Bitcoin Forum

ok so bitcoin removes the middle man right?

but then who or what ensures and enforces that both parties are being honest?, isn't that the job OF a middle man to ensure security?

i encountered this problem right away when i decided to purchase some bitcoin...

if i send cash first, the's no guarantee i'll get bitcoins in return.

if i trade it in person, then at least there's a person i can beat up >.>


i mean, isn't this the very basis of government, as this 'public' third party figure, because people ultimately are unable to trust each other.

Bitcoin ensures that when you are paid that the transaction will not be later reversed.  There are varying risks when you receive a transaction but after a few seconds it can be determined to be a very low chance of the payment being reversed (due to a race attack double spend attempt), then after one confirmation (i.e., after about ten minutes, on average) there is an even lesser chance.  Then by six confirmations (average about an hour) it is mathematically certain to be non-reversible (with a lone exception of a 51% attack).

So, if you are sending cash to someone and don't trust them, consider using an escrow partner.  Or pay with credit card so you have the dispute protections.  If  you are planning on scamming someone by means of a chargeback, definitely pay with credit card and not with bitcoin because with bitcoin there is no forced dispute resolution.  [Edit: Said this way not to encourage scamming but to highlight Bitcoin's strength against a payment method that is reversible.]

If you are accepting bitcoins from someone in exchange for something of value then you can know that there is no intermediary that will extract those coins from you at a later time.

The middle man charges a large transaction fee on every transaction even the Millions of transactions they do not have to do anything with.  A middle man can also restrict how you can use the card or for that matter where you can use it.

Bitcoin takes care of the transaction.  Something else takes care of the trust.

You should get familar with the web of trust with bitcoin-otc : http://bitcoin-otc.com/viewratings.php

Also check out my blog I have two articles in this space : http://bitcoinsbs.wordpress.com/

The two (transactions and trust) can be separated but must both exist, but this up to the parties involved in the transaction to understand their part in it.

It's your job now. It's up to you to decide who you can trust, and to only send money to trusted people.

That begs the question, if people are unable to trust each other, how can they trust a third party? (Especially if that third party is someone they've never met, never talked to, never voted for, and enforces arbitrary rules on transactions while taking an exorbitant fee for their "services" which in many cases are neither requested or desired.)

The fact that they have no stake in the transaction is marginally helpful, but my main point is that in the case of escrow defecting, you have two parties telling the same story as opposed to one person's word to another's in a direct trade.