits of decentralising an exchange?
In addition to allowing users to hold their own cryptocurrency and fiat the design is resilient to distributed denial of services attacks – a form of attack that is used on exchanges to lock out its users and manipulate price. The MetaLair decentralised exchange cannot be attacked in this way.
How is MetaLair different to other services like Coloured Coins, Master Coin, Ethereum and Ripple?
Coloured Coins, Master Coin and Ethereum do not solve the two major issues that the MetaLair decentralised exchange addressees.
Firstly, these systems transact units or coins on the same blockchain, these units or coins have been uniquely marked (or coloured) to represent a unit of trade such as a USD. So these systems only enable you to transact for the same currency: Coloured Coins can only be swapped for other Coloured coins; Master Coin can only be swapped for other Master Coin and Ethereum can only be swapped for other Ethereum. None of these exchanges can transact with other blockchains. Our decentralised exchange is able to let a user trade between cryptocurrencies across blockchains, so for example they can swap litecoins for bitcoins securely.
Secondly, trust is still required as users who buy a Coloured Coins, Master Coin and Ethereum that represents for example USD still need to redeem that coloured coin with a central authority to get their USD. On the MetaLair decentralised exchange users hold all their own fiat and cryptocurrencies, removing the need for trust entirely.
Like Coloured Coins, Master Coin and Ethereum Ripple does not allow any cross blockchain exchanges, users swap IOUs against the value of a common currency called ripples. The Ripple system relies on many separate centralised authorities, called ‘gateways’, with which users redeem these ripples for their currency of choice such as USD. This creates an issue of trust as gateways may become insolvent and unable to honour their debts. The MetaLair decentralised exchange bypasses this issue entirely as users hold their own fiat and cryptocurrency at all times.
What does the user see when they download MetaLair?
Users will be provided with a piece of software that is the first true multicurrency wallet for both fiat and cryptocurrencies. This wallet can be downloaded and run locally or securely in a ‘lite’ form from a web browser. Crucially we are able to run it in a web browser whilst maintain absolute security for users’ private keys.
What else can the user do from the multicurrency wallet interface?
In addition to allowing users to spend their currencies it will also act as the one stop interface for all users’ trading needs: allowing users to securely manage all their Bitcoin, Litecoin, cryptocurrency and fiat trading. Users will also be able to choose from a number of third party services, such as future contracts, spread betting and derivatives by downloading plug-ins to support additional training activities they may wish to undertake.
How will MetaLair attract users and grow?
On centralised exchanges users are separated into islands where they can only trade with other users on the same exchange. The MetaLair decentralised exchange allows anyone with a cryptocurrency wallet to trade. This means we can rapidly accumulate a large userbase with a very low barrier to entry: there is no complicated sign up, KYC or AML, all a user needs to do is download our multicurrency wallet and link it to their current wallet file(s), then they are ready to start trading.
Why don’t MetaLair have to be AML and KYC compliant?
Under international law AML and KYC applies to any company handling funds directly. Because we never hold funds directly we sidestep all current regulatory requirements across all global territories reducing the legislative burden on our operations.
How much will it cost to build the hardware trading infrastructure for MetaLair?
Virtually nothing. Unlike other exchanges we have virtually no hardware related costs: because the system is decentralised it uses the computers of all the users on the decentralised exchange, reducing our start-up and running costs to near zero, allowing us to build a global exchange infrastructure from a very small corporate footprint.
How will MetaLair Make money?
There are a number of ways we can make money, we have not yet settled on a specific business model, however we believe if positioned correctly we will be able to attain the highest userbase of any exchange or wallet on the internet because anyone with a cryptocurrency wallet can easily become a user with a very low barrier to entry to our exchange.
Will any of the software be open source?
Yes, all the exchange mechanism and the multicurrency wallet will be released totally open source: this instils a huge confidence boost in the technology from the community as anyone can see how the MetaLair decentralised exchange works. Some third party plug-ins may remain closed source; however this is at the discretion of the particular vendor.
Does releasing open source not damage MetaLair’s market share?
We don’t believe so as evidence would suggest the opposite for our style of business operation: Bitcoin’s market share has not been damaged by being open source – it has had exactly the opposite effect. We believe the trust instilled in the community by making the workings of our system totally open source is a qualitative customer draw that no other business process can match.
How will MetaLair benefit Bitcoin and other cryptocurrencies?
One major global barrier to cryptocurrency adoption is that user cannot easily get hold of bitcoins, litecoins or other cryptocurrency. When launched MetaLair will significantly lower this barrier as users are then able to swap any fiat currency such as USD, CNY, EUR for cryptocurrencies, with any user, anywhere, in a safe and trusted environment.
Do other exchanges protect users from double spend attacks?
None that we know of, in fact this form of attack is problematic to other exchanges and has been used successfully on a number of occasions to steal funds from them. MetaLair protects its users from double spend attacks.
Why can’t other people design a decentralised exchange like MetaLair?
The MetaLair decentralised exchange is built from some non-obvious solutions, just as Bitcoin would have been completely feasible in the 90’s the underlying technology was not figured out until 2008. Likewise the MetaLair decentralise exchange uses some non-obvious proof of work mechanisms to ensure transactions on the network are reliable and trustless. This is intellectual property which is unique to us and we wish to exploit for the benefit of all.
Where is MetaLair Based?
MetaLair is a start-up based at the University of Sussex in Brighton, UK.