So bob wants to buy 100 usd of bitcoin from alice lets say.
So Bob deposits 100 usd in btc (to prevent himself from extorting from alice)
And Alice advances 100 usd in btc for the purchase plus 100 usd deposit
Now Alice is out 200 Bob is out 100 locked into an escrow that each of them has 50% control. They agreed that the time limit is 2 weeks. If this time limit expires they both destroy the escrow resulting in loss for both parties. Since that cant be prevented they must work together.
Now Bob sends 100 in cash via western union. Note this is the first time in history WU can be used trustless without an escrow agent or laws tacitly as a deterrent.
Once Alice gets the 100 she is still -100 because of her deposit and advanced payment. Bob is -200 because his deposit and cash advance.
Now they release escrow since they agree the deal is complete. Bob gets his deposit back and 100 usd in btc and Alice gets her deposit back so now she has 100 usd in cash in exchange for her btc. The sale of btcoins is complete. Both parties are happy and nobody needed a government or third party looming over the deal. And more importantly, at no point could Bob or Alice steal from this deal or try to lie to the other because if they had they both would have lost.
Lke ive said before as well deposits dont always have to be equal to the value. They can be 10% the value since any deposit in this deal would be a net loss for a thief. However make the deposits high is best when dealing with an untrusted party. You deposit thus reflects your level of trust.
It certainly is a neat solution to the problem of trust-free exchange. But it does leave open the question, "why would a seller
and a buyer agree to making security deposits? What's wrong with eBay's Trust and Safety?"
After mulling this question over, I've got a somewhat gloomy but realistic answer: dark markets. Markets where neither the buyer nor the seller have recourse to the law to assure that the other fulfills the contract.
Interestingly, with the dark-market option you've got a real use case even if it seems silly.
So tyler wants to buy 100 usd of cocaine from de'tasho lets say.
So tyler deposits 100 usd in btc (to prevent himself from extorting from de'tasho)
And de'tasho advances 100 usd in btc for the purchase plus 100 usd deposit
Now de'tasho is out 200 tyler is out 100 locked into an escrow that each of them has 50% control. They agreed that the time limit for the deal goin' down is 2 weeks. If this time limit expires they both destroy the escrow resulting in loss for both parties. Since that cant be prevented they must work together.
Now tyler sends 100 in cash via western union. Note this is the first time in history WU can be used trustless without an escrow agent or laws tacitly as a deterrent.
Once de'tasho gets the 100 he is still -100 because of his deposit and advanced payment. tyler is -200 because his deposit and cash advance.
Now they release escrow since they agree the deal is complete. tyler gets his deposit back and 100 usd in btc and de'tasho gets his deposit back so now he has 100 usd in cash in exchange for his cocaine. The sale of the happy dust is complete. Both parties are happy and nobody needed a government, third party or a posse of drive-by shooters looming over the deal. And more importantly, at no point could tyler or de'tasho steal from this deal or try to lie to the other because if they had they both would have lost.
There's actually a humanitarian argument to be made for this use case. From a humanist standpoint, mutual escrow is a helluva lot better than a drive-by shooting. The trouble with this specific use case is that inner-city-type drug dealers take a lot of pride in retaliating physically against someone who they feel has cheated them. Up to and including murder, for the hard-core. Getting them to shift to compulsory two-sided escrow would be as difficult as convincing a 19th-century frontier vigilante that the rule of law is in his best interest. He'd be quite resistant to giving up his frontier right to "Hang 'Em High", even if leaving it to the law is in his best interest.
A more promising dark-market option is otherwise-legitimate transactions that have to occur without legal protection because of associated illegalities. Case in point: buying (say) shoes from a black-market stall or pop-up shop run by an illegal immigrant. There's nothing illegal in this transaction in itself, provided the shoes were't stolen, but an illegal immigrant is not someone who's going to call in the cops if cheated - at least, not without a lot of reluctance. Double escrow could work in this clime, tho' you'd have to have some evangelists that were legitimate members of that subculture prior to evangelizing for Bitbay.
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But for here, I can't think of any better use case than an altcoin ICO!
Well there is so many things I could say in response to this.
What you say is true. But consider the fact on E-bay people constantly get empty boxes and still are
forced to pay. Paypal payments get reversed and how can Ebay know who is telling the truth?
They GUESS thats how.
Notice in USA they hold 25% of the worlds prison population, 85% in the prison for victimless crimes
(collecting rainwater, selling weed, not paying taxes, permit violations the list goes on)
So i think there is a major confusion here about what is legal and what is MORAL. Two totally separate
things. I can make the argument that jail is barbaric, disgusting and immoral.
Regardless, you are right. Society will not adopt new ideas so easily and in the case of your criminals
they do seem to prefer violence, it makes them feel important or something.
You have the oxycotin scumbag billionaires who are basically just legalized heroin pushers.
For people who think the line is grey its not, the world is just run by the self righteous.
Im sorry for injecting "idealism" into this but its true.
With that said, lets look at ways double deposit solves the problem of DECEPTION which is societies
biggest problem. NOTE: It only solves the problem of deception if adopted and like you said
human psychology makes this a very low probability since propaganda comes first.
Two parties involved, victim and perpetrator. The victim goes to court and cries that they
were harmed. The perp has a good lawyer and wins. Judges, juries, hell even 1000s of people can
be wrong in a good frame job! I can think of a good frame job that happened in the month of September
*cough* *cough* and more than half the world would accuse the wrong party.
In essence the ONLY people who know the truth behind a crime is
TWO people. The victim and assialant. Nobody else knows.
So why not reduce commerce to that? They make deposits to prevent lying and cheating. Both parties
deposit to avoid extortion. The network itself can raise or lower deposit levels. And someone
who abuses that system will eventually become poor.
Here you switch society upside down. The rich people are no longer the liars and self-righteous.
No the rich people would be the HONEST hard workers. The liars would be poor because they
keep blowing up escrows and losing funds for themselves. Basic math.
There are many use cases besides "Dark markets" where Halo is instantly valuable, maybe in the tune
of billions of dollars. Here are a few:
International Trade and Shipping (no more expensive insurance, deposits cover daily volume, no more
lost shippments, no more tricks)
Telcom (no more finding escrows, making complicated wire routes, finding banks, dealing between countries)
Outsourcing (no more procrastinating workers, lies about credentials, poor performance... all gone thanks to the fear of loss)
Cash for Coins (no more local bitcoins, countries that cant get BTC now CAN and with low fees P2P)
Barter (impovershed countries with no trust can use deposits at kiosks and trade commodities instead of cash)
International Business (countries with bad legal system, opposing laws, can find middle ground do trusted business)
So i think we should realize those industries need this, but they don't know how bad they need it.
When the tree is rotting at the root, you don't clip the leaves you CURE THE ROOT. Even if the people
resist this change, it must happen even if not 100 years from now because things cannot stay broken forever.
If we don't use the best protocols then who will?
