Towards better consumer protection in bitcoin

[Syke]

What makes you say that security for cards is awful? The only time I had issues with one was with a debit card loaded with bitcoin.

The private key is 16 digits printed on the front of the card. There is no security whatsoever!

[1715021709]

1715021709

[achow101]

What makes you say that security for cards is awful? The only time I had issues with one was with a debit card loaded with bitcoin.

The private key is 16 digits printed on the front of the card. There is no security whatsoever!

Not only that, but the name, expiration date, and security code are all there for anyone to see. All it takes is a cashier or waiter with a good memory (or just good stealth skills) to remember those details and use the card online to buy stuff.

[belcher]

I'm calling out the entire ecosystem. Consumer protection would have to be implemented in wallets, payment processors, marketplaces and most other services. I'm guessing it would look like something along the lines of the bip70 payment protocol.

Why does arbitration have to be built into a BIP? If people want it, as you and I have both said, any service provider can offer it with current functionality. So I think the discussion is at an end there because I don’t think you’ll disagree with that statement.

I'll just say thought that everything else you say sounds like you want to implement control over bitcoin. Leave bitcoin as it is and let consumers choose what gets implemented through natural processes. BIP70 sounds like it’s intended simply to further identity tracking and it sounds like a horrible idea for bitcoin. I’m sure some of your altcoins have that functionality built in. Bitcoin doesn’t need it built in in any form.


People who talk about getting rid of governments don't generally sit and think up ways to govern things. You're talking about governing. If you really believed there was a market for it, then you would write some code and try to sell your service. That's my challenge to you. Go do it with bitcoin as it is today. Go make some money and support bitcoin in the way that you're so passionate about, which seems to be arbitration and identity tracking. Only, let consumers choose.

This is total BS. There's nothing in my thread about collecting ID information or anything resembling governance. All arbitration is voluntary.

[Itoo]

I'm calling out the entire ecosystem. Consumer protection would have to be implemented in wallets, payment processors, marketplaces and most other services. I'm guessing it would look like something along the lines of the bip70 payment protocol.

Why does arbitration have to be built into a BIP? If people want it, as you and I have both said, any service provider can offer it with current functionality. So I think the discussion is at an end there because I don’t think you’ll disagree with that statement.

I'll just say thought that everything else you say sounds like you want to implement control over bitcoin. Leave bitcoin as it is and let consumers choose what gets implemented through natural processes. BIP70 sounds like it’s intended simply to further identity tracking and it sounds like a horrible idea for bitcoin. I’m sure some of your altcoins have that functionality built in. Bitcoin doesn’t need it built in in any form.


People who talk about getting rid of governments don't generally sit and think up ways to govern things. You're talking about governing. If you really believed there was a market for it, then you would write some code and try to sell your service. That's my challenge to you. Go do it with bitcoin as it is today. Go make some money and support bitcoin in the way that you're so passionate about, which seems to be arbitration and identity tracking. Only, let consumers choose.

This is total BS. There's nothing in my thread about collecting ID information or anything resembling governance. All arbitration is voluntary.

You're right. I should have read your post and BIP70 more carefully. I see now that you're making a case for someone to step up and do a better job of offering arbitration services using the existing infrastructure.

I'll read more carefully in the future. After re-reading your post and BIP70, I was arguing out of misunderstanding and I sincerely apologize.

When I get a chance I'll got to bitrated and check out their services, and I'll be thinking about your advice as well.

[belcher]

Thanks for clarifying. It's not very often on the internet that people put their hands up and say they erred.

[BellaBitBit]

Bitcoin does have a way to implement better consumer protection. It's called multisig. The idea being that a special kind of bitcoin address is created from three keys. If any two of the private key-holder, the money can be moved. So to create a robust consumer protection model you give the buyer, seller and an arbitrator each one key. The buyer pays into the multisig address, if the buyer receives the service and is happy, her and the seller can both use their private keys to send the money to the seller. If they can't agree then the arbitrator can use her private key to tie-break and distribute the money as they see fit. Also the arbitrator can't steal the money on his own as they only have one key, so they don't need to spend time and money on security.

