remmy (OP)
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August 02, 2011, 04:40:54 AM |
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Bitcoin is a lot like cash in that consumers can be too easily defrauded. Is there any way to discourage fraud using bitcoin technology?
I am thinking about something along the lines of an addition to the bitcoin protocol and program:
Next to the send coins button, a "promise coins" button. The coins are removed from the sender's account, but not deposited into the receiver's account. An entry is created in the block chain representing a "promise" of coins from sender to receiver. The receiver sees "promised" in their transaction history. The receiver either completes or does not complete the deal to the satisfaction of the sender. The sender has two options with promised coins, finish payment, or destroy. Destroyed coins are returned to the unmined coin count or just eliminated from circulation.
This essentially eliminates the receiver's benefit of defrauding senders. Senders also cannot defraud receivers since they cannot get the coins back, they can only destroy them.
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haploid23
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August 02, 2011, 04:43:33 AM |
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what you're describing is pretty much the same thing as escrow service
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remmy (OP)
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August 02, 2011, 05:00:31 AM |
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- in a centralized escrow service, the sender and receiver need to trust the escrow provider. the escrow provider could defraud the sender or the receiver or both.
- the centralized escrow provider is a middleman taking a fixed fee or a percentage, the decentralized version could run on the existing low cost transaction system that bitcoin already enjoys.
- in a centralized model, coins are never destroyed. either the sender has them or the escrow service has them or the receiver has them. destroying coins is like paying the entire community for helping run the service by decreasing the number of bitcoins in circulation (or recirculating them).
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foggyb
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August 02, 2011, 05:05:10 AM |
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I like it.
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nmat
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August 02, 2011, 05:08:50 AM |
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I like it.
+1 ![Cool](https://bitcointalk.org/Smileys/default/cool.gif) But I don't know anything about the technical implications of this.
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ffuentes
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August 02, 2011, 05:10:34 AM |
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- in a centralized model, coins are never destroyed. either the sender has them or the escrow service has them or the receiver has them. destroying coins is like paying the entire community for helping run the service by decreasing the number of bitcoins in circulation (or recirculating them).
What I want when I've been scammed is to recover my money, not its destruction. Could be a good idea but I don't get it completely and we need more technical explanation about.
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remmy (OP)
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August 02, 2011, 05:11:48 AM |
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incorporating more features of escrow services:
in addition to release or destroy on promised coins, a sender could release a portion of them, proportional to the amount of work done.
as for the implementation details, it is a fork to the existing protocol and would require majority support. i'm not sure if the protocol is extensible enough to handle an addition like this while still remaining backwards compatible (a client that doesn't recognize promise transactions can simply use the current send coins method). i don't understand satoshi's bitcoin code yet, so i can't say for sure how hard it would be to implement.
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remmy (OP)
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August 02, 2011, 05:12:39 AM |
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the problem with being able to recover your money is that it makes the senders capable of defrauding the receiver (send the coins then take them back after receiving the service). i'm trying to eliminate fraud from all parties.
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nmat
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August 02, 2011, 05:16:54 AM |
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What I want when I've been scammed is to recover my money, not its destruction.
Since the scammer will not earn anything with this, he will not have a reason to do it. But yeah, I can set up a fake store to destroy promised coins just for fun ![Tongue](https://bitcointalk.org/Smileys/default/tongue.gif)
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remmy (OP)
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August 02, 2011, 05:23:45 AM |
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But yeah, I can set up a fake store to destroy promised coins just for fun ![Tongue](https://bitcointalk.org/Smileys/default/tongue.gif) Can you think of any other ways to break this idea? If that is the only one, I would gladly take it over the current situation.
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BitOffer
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August 02, 2011, 06:01:06 AM |
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Your ideal would work a majority of the time. Best of all, no 1-2% escrow fee, or insurance withheld. Unfortunately, some won't release the funds after the trade is finished, even tho they can't get them back(laziness-envy-who-knows why).
Who can we trust?, (-no one is the answer). The best risk management tool we have is trust in community/p2p.
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Rassah
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August 02, 2011, 03:15:08 PM |
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Your idea is already implemented in the Bitcoin protocol https://en.bitcoin.it/wiki/Contractsbut was disabled due to bugs/issues. You could press on the developers to fix the issues and re-implement it again, maybe? Or ask someone else to get it working in a different client/miner. (Satoshi thought of everything ![Grin](https://bitcointalk.org/Smileys/default/grin.gif) )
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JoelKatz
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August 02, 2011, 03:19:06 PM |
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The sender has two options with promised coins, finish payment, or destroy. Destroyed coins are returned to the unmined coin count or just eliminated from circulation.
This essentially eliminates the receiver's benefit of defrauding senders. Senders also cannot defraud receivers since they cannot get the coins back, they can only destroy them. This doesn't really work. What typically happens in the fraudster says "Sorry, I can't go through with the deal because <lame excuse> . Release the funds and I'll reimburse you." Now, what's your incentive to destroy them?
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iamzill
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August 02, 2011, 03:30:02 PM |
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The sender has two options with promised coins, finish payment, or destroy. Destroyed coins are returned to the unmined coin count or just eliminated from circulation.
