Chargeback in Bitcoin, good or bad?

[Hazir]

We all know that chargebacks are useful for limiting scams. Say: you buy something online on eBay with PayPal and the seller won't ship it to you, PayPal will take funds from the sellers. account and gives you back the money.

This improves the eBay economy and credibility, because people know that their risk factor is very little and are more willing to purchase items from uncertain shops/sellers.

With Bitcoin you are always afraid to sell your coins because if you do it, you lose it forever. I understand that Bitcoin is designed for responsible users in mind.

But this 'no chargeback' feature will be hard to accept for masses of people in the future. I know that it is possible to modify bitcoin and add chargeback functionality: but is it needed?

[sherbyspark]

I don't think not having chargebacks that a stares away a lot of people from bitcoin. Digital goods will also have some kind of a problem on bitcoin chargebacks, just like Paypal limits it. For people who wish to trade can always be extra careful , or only trade using an escrow. Chargeback is usually initiated in cases mostly involving a scam. With bitcoin that can always be limited using an escrow as currently Paypal escrows are not possible.

[jl2012]

I know that it is possible to modify bitcoin and add chargeback functionality

How?

[AgentofCoin]

With BTC, we are all basically going back to a "gold standard",
but with a modern day processing/clearing house (blockchain).
BTC is a form of "digital gold".

How can there be an ability for "chargebacks" when you are basically paying in gold? (In theory)
"Chargebacks", IMO, can only exist in a credit system, which Bitcoin/bitcoin claims to be against.

Bitcoin/bitcoin is a payment system for a gold standard currency,
not a credit system with reserve banking and payment reversals.

[S4VV4S]

I know that it is possible to modify bitcoin and add chargeback functionality

How?

That is indeed an excellent question.
AFAIK, once a transaction is registered in the blockchain that is that.

So I will repeat what jl2012 asked....

HOW?

[ebliever]

There is no need for chargebacks built into bitcoin. That would just provide more opportunities for scammers to perform acts of theft.

Responsible businesses that want to last will refund customers when circumstances warrant. You'll just provide your public key and they'll send your payment back.

Keep in mind that most forms of payment today don't have chargeback capability. You can't retrieve the cash you used at the convenience store with a chargeback, but that doesn't stop lots of people from paying with cash. And businesses in general have proven to be reasonable about accepting returns and listening to complaints and provided refunds where warranted.

[LiteCoinGuy]

the good thing with bitcoin is: you can add chargeback option ON TOP of bitcoin. no problem. you choose which service you want to create.

[MakingMoneyHoney]

I know that it is possible to modify bitcoin and add chargeback functionality

How?

Isn't there a way to put the money into an if/then statement, like is discussed in this video:

https://youtu.be/4nOfHpOFhN8

Then you could put a statement, if that doesn't happen, the money gets sent back to the original address?

[ebliever]

I know that it is possible to modify bitcoin and add chargeback functionality

How?

Isn't there a way to put the money into an if/then statement, like is discussed in this video:

https://youtu.be/4nOfHpOFhN8

Then you could put a statement, if that doesn't happen, the money gets sent back to the original address?

And how does the computer know if something has happened or not? Outside purely digital phenomena this approach requires an honest human agent to be at the controls. (And even with digital phenomena it would be vulnerable to hacking at the weakest point(s).)

[erikalui]

I did not ever know about PP chargebacks until I saw it on this forum. Ebay is ridiculous and I will never deal with them as earlier I thought they use Paisapay which is better than PayPal but then I realized that they only allow PP transactions for goods in USD and other currency.

Bitcoins should never be like PP although I agree than sometimes it could help to get back money from frauds but it would also work in the favor of the scammer. The best thing about BTC is that it is never chargedback nor have I heard anyone's account getting closed/freezed for any reason.

Chargeback is not needed by any processor. Even banks don't chargeback then why these online payment processors do?

People lose their bitcoins mainly by downloading a malicious software and if they use paper wallets or an offline wallet, there wouldn't be any case of a scam. In case of chargebacks, it can easily work in favor of the buyer whereas the seller (if genuine) would suffer.

[StevenS]

The feature you are looking for is called "escrow". It can be implemented with multiple-sig (2 of 3) in Bitcoin.
In your PayPal example, there is a trusted 3rd party (PayPal.com). Both the sender and receiver trust them to handle disputes, making a human decision to let the receiver keep the money or giving it back to the sender.