I like this paragraph and would be happy with this for my merchant activities.  Because arbitration is new for some of us coming from Ebay and Etsy it would help people feel more comfortable if we know that arbitrators would only have one key and there was no possibility of arbitrator theft.

I like many of the points you made and this issue needs a lot of attention as we are starting to see the first decentralized marketplace options appearing.

It is so important for the consumer AND merchant to feel comfortable doing business if we want more adoption. Whoever nails this first will have the most successful marketplace.

[belcher]

Bitcoin does have a way to implement better consumer protection. It's called multisig. The idea being that a special kind of bitcoin address is created from three keys. If any two of the private key-holder, the money can be moved. So to create a robust consumer protection model you give the buyer, seller and an arbitrator each one key. The buyer pays into the multisig address, if the buyer receives the service and is happy, her and the seller can both use their private keys to send the money to the seller. If they can't agree then the arbitrator can use her private key to tie-break and distribute the money as they see fit. Also the arbitrator can't steal the money on his own as they only have one key, so they don't need to spend time and money on security.

I like this paragraph and would be happy with this for my merchant activities.  Because arbitration is new for some of us coming from Ebay and Etsy it would help people feel more comfortable if we know that arbitrators would only have one key and there was no possibility of arbitrator theft.

I like many of the points you made and this issue needs a lot of attention as we are starting to see the first decentralized marketplace options appearing.

It is so important for the consumer AND merchant to feel comfortable doing business if we want more adoption. Whoever nails this first will have the most successful marketplace.

On the contrary, I believe customers are very used to arbitration in Ebay and Paypal. They don't call it that word but they know they can get their money back if the deal goes bad.

It takes more than a marketplace to make smart contract escrow easy. All bitcoin wallets need to be integrated into the system too, for a 2-of-3 style multisig the customer's wallet needs to send it's public key to the arbitrator somehow.
We saw how long it took wallets to be able to send to p2sh addresses, having them all adopt this pubkey-sending thing will probably take a similar time.

[BellaBitBit]

Bitcoin does have a way to implement better consumer protection. It's called multisig. The idea being that a special kind of bitcoin address is created from three keys. If any two of the private key-holder, the money can be moved. So to create a robust consumer protection model you give the buyer, seller and an arbitrator each one key. The buyer pays into the multisig address, if the buyer receives the service and is happy, her and the seller can both use their private keys to send the money to the seller. If they can't agree then the arbitrator can use her private key to tie-break and distribute the money as they see fit. Also the arbitrator can't steal the money on his own as they only have one key, so they don't need to spend time and money on security.

I like this paragraph and would be happy with this for my merchant activities.  Because arbitration is new for some of us coming from Ebay and Etsy it would help people feel more comfortable if we know that arbitrators would only have one key and there was no possibility of arbitrator theft.

I like many of the points you made and this issue needs a lot of attention as we are starting to see the first decentralized marketplace options appearing.

It is so important for the consumer AND merchant to feel comfortable doing business if we want more adoption. Whoever nails this first will have the most successful marketplace.

On the contrary, I believe customers are very used to arbitration in Ebay and Paypal. They don't call it that word but they know they can get their money back if the deal goes bad.

It takes more than a marketplace to make smart contract escrow easy. All bitcoin wallets need to be integrated into the system too, for a 2-of-3 style multisig the customer's wallet needs to send it's public key to the arbitrator somehow.
We saw how long it took wallets to be able to send to p2sh addresses, having them all adopt this pubkey-sending thing will probably take a similar time.

Arbitration is only working for buyers at this point with Ebay and Paypal and many buyers are privy to this and taking advantage of sellers (sorry, too much time on the Ebay seller message board). Chances of winning a case against a buyer are slim these days and it is just easier to refund and take the loss rather than have Ebay get involved with a process that takes FOREVER.  Buyers sometimes do not even contact sellers on ebay before opening a case which in turn hurts the seller.  I appreciate what you are saying but for sellers on ebay there is no arbitration.  

[belcher]

I see, I have no experience with selling on ebay.

