New Escrow Service - mybitsafe.com

[kgo]

Hello all,

My new escrow service just went live:

http://mybitsafe.com/

It basically follows the clearcoin model.  You setup a release address and deposit coins to an escrow address.  When you get your goods or services, you release the coins to the seller.  If the seller rips you off, you don't release the coins and they go to the bitcoin faucet after 30 days.  This way the seller must deliver to get the coins, and the buyer has no incentive to withhold payment since they can't get their coins back.

I charge a small tiered fee of 0.025 BTC per hundred BTC held in escrow.  This means that all deals up to and including 100 BTC are charged 0.025 BTC.  Deals between 100-200 BTC are charged 0.05 BTC.  These charges are to cover server overhead and my time doing support/maintenance, and maybe buy a few beers.

So am I reputable enough to trust with your bitcoins?  I'd like to think so.  I've completed many deals, buying and selling, both here and on #bitcoin-otc.  The domain is registered with my real name and address.  Several people here have shipped me goods and can confirm my real-world identity and location.

-Grant Olson
mybitsafe.com

[Distribution]

Do you have a reputation anywhere we can go by?

[kgo]

Do you have a reputation anywhere we can go by?

Here's my otc rating:

http://bitcoin-otc.com/viewratingdetail.php?nick=kgo&sign=ANY&type=RECV

If there's anything else I can do to assure you I'm trustworthy, please let me know.

If anyone here who I've done business with would like to vouch for me, I'd appreciate it.

[Cory]

Absolutely a legitimate service. I just made a transaction with them and everything went very smoothly. kgo is certainly a trustworthy member of the Bitcoin community.

[kiwiasian]

This is pointless. If the seller never sends the item then the buyer can't get their money back.

The buyer will lose money, the seller will lose nothing.

[kgo]

This is pointless. If the seller never sends the item then the buyer can't get their money back.

The buyer will lose money, the seller will lose nothing.

But if the buyer can recover their money, the seller can get ripped off.  See all the paypal chargebacks that have been going on.  The same thing could happen, but in reverse.  Buyer gets his bitcoins back, and keeps the dwolla money.

I realize the solution isn't perfect.  But it keeps a buyer and seller on equal footing, with neither having an advantage.  The worst case scenario is a no-win situation.  Which sucks.  But it's better than letting the scammer win.  And at the same time, a total sociopath could refuse to release funds even though it doesn't benefit them in any way, shape, or form.

Anyway, it's modeled (basically) off of the now-defunct clearcoin site.  And that site was reasonably popular in spite of the same weakness.

Of course it's not for everyone.  And it won't protect you from someone who just gives off a bad vibe.  But it provides a reasonable compromise in situations where you have no reason to doubt your counter-party's sincerity, but still don't have any real-life information about them such as their reputation or identity.

[Distribution]

This is pointless. If the seller never sends the item then the buyer can't get their money back.

The buyer will lose money, the seller will lose nothing.

That's not entirely true as a person loses trust and gains nothing by not getting the coins. It would be perfect to do on someone you absolutely hate, but other than that, what would be the point? What's your solution? I've used ClearCoin in the past, and I wouldn't do Bitcoin transactions, especially larger ones, without some sort of protection.

[Syke]

I realize the solution isn't perfect.  But it keeps a buyer and seller on equal footing, with neither having an advantage.  The worst case scenario is a no-win situation.  Which sucks.  But it's better than letting the scammer win.  And at the same time, a total sociopath could refuse to release funds even though it doesn't benefit them in any way, shape, or form.

There is a huge advantage for a scamming seller. Once the buyer puts the coins in escrow, if the seller backs out, the only way for the buyer to get their coins back is to release them to the seller. This gives the seller the coins without having sent any item. As a buyer I would never use this service.

[kgo]

There is a huge advantage for a scamming seller. Once the buyer puts the coins in escrow, if the seller backs out, the only way for the buyer to get their coins back is to release them to the seller. This gives the seller the coins without having sent any item. As a buyer I would never use this service.