Bitcoin doesn't have a trusted 3rd party built into the system, but one can be used at any time. This is called escrow.

In this system, the sender uses multi-sig (Please correct me if I have the mechanism or terminology wrong.) to send a payment to a destination that needs 2 of 3 signatures to send it to the final destination. the 3 signatures are the sender, the receiver, and the 3rd party (escrow company). The receiver will put the first signature on the transaction that sends the money to himself, but he needs a 2nd signature to receive it. When the sender receives the merchandise in the mail, he can add his signature, which gets the money to the receiver (merchandise seller).

If the sender (merchandise buyer) does not receive the merchandise, he will open a dispute with the escrow company asking for his money back. If the dispute is resolved in his favor, then he and the escrow company sign a transaction the sends the money back to him.

On the other hand, if the seller (receiver) does not receive his bitcoin in a reasonable time, he can also open a dispute with the same 3rd party.

tl;dr Bitcoin doesn't need to be changed, it already has this feature.

[jl2012]

I know that it is possible to modify bitcoin and add chargeback functionality

How?

That is indeed an excellent question.
AFAIK, once a transaction is registered in the blockchain that is that.

So I will repeat what jl2012 asked....

HOW?

Technically it is not impossible to include chargeback in the protocol. However, it's just a very stupid idea because it will never achieve what it intends to achieve.

If the payer is able to reverse a transaction without the permission of the payee or any trusted third party, no merchant will deliver goods as a customer may reverse the transaction after delivery.

If the payer is able to reverse a transaction within certain time period, say 10 days, no merchant will deliver goods within 10 days for the same reason. If the customer tries to reverse the transaction, the trade is simply cancelled. If the customer does not try to reverse the transaction, he will lose the chargeback protection and may or may not be scammed.

So just stop arguing to have chargeback in bitcoin protocol.

[Amph]

everyone here is escaping from paypal chargeback and you want to add it to bitcoin? no way, i want bitcoin to remain irreversible

maybe it can be added via sidechain for merchants only, if they really need it for adoption, in the future

[jl2012]

everyone here is escaping from paypal chargeback and you want to add it to bitcoin? no way, i want bitcoin to remain irreversible

maybe it can be added via sidechan for merchants only, if they really need it for adoption, in the future

If you are talking about PP chargeback then you don't need any protocol change. We already have bitpay doing the same thing with bitcoin

[PolarPoint]

No chargebacks is a feature of bitcoin. No need to add a chargeback option into the Bitcoin protocol. A third party marketplace site can implement chargeback or use an escrow.

[Amph]

everyone here is escaping from paypal chargeback and you want to add it to bitcoin? no way, i want bitcoin to remain irreversible

maybe it can be added via sidechan for merchants only, if they really need it for adoption, in the future

If you are talking about PP chargeback then you don't need any protocol change. We already have bitpay doing the same thing with bitcoin

yeah but i think the op is talking about a system that deal with bitcoin only, between privates for example(goods for btc ecc...)

[jl2012]

everyone here is escaping from paypal chargeback and you want to add it to bitcoin? no way, i want bitcoin to remain irreversible

maybe it can be added via sidechan for merchants only, if they really need it for adoption, in the future

If you are talking about PP chargeback then you don't need any protocol change. We already have bitpay doing the same thing with bitcoin

yeah but i think the op is talking about a system that deal with bitcoin only, between privates for example(goods for btc ecc...)

I explained why this is a stupid idea: https://bitcointalk.org/index.php?topic=1032946.msg11146097#msg11146097

It is stupid not because we want to escape from chargeback. It's because it won't offer any benefit to both customers and merchants.

[sana54210]

If chargeback is to be done it should be under a centralized system to monitor it and give it a fair dispute as a third person, I think Bitcoin is the best as it is right now, people can use escrow to avoid any scams

[needmoney]

Bitcoin doesn't need chargeback use escrow

[erikalui]

If chargeback is to be done it should be under a centralized system to monitor it and give it a fair dispute as a third person, I think Bitcoin is the best as it is right now, people can use escrow to avoid any scams

In case of PayPal chargebacks, even an Escrow cannot help as a chargeback can occur till 180 days of the transaction. Chargebacks of gift cards also cannot be handled by an Escrow. Escrow only helps to complete a transaction and he cannot help if there is a chargedback later whether bitcoins/PP or any other payment processor.