[Redrose]

Chargebacks are something really good. They make you being aware, and don't make you think that you live in a paradise world. If you're dumb enough to send your coins to a pure scam, you don't merit them.

[belcher]

I don't think dumb people deserve to lose their money.

A lot of people in the world are dumb, if they get their money stolen when using bitcoin but have protection when using credit cards, they will use the latter.

Not to mention scams are usually more about information asymmetry than actual stupidity. We know a lot of very smart people lost money at MtGox. (Which chargebacks wouldn't have solved)

[Cryddit]

Look at it this way.

If dumb people lose their money when dealing in Bitcoin, then most people won't be able to use Bitcoin.  Because most people, even people who aren't dumb as a rule, are dumb at least twice a month. 

If most people can't use it, then by definition it never reaches mainstream adoption.

It's a valid problem.  The solution however, is far from obvious. 

[HeroCat]

Better consumer protection in bitcoin can be problem only after BTC confirmation time is not more than 1 - 2 minutes. Shops will not wait 24 hour time untill BTC complete transaction is finished. 

[belcher]

Better consumer protection in bitcoin can be problem only after BTC confirmation time is not more than 1 - 2 minutes. Shops will not wait 24 hour time untill BTC complete transaction is finished. 

Multisig escrow can be implemented in Lightning Network transactions, so that would provide instant confirmations.

But right now for most commerce over the internet, the 10 minutes block time is not a problem.

[alani123]

What makes you say that security for cards is awful? The only time I had issues with one was with a debit card loaded with bitcoin.

The private key is 16 digits printed on the front of the card. There is no security whatsoever!

If you lose your card, you're not going to lose any money as it's going to be taken care of by your bank. Whereas if the private key of a bitcoin address you're using to store bitcoin leaks, your money will be stolen with a non-reversible transaction.

[Syke]

If you lose your card, you're not going to lose any money as it's going to be taken care of by your bank.

The bank takes care of it by taking the money from the merchants, who now raise their prices to offset the fraud. You now get to pay higher prices for everything because credit card fraud is so pervasive. You think you're getting "protected", but really you're just paying for it up-front in fees and higher prices.

[alani123]

If you lose your card, you're not going to lose any money as it's going to be taken care of by your bank.

The bank takes care of it by taking the money from the merchants, who now raise their prices to offset the fraud. You now get to pay higher prices for everything because credit card fraud is so pervasive. You think you're getting "protected", but really you're just paying for it up-front in fees and higher prices.

That's more or less a myth. The percentage of CC transactions related to fraud is tiny, look it up. Sure there are merchants whose business model puts them at a high risk for such fraud but those are also a tiny percentage of the market. The assertion that all prices are jacked up because of fraud is a vast generalization at best or a fabricated myth at best.

[Carlsen]

If you lose your card, you're not going to lose any money as it's going to be taken care of by your bank.

The bank takes care of it by taking the money from the merchants, who now raise their prices to offset the fraud. You now get to pay higher prices for everything because credit card fraud is so pervasive. You think you're getting "protected", but really you're just paying for it up-front in fees and higher prices.

That's more or less a myth. The percentage of CC transactions related to fraud is tiny, look it up. Sure there are merchants whose business model puts them at a high risk for such fraud but those are also a tiny percentage of the market. The assertion that all prices are jacked up because of fraud is a vast generalization at best or a fabricated myth at best.

At the moment, when a bank raises its fees I think it's due to the economic situation in general.
The interests are low, so they search other ways to increase their income. I don't think that fraud cc transactions have much to do with that.

[belcher]

Bump

An interesting detail for how to do 2-of-3 multisig escrow in Lightning Network: https://lists.linuxfoundation.org/pipermail/lightning-dev/2016-January/000403.html

That would allow consumer protection for off-chain payments that don't need to wait for confirmations.

[ronafurw]

Can't do it. That breaks the decentralized concept and ruins the system. Yes, there are many people that have at least one issue and lose coins within their crypto lifetime. This can only be controlled by their knowledge. Some sites provide things like escrow, but that is not within the coin code and can never be.