Bitcoin philosophy and third parties …

[bitbitcoins]

I was wondering about one point concerning the Bitcoins :

Bitcoin delivers a technology able to perform money exchange transactions anonymously and securely. One of its main advantages is to suppress intermediate intervention (i.e banks) when making a transaction and by this way to simplify and secure it. It’s crystal clear that it perfectly works for pear to pear transactions.

But when you need to make a transaction with an untrusted user (buying something or exchanging money), the only way I found is to require the service of an escrow trusted by both parties.

In this case there is an intermediate, which is not the Bitcoin philosophy and for the purpose of making a transaction with an untrusted party, banks represent insurance, warranty and security (e.g ebay with paypal).

- How to fight this argument?
- What are the advantages of bitcoins (except anonymity) while making a transaction with an untrusted user?
- How to make a transaction with a party you don’t know? Are there alternatives to Escrows?

[caveden]

Search for 2-of-3 multisignature transactions.

Basically you can create an address that need the signature of 2 out of 3 keys in order to be spent. The escrow, as well as both parties of a transaction would each hold one of the keys. Only with the agreement of at least 2 of them the money would be moved.
So the worst the escrow can do is to be a "bad judge" in a conflict case. He can't steal the money.

[Terk]

- What are the advantages of bitcoins (except anonymity) while making a transaction with an untrusted user?

You need to worry only during the transaction. Once the transaction is complete, you are good. When charging by credit card, your customer has up to half a year for a chargeback. Similar with PayPal. All these returns also cost you money on top of the money refunded.

And there are of course high speed and low cost advantages. If you use any payment agent, you usually have your money released days and sometimes weeks after the transaction. You usually need to keep a security balance with the agent being some percent of your monthly volume so that they could cover chargebacks in case you scammed all your customers one day and disappeared (or just went out of business). And the fees are high.

[waxwing]

There is clearly value in crypto-based escrow solutions (m of n type), as mentioned above.

However, I think there is a deeper point here. I am sure Satoshi was under no illusion whatsoever that the architecture he created entirely replaced the existing financial architecture. What it replaces is something like the skeleton, not all the organs and skin and so on. It takes away the current total control of money by a central organization and thereby removes the ability to create money at will and against the will of others. It removes what was once called the "exorbitant privilege".

Whether there will in future be Bitcoin banks, peer to peer lending, Bitcoin paper certificates etc. etc. - who knows? I'm sure some of that stuff will have to be created, webs of trust etc., security - and all of that could remove some of the advantages, because intermediation costs something. But the point is that individual people will not HAVE to use those services in order to transact, as they do now.

[Terk]

That's right, I forget that some people actually think that there will be one bitcoin to rule them all. Just like radio didn't replace newspapers, television didn't replace radio and internet didn't replace television - all of them coexist and took their space - bitcoin will never replace current systems. It might take its share, wether it will be 0.0001% or 10% of worldwide financial transactions, but it won't be used for everything. We can't know what will be the preferred bitcoin usage ten years from now. Whether it will be a value storage, small to mid online payments, high-volume bulk transfers, long-distance international transfers or maybe something else. But it will never replace all current systems.

[waxwing]

That's right, I forget that some people actually think that there will be one bitcoin to rule them all. Just like radio didn't replace newspapers, television didn't replace radio and internet didn't replace television - all of them coexist and took their space - bitcoin will never replace current systems. It might take its share, wether it will be 0.0001% or 10% of worldwide financial transactions, but it won't be used for everything.

Somehow that doesn't add up - while television didn't entirely replace radio, it largely did. Television took 80-90% of radio's "attention" market, or more, surely not 10% or less.

We can't know what will be the preferred bitcoin usage ten years from now. Whether it will be a value storage, small to mid online payments, high-volume bulk transfers, long-distance international transfers or maybe something else. But it will never replace all current systems.

Yep, it's a reasonable point of view. But it's also possible that Bitcoin becomes 90%+ of the "backbone" of the financial system, and all those other things are on top of it, not beside it, using current money. Maybe it's unlikely, I don't know, but it's possible.

