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Author Topic: Preventing fraud and scams and building reputation for new users  (Read 5471 times)
Nefario
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February 11, 2011, 05:45:26 PM
 #1

We need a way to do business with new users that have little or no reputation or history, but that will also make it very difficult or expensive for scammers to rip peopel off.

Something a little better than otc-web of trust( because they're new users, no one trusts them)

Im thinking of a bondbail system, where for a user to get a bonded id they would deposit btc that would be kept. Traders could then refuse to do business with someone who doesn't have a bail of at least 1/3 of the amount of the transaction. So that if the user cheats they lose their bail.

This should make it more expensive for scammers to cheat people, that is, make it more expensive for them to get back into the trading system after cheating someone( they might make some profit but not much).

Traders who want absolute guarantees could require a bond equal to the size of the trade, so that if the cheater ... cheats, they make no profit.

Usefull idea?

Any other ideas? The goal is to put a cost to entering into trade with other users, a deposit. Good users want to keep their deposit so won't cheat, bad users cant make anymoney if thry have to pay to trade, or they lose money by cheating ( bail larger than trade amount?). How to remove the economic incentives of scamming? While allowing new users to join?

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kiba
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February 11, 2011, 06:00:35 PM
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This is from the article on https://ffij33ewbnoeqnup.onion.meshmx.com/books/Toward_A_Private_Digital_Economy/index.html ?

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February 11, 2011, 06:04:39 PM
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Bondmen could lose a lot of money if the last ten customer he have were a bunch of scammers.

Nefario
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February 11, 2011, 06:13:16 PM
 #4

That is kind of where I got the idea, but it is not exactly bondmen( also bondmen is high risk high reward, it mentions that in the paper). Im thinking having a kind of trade security deposit.

To do trade of x value you must have at least 1/3 of x(maybe more) to be able to trade. If you scam someone then you lose your deposit.

Of course there is always escrow and clearcoin.

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Bimmerhead
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February 11, 2011, 06:35:40 PM
 #5

Asking for service providers to connect with you on Facebook or LinkedIn can help.  That way they reveal their real identity and you can see if they have a long-term established network of connections.  Sometimes you might even have a mutual connection.

Also, there might be a plugin for SMF where users can vouch for one another, or collect reputation points.

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kiba
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February 11, 2011, 06:36:06 PM
 #6

So a new bitcoiner on the scene goes to a bondman so he can purchase an arudino from a nervous merchant for 14 BTC. The bondman said "gimme 1/3 of 14 BTC. If you are not successful, I keep all your deposit. If successful, I will give you back 98% of my deposit."

Said new bitcoiner conduct a trade with the merchant. The transaction is successful.

Both party could also deposit with the bondmen giving him more room to move and recoup his risk. If the transaction turn out to be a fraud, the bondman will refund the damaged party.

That how it works?

Nefario
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February 11, 2011, 06:40:23 PM
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So a new bitcoiner on the scene goes to a bondman so he can purchase an arudino from a nervous merchant for 14 BTC. The bondman said "gimme 1/3 of 14 BTC. If you are not successful, I keep all your deposit. If successful, I will give you back 98% of my deposit."

Said new bitcoiner conduct a trade with the merchant. The transaction is successful.

Both party could also deposit with the bondmen giving him more room to move and recoup his risk. If the transaction turn out to be a fraud, the bondman will refund the damaged party.

That how it works?

Something like that, added that the merchant can check if the newby has bail. merchant can ask for bail requirement higher if they want also, even more than 100%

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Nefario
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February 11, 2011, 06:42:31 PM
 #8

Asking for service providers to connect with you on Facebook or LinkedIn can help.  That way they reveal their real identity and you can see if they have a long-term established network of connections.  Sometimes you might even have a mutual connection.

Also, there might be a plugin for SMF where users can vouch for one another, or collect reputation points.

thats good, but not something the merchant would do themselves, maybe the bondman can do a security check, or this coukd be part of a credit rating system that the bondman could check

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Stephen Gornick
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February 11, 2011, 06:45:33 PM
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Might the web of trust on Bitcoin-OTC might be used for ratings such as this? 
  http://wiki.bitcoin-otc.com/wiki/OTC_Rating_System


In addition to rating people, you could rate services  e.g., 
  ;; rate bitcoingadgets.com 1
for example, if you were happy with your purchase from them.

kiba
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February 11, 2011, 06:52:15 PM
 #10

Yeah, bondmen must be rated first.

Nefario
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February 11, 2011, 06:52:45 PM
 #11

Might the web of trust on Bitcoin-OTC might be used for ratings such as this? 
  http://wiki.bitcoin-otc.com/wiki/OTC_Rating_System


In addition to rating people, you could rate services  e.g., 
  ;; rate bitcoingadgets.com 1
for example, if you were happy with your purchase from them.


It could be added to it, yes services too. The problem with wot is that this is to deal with new or untrusted users.
A person could have 2 or 3 scores for credit rating.

1) theyre social network, who do they know and is willing to be associated with them, new users have facebook for this, some of us could use otc wot for this score.email verified, phone number verified by bondman( I know this can all be fakedbut it adds difficulty)

2) bail score, that is the bail they have deposited is enough( this would br compared to the value of the trade theyre trying to do)

3) trade history, good bad etc.

3)

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Nefario
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February 11, 2011, 06:54:42 PM
 #12

Yeah, bondmen must be rated first.

yes, rated by a rating agency of some kind.

and the agency must be rated by an agecy rating agency and the ............

joking, but you are right.

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davout
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February 11, 2011, 08:51:13 PM
 #13

That's basically an escrow service.
You're assuming that the dispute can always be resolved, how are you going to handle that ?

kiba
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February 11, 2011, 08:52:27 PM
 #14

That's basically an escrow service.
You're assuming that the dispute can always be resolved, how are you going to handle that ?

The bondman refund the damaged party.

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February 11, 2011, 09:27:10 PM
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That's basically an escrow service.
You're assuming that the dispute can always be resolved, how are you going to handle that ?

The bondman refund the damaged party.
How do you know the damaged party actually got damaged ?
I doubt the scammer will be like "oh yea buddy i totally tried to scam you there !"

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February 12, 2011, 06:28:29 AM
 #16

Isn't the main problem newbies that want to trade PP or other soft money for coin? What are they going to pay to escrow? More PP?
kiba
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February 13, 2011, 01:12:43 AM
 #17

So, what is a difference between a bond/bail system and an escrow service?

malditonuke
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February 15, 2011, 11:19:06 AM
 #18

check out  https://mises.org/journals/jls/9_2/9_2_2.pdf  (search for bond)

interesting article on the history of bond/credit methods and effectiveness.
malditonuke
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February 17, 2011, 06:45:01 AM
 #19


that link doesn't work on my browser.  here is (what i believe to be) a suitable replacement:
http://themonetaryfuture.blogspot.com/2010/03/toward-private-digital-economy.html
Nefario
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February 17, 2011, 07:36:11 AM
 #20

That's a great read, and a pretty good blueprint for how the bitcoin economy may develop in the future.

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