Nowadays we can buy and sell bitcoins through the exchanges or some centralized platforms (e.g., localbitcoins.com). Usually The exchanges will ask for your identification and the platforms will hold your bitcoins before the trade starts. It’s not so reliable for your privacy or the safety of your coins.
We are planning to build a P2P market in
YardWallet with multisig escrow. And these are the steps:
- The sellers can post advertisements in the market. They will set the price, payment methods and other necessary information.
- The buyers choose a seller in the market and send him/her the buying request with amount.
- The seller can accept the request and escrow bitcoins into a 2-of-3 multisig address which is generated by 3 keys. One is held by the seller, one by the buyer, the last by our platform. Any 2 of them can transfer the escrowed bitcoins.
- Now it’s safe for the buyer to complete the payment to the seller because the escrowed bitcoins can’t be transferred only by the seller.
- Once the seller receives the payment, he/she will release the bitcoins to the buyer and the trade is completed.
What if the buyer or the seller want to scam?
- If the buyer claims to have completed the payment who actually not, the seller can start a dispute to get support from the platform. We’ll ask the buyer to send us the evidence about the payment. If there’s no evidence or response the seller will get back the escrowed bitcoins with his/her key and the platform’s.
- If the seller doesn’t release bitcoins in time after receiving the payment, the buyer can start a dispute to get support from the platform. We will check the evidence about the payment that the buyer provides. Once we confirm the payment, the buyer will get the escrowed bitcoins with his/her key and the platform’s.
With these measures, the sellers can hold bitcoins in their local wallet at ordinary times. Only when a trade is started the seller needs to escrow bitcoins which will be jointly controlled by the seller, the buyer and the platform instead of only by the platform. So it’s much safer for the bitcoins and more convenient than the centralized platforms.
What do you think? Any suggestion is heavily appreciated. Thank you.