For a scamming seller, you're going to lose the coins with or without this service.  The alternative is just to send the coins straight to them, and they can just keep them anyway.  With this service, you can at least make sure they don't profit, removing the advantage and the position of power the scammer is in.  It removes any incentive to scam.  I suppose a seriously deranged person could do it for the 'lulz', but that's not the way an average scammer operates.  They'd try to get you to not use the service.

For a legitimate seller who is forced to back out of a deal, ideally they could escrow an equal amount back to you.  Then you release.  Then they release.  Of course this won't work if the seller doesn't have a bankroll of bitcoins.

I'll try to think of a safe way for the seller to call off the deal, but I'm afraid any system I come up with will be subject to social engineering, MiTMs, etc.

[kgo]

There is a huge advantage for a scamming seller. Once the buyer puts the coins in escrow, if the seller backs out, the only way for the buyer to get their coins back is to release them to the seller. This gives the seller the coins without having sent any item. As a buyer I would never use this service.

Or let me ask this question:  What do you do now to protect your bitcoins when buying something from a semi-anonymous person in the forums?

I'm not asking this to be flippant or to try and call you out.  I'm interested in the different methods people use to conduct a safe deal, and interested in improving the website if possible.

This question isn't just directed at Syke, it's directed at anyone who wants to answer.

I'll even throw one out there.  I know BTCRow provides real mediation services, but they're much more expensive.  And in fairness I think that expense is entirely justified considering the amount of work involved in dispute resolution.

[bc]

I charge a small tiered fee of 0.025 BTC per hundred BTC held in escrow.  This means that all deals up to and including 100 BTC are charged 0.025 BTC.  Deals between 100-200 BTC are charged 0.05 BTC.  These charges are to cover server overhead and my time doing support/maintenance, and maybe buy a few beers.

Check your fee schedule page. I think it has some errors.

[kgo]

I charge a small tiered fee of 0.025 BTC per hundred BTC held in escrow.  This means that all deals up to and including 100 BTC are charged 0.025 BTC.  Deals between 100-200 BTC are charged 0.05 BTC.  These charges are to cover server overhead and my time doing support/maintenance, and maybe buy a few beers.

Check your fee schedule page. I think it has some errors.

DOH!  Thanks.  Fixed now.

[kiwiasian]

This is pointless. If the seller never sends the item then the buyer can't get their money back.

The buyer will lose money, the seller will lose nothing.

That's not entirely true as a person loses trust and gains nothing by not getting the coins. It would be perfect to do on someone you absolutely hate, but other than that, what would be the point? What's your solution? I've used ClearCoin in the past, and I wouldn't do Bitcoin transactions, especially larger ones, without some sort of protection.

With the current model, if I wanted to sell 100 BTC for $100 then I would send the BTC to the escrow service. But if the buyer backs out and chooses not to buy from me then I (the seller) just lost 100 coins, and the buyer didn't lose anything. There is no way to get my money back. This is why I like PayPal, I have no idea why everyone hates it so much. It gives the protection against scammers.

A functional model is where the escrow service takes the money from both parties and releases them simulatenously.

Where party A sends 100 BTC to the escrow and then party B sends $100 to the escrow, at which point the money is released to both parties at once to prevent something like the above.

[kgo]

With the current model, if I wanted to sell 100 BTC for $100 then I would send the BTC to the escrow service. But if the buyer backs out and chooses not to buy from me then I (the seller) just lost 100 coins, and the buyer didn't lose anything. There is no way to get my money back. This is why I like PayPal, I have no idea why everyone hates it so much. It gives the protection against scammers.

A functional model is where the escrow service takes the money from both parties and releases them simulatenously.

Where party A sends 100 BTC to the escrow and then party B sends $100 to the escrow, at which point the money is released to both parties at once to prevent something like the above.

Okay, now I understand where you're coming from.  For an all-digital transaction, you're right.  It would be nice to have a service that collected the bitcoins and money from paypal or dwolla, then released both ways.  You should be able to close a deal like that in a matter of minutes.