This essentially eliminates the receiver's benefit of defrauding senders. Senders also cannot defraud receivers since they cannot get the coins back, they can only destroy them. This doesn't really work. What typically happens in the fraudster says "Sorry, I can't go through with the deal because <lame excuse> . Release the funds and I'll reimburse you." Now, what's your incentive to destroy them? Bingo. Denial of service. Suppose NSA/SS/Random asshole/bitter ex just want you to lose money. They can start a transaction, and after you send the promise, ignore you thereafter. It cost them 0 bitcoins, 1 minute of typing, and gives them 10 minutes of trolling entertainment. It will cost you the entire transaction amount. Classholes will even write bots to do this for the lulz, I promise. Please excuse the cliché hollywood quote, but: "Some men just want to watch the world burn.".
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remmy (OP)
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August 02, 2011, 03:36:46 PM |
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This doesn't really work. What typically happens in the fraudster says "Sorry, I can't go through with the deal because <lame excuse> . Release the funds and I'll reimburse you." Now, what's your incentive to destroy them?
Since the funds are promised, the victim will insist that the fraudster reimburse first. This does turn the tables because now the victim can cause the fraudster to lose coins, but the victim doesn't profit directly. In both cases, you can only cause someone to lose coins, you can't get them yourself. I argue that there are a smaller number of people who would want you to lose your coins for an indirect benefit than there are "men who want to watch the world burn".
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remmy (OP)
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August 02, 2011, 04:40:04 PM |
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Your idea is already implemented in the Bitcoin protocol https://en.bitcoin.it/wiki/Contractsbut was disabled due to bugs/issues. You could press on the developers to fix the issues and re-implement it again, maybe? Or ask someone else to get it working in a different client/miner. (Satoshi thought of everything ![Grin](https://bitcointalk.org/Smileys/default/grin.gif) ) Thank you for the link, I have looked at this page and its escrow section, but it doesn't mention decentralizing escrow. It specifically shows three parties working together by exchanging keys. The escrow service could collude with the sender or the receiver to abuse the trust placed in it.
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JoelKatz
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August 02, 2011, 04:46:20 PM |
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In both cases, you can only cause someone to lose coins, you can't get them yourself. I argue that there are a smaller number of people who would want you to lose your coins for an indirect benefit than there are "men who want to watch the world burn". Fraudster: I have $100, I want to buy 6.66 bitcoins. Victim: Okay, deal. I put the 6.66 bitcoins in escrow. Fraudster: Damn, I can't buy them. So sorry. I don't need the coins because the guy I was going to trade them with sold the thing I was going to trade him for to his nephew for cash to buy drugs instead, plus my wife spent the money I was going to buy the bitcoins with on a new pair of shoes. And, not that this matters, but my cat has swine flu. Victim: Umm, I already put the bitcoins in escrow. If I burn them, I'm out the coins! Fraudster: No, don't burn them. Just send them to me and I'll send them right back to you. I'm an honest guy, the deal just fell through, and I'm very, very sorry about that. Let me make it right -- just send me the bitcoins and I'll send them right back to you. Victim: Well, if I burn them, I have zero chance. So I'll release them to you and hope you pay me back. Fraudster: Sucker. Note: This will not be obvious because the fraudster's name will not actually be "Fraudster". But if your name actually is "Victim", watch out.
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remmy (OP)
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August 02, 2011, 04:52:28 PM |
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You can get them yourself. Once the fraudster says he can't go through with the transaction, the victim has no incentive to burn the coins. If he burns them, he has zero chance of getting them back. If he releases them, the fraudster might refund them to him. Here's how I see it: Fraudster: I have $100, I want to buy 6 bitcoins. Victim: Okay. I put the 6 bitcoins in escrow. Fraudster: Damn, I can't buy them, send them to me and I'll reimburse you. I'm an honest guy, I just don't need the coins anymore or don't have the money. Just send me the bitcoins and I'll send them right back to you. Victim: Since I've already promised you the coins, go get a job, then reimburse me first then I will release the coins from escrow. Fraudster: Well shucks. All I'm saying is that if you are willing to put the coins into public escrow, then you have a way to make sure that the fraudster doesn't get the benefit of the coins without you getting the benefit of his work / product.
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JoelKatz
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August 02, 2011, 04:56:04 PM |
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Here's how I see it:
Fraudster: I have $100, I want to buy 6 bitcoins. Victim: Okay. I put the 6 bitcoins in escrow. Fraudster: Damn, I can't buy them, send them to me and I'll reimburse you. I'm an honest guy, I just don't need the coins anymore or don't have the money. Just send me the bitcoins and I'll send them right back to you. Victim: Since I've already promised you the coins, go get a job, then reimburse me first then I will release the coins from escrow. Fraudster: Well shucks. Do you ever get emails telling you that your email won a lottery? The fraudster doesn't have to succeed every time. It just has to be possible for him to succeed. All I'm saying is that if you are willing to put the coins into public escrow, then you have a way to make sure that the fraudster doesn't get the benefit of the coins without you getting the benefit of his work / product. Sure, but in exchange for that, you have to be willing to get nothing in exchange for your coins. What percentage of the time does the fraudster have to succeed for it to be worth his while?
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bitplane
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August 02, 2011, 05:00:05 PM |
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If the person with the least reputation sends first, like in usual transactions, this would still be useful. Two people who lack any reputation would have the issues described above though.
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