One of the major shortcomings in the history of Bitcoin is the amount of fraud and scams happening. We can argue about how much of an extent this is really happening, of course.
But that is not what this thread is about. Even in a fairly civil part of the economy, the classifieds and merchant businesses we should try to minimize the impact fraud has on the perception and potential use of Bitcoin.
So I want us to brainstorm on ideas of how a fraud insurance could be implemented.
Maybe bitpay has something to say, maybe anybody else has a suggestion.
Here is the first pitfall I would like to discuss: The reason insurance claims work in the big world of finance out there is because of the legal system and it's support for legal tender. If the fraudsters can be prosecuted it becomes much easier for the insurance company to remain profitable. So we have two options here:
-) Rely on the existing legal system
The preferable option, but, sadly there are no stunning success stories so far.
-) Devise our own system (This is the realm of crack-pot darknet anarchism, you know decentralized republica and for hire "task forces")
or maybe you have a better idea which can work in the world of ordinary people too?