I was thinking more about the case where someone is shipping me something.  I just ordered a sterling silver bitcoin ring that's going to be shipped from the UK.  And I trust the guy.  I did send him bitcoins.  But for the sake of argument, lets assume he's just been constructing an elaborate hoax.  For something like that, a full escrow service would need to have the package shipped to them, possibly verify the contents, possibly put it in storage, and eventually ship it back out.  That could end up costing as much as the ring itself.

In that case, I think it's useful to offer a service that provides "mutually assured destruction".  For a scammer on either side, it's not worth using the system.  The scammer can't win and they can't profit.  An a**hole could just abuse the system, but luckily that sort of person is much less common than scammers.  Who's going to waste hours setting up deals just to screw someone over, even though they don't benefit from it?

Sure those people are out there, but maybe 1 for every 100 scammers, if that.  This system doesn't protect you from that one person who (with apologies to The Dark Knight) just wants to see the world burn.  But this system keeps you from getting into a deal with those 100 scammers in the first place, since they can't possibly profit.

[Syke]

There is a huge advantage for a scamming seller. Once the buyer puts the coins in escrow, if the seller backs out, the only way for the buyer to get their coins back is to release them to the seller. This gives the seller the coins without having sent any item. As a buyer I would never use this service.

Or let me ask this question:  What do you do now to protect your bitcoins when buying something from a semi-anonymous person in the forums?

The regular ClearCoin escrow was fine. If I don't get the item, in 30 days the bitcoins are returned to me as a buyer.

[kgo]

There is a huge advantage for a scamming seller. Once the buyer puts the coins in escrow, if the seller backs out, the only way for the buyer to get their coins back is to release them to the seller. This gives the seller the coins without having sent any item. As a buyer I would never use this service.

Or let me ask this question:  What do you do now to protect your bitcoins when buying something from a semi-anonymous person in the forums?

The regular ClearCoin escrow was fine. If I don't get the item, in 30 days the bitcoins are returned to me as a buyer.

I actually probably will add this feature since it's been requested by a few people.  Or at least allow you to specify an arbitrary release address.  It just seemed like in 95% of the deals I saw, the sellers insisted on 'donate to charity' to protect themselves.

[kgo]

I just reduced the number of confirmations required from 6 to 3, so that funds will clear faster, and deals can be cleared more quickly.

[DonnyCMU]

There is a huge advantage for a scamming seller. Once the buyer puts the coins in escrow, if the seller backs out, the only way for the buyer to get their coins back is to release them to the seller. This gives the seller the coins without having sent any item. As a buyer I would never use this service.

Or let me ask this question:  What do you do now to protect your bitcoins when buying something from a semi-anonymous person in the forums?

The regular ClearCoin escrow was fine. If I don't get the item, in 30 days the bitcoins are returned to me as a buyer.

How is that fine? If an escrow service is 'fine', it has to work both ways, for both seller and buyer.
, meaning scammer from both side should at least have zero incentive for scamming.
If you actually get the items, but keep lying that you didn't get it yet, then in 30 days, you'll get your money back, and .... Voila... the item for free!

[kgo]

I added an FAQ this weekend to answer some of questions I've been getting:

https://mybitsafe.com/faq

[kgo]

Two new features just went out.

• We now explicitly show how many confirmations are needed for a pending deposit to clear.  It still takes 3 confirmations, but now a seller can see exactly how many confirmations are left.
• There is a tracking option.  If you are a seller who has lost the link for a given deal, you can now search by your payment address.

While I was writing this post, I thought it would be nice to show an example link of what a seller sees when bitcoins are in escrow:

https://mybitsafe.com/deals/35d0670d-1ba3-4c82-a209-afdc3753f2eb

In this scenario:

• You're selling $100 dollars worth of Amazon e-gift-cards.
• At the time, the bitcoin price was 13.5, so 7.4 bitcoins were placed into escrow by the buyer.
• You agreed with the buyer to send the cards in $20 increments just in case he flaked out.
• So far one e-card has been sent to the buyer, and the buyer has released payment of 1.48 bitcoins for that card, which would now be in your wallet.
• 5.92 bitcoins remain in escrow.  This money is ready to be released as you continue to send e-gift-cards.