[bitbitcoins]

That's right, I forget that some people actually think that there will be one bitcoin to rule them all. Just like radio didn't replace newspapers, television didn't replace radio and internet didn't replace television - all of them coexist and took their space - bitcoin will never replace current systems. It might take its share, wether it will be 0.0001% or 10% of worldwide financial transactions, but it won't be used for everything. We can't know what will be the preferred bitcoin usage ten years from now. Whether it will be a value storage, small to mid online payments, high-volume bulk transfers, long-distance international transfers or maybe something else. But it will never replace all current systems.

In a certain point of view yes but it's difficult for the radio to be in competition with TV. Out of Coca-Cola and Pepsi there is no big marketshare for a third cola brand.

Regarding the popularity of the Bitcoin, I think there is no space for too many payment means but I'm pretty sure that there is are good opportunities for crypto-currencies. I'm also convinced that there is no space for several (at least too many) crypto-currencies devices. Will bitcoin be the one ?

Let's see the future, that's why we are here as early adopters , right ?

[reg]

Whether there will in future be Bitcoin banks, peer to peer lending, Bitcoin paper certificates etc. etc. - who knows? I'm sure some of that stuff will have to be created, webs of trust etc., security - and all of that could remove some of the advantages, because intermediation costs something. But the point is that individual people will not HAVE to use those services in order to transact, as they do now.
[/quote]

To replace the existing intermediary (contracts) webs of trust will be the method that allows p2p to happen properly. However you need only look at the scammers list to see how far we have to go. However in the long term game theory has been shown to apply. Trusting someone on first contact has shown to be beneficial in the long term for both parties that co-operate. reg.

[bitbitcoins]

Whether there will in future be Bitcoin banks, peer to peer lending, Bitcoin paper certificates etc. etc. - who knows? I'm sure some of that stuff will have to be created, webs of trust etc., security - and all of that could remove some of the advantages, because intermediation costs something. But the point is that individual people will not HAVE to use those services in order to transact, as they do now.

Bitcoin banks ? you mean to ensure security and trust ... is is not against Bicoins principles ? In a certain way no because you would pay for trustable intermediation and not for centralizing all the money ...

[jdbtracker]

The system is able to work escrow free for money transactions for sure, but for delayed transactions it is a poor choice, since someone does have to send that xBox you just bought online.  An escrow service is essential for first time contact and very true the first time you meet someone to transact it is in the parties interest not to scam you, since the rewards of not doing so means return business, but not all people grasp this, it makes them feel better to know they can make you look like a chump.
   Tricking people is easy, keeping their trust is harder, even if they are beside you for years they won't trust you ever, these people do not value logic or preservation, they are run by emotional values... a different breed.

Sooner or later someone will create a system that will not require that escrow service, Satoshi wrote that it would have to be done that way sometimes, unfortunately. But the dialogue is happening, new methods and technologies, new systems are being created now that this Bitcoin, the proof of concept has been proven. Sooner or later someone will find through process of elimination the best most resilient implementation.

Systems with absolute openness that are indestructible, ineffable, incorruptible, unbribable... the concept that a program combined with a solid system is unquestionable... the system will simply not allow you to do it any other way, you signed the terms of usage the moment you used it.

Just imagine if someone did this to our constitution or our bill of rights?  Wrote those rights into a program and with a decent amount of insight created a system to work with it?

- How to fight this argument?
- What are the advantages of bitcoins (except anonymity) while making a transaction with an untrusted user?
- How to make a transaction with a party you don’t know? Are there alternatives to Escrows?

you have to assume the risk of the transaction can you trust them? can you afford to lose that money... are you aware that all transactions are recorded on the blockledger? you can keep track of that individual forever!

That is one big advantage the trust is removed my friend... if you get scammed you take that address and you follow it till the end of the universe or you find them. Yes a lot of work but if you follow the money it will lead you to a wealth of information about the individual, maybe even find their entire network, they have to buy something sometime and that will have an address.

To make a secure transaction without an intermediary would require you to be face to face, if it is done online you assume half the risk, half now half on delivery.

oh yeah you can do a triple+ signature requirement, so that the money is a little safer just using a intermediary, lets say a friend you trust who introduced you to someone they know for a purchase.