A former Virtu trader has created a platform that could help bitcoin traders in China get around a ban
Michael Oved, a former trader at Virtu, the high-frequency trading firm, founded AirSwap, a decentralized exchange, to provide a platform for buyers and sellers to meet anonymously.
It does this using smart contracts, a computer protocol based on Ethereum's blockchain technology that facilitates and enforces a contract or exchange.
"There are no user accounts and identities are hidden as trading is solely on a peer-to-peer basis," wrote Bloomberg News' Michael Leising, whose profile on Oved is worth the read.
The anonymity of the platform could subvert China's attempt to crackdown on bitcoin, according to Leising.
"It's impossible to shut down, and you don't even need an account," Oved told Bloomberg. "People won't even know Chinese traders are on the system."
Chinese regulators banned initial coin offerings, a cryptocurrency-based fundraising method. And reports suggest the country is moving forward with a wide-ranging crackdown on bitcoin trading.
While the identities of users on the platform are anonymous, their activity is not. All bid and offer prices are public to everyone on the platform. This, according to Leising, could open the door to front-running. A trader, for instance, could see that someone is going to buy a cryptocurrency at certain price and then jump in line to potentially buy it up and then sell it back to the original trader at a higher price.
"The reason this can be done on the blockchain is because a front-runner can offer to pay a higher transaction fee to have their dishonest trade verified before the honest trade," Leising wrote.