Professional Bonding Service

[Ringmasta]

Would there be interest in a BTC bonding service?  As in, a deposit is paid by BTC professionals or sellers, then a small monthly maintenance fee is paid.  If they fail to deliver goods and/or cause damages of some sort while performing a service and then drop off the face of the earth, remuneration can be paid from the bond.  Just like any sort of professional liability bond, only specifically for the BTC community.  I've got a pretty decent idea of how this would easily operate, though I'd probably have to get some people better-known-than-me to be involved to give it some legitimacy.

I haven't seen anything like this, only per-transaction escrows, which get expensive if you do a lot of trading.  This could seriously cut down on that sort of expense.

[Vod]

You'll go bankrupt as soon as someone runs away with a large amount.

[blakdawg]

I think it's an interesting idea, but I wonder if anyone really cares, given the dismal level of self-protection BTC users have displayed to date.

To be meaningful, the bonds would need to be issued by an entity with some sort of credibility. For me, personally, that means that it'd need to disclose its ownership, management and corporate structure, and its capital reserves so that it would be clear that it could pay out on the bond if necessary; and it'd need to be located in a US jurisdiction (CA would be my favorite, since that's where I am, and have easy access to the courts).

Also, I'd want a way to know that the bond hadn't been oversubscribed, so to speak - if someone's sold $1M worth of product backed by a $10K bond, well, that's not much comfort.

Given the funny-money numbers that get thrown around about profits, etc., the bond company would need to have some pretty good capital to back it - it sounds like BFL, for example, is up into the millions in pre-order dollars collected, so the bond company would need to have a pretty large fraction of that in available cash to back BFL's promises, if BFL defaulted.

And it'd take some pretty good due diligence/background investigation to bring the costs of the bond low enough anyone would use it - you don't want to put your millions on the line if you're only getting paid a few thousand, unless the people buying the bond have other assets that could be used to satisfy your lawsuit against them in the event of default, or unless you can satisfy yourselves that the risk of nonperformance really is low.

When I've bought bonds or looked into bonds (not "investment" bonds, but fidelity or performance bonds) they've usually been for relatively low values, and the prices have been pretty low, and the due diligence has been minimal or nonexistant. Last time I looked, I think I could pay a couple hundred dollars per year for a few tens of thousands of dollars of coverage against employee theft/dishonest, for example. A notary bond in CA is usually around $60 USD for 4 or 5 years of $25K coverage, if I remember correctly.

You'd also likely need to be licensed as an insurance company to offer the product, assuming you're going to be "above the radar". If this is some sort of black-market secret-squirrel we-don't-need-no-stinking-badges libertarian paradise free market bond company . . . don't bother. I don't need one anonymous, untraceable, un-sueable entity to give me protection against default on the part of some other anonymous, untraceable, un-sueable entity.