[2013-12-11] Bitrated: You Can No Longer Say Bitcoin Has No Consumer Protection

[LiteCoinGuy]

Bitrated: You Can No Longer Say Bitcoin Has No Consumer Protection

One of the commonly cited problems that many people see with Bitcoin as a payment method is the fact that all transactions are final and irreversible. With credit cards, if you buy something but never receive the product, you can issue a chargeback to recover your funds potentially weeks after the transaction. With Bitcoin, on the other hand, no such option exists. Of course, in many cases the lack of chargebacks in Bitcoin is actualy an advantage...


http://bitcoinmagazine.com/8834/bitrated-you-can-no-longer-say-bitcoin-has-no-consumer-protection/

[Lethn]

Wow that's actually a nice article and it seems like a cool way to maybe earn money and a reputation too, maybe I'll try that.

Edit: After coming back I just realised that this is not a new service wtf? lol

[shesek]

Edit: After coming back I just realised that this is not a new service wtf? lol

Its actually quite new - it was released about a week ago.

[hieroglyph]

More good news, can't go wrong with that.  May have to look into this futher as I'm always open to making a little coin.  Thanks for the post and links.

[e521]

The idea is good but it is still based on trust to unknown 3rd party.
How do you know the buyer is not conspiring with the arbitrator, wait for the delivery and subsequently leave with the BTCs?
Even if they implement a feedback system it will require trust.

1. Suppose that Alice wants to send money to Bob through escrow. To start off, Alice goes to the Bitrated website and goes to “Browse arbitrators”. She then selects an escrow agent (say, Trent) and clicks “Start transaction”.
...
Finally, Trent himself has no opportunity to run away with the funds. In theory, Trent can conspire with Alice to split the funds fifty-fifty and leave Bob with nothing, but such a situation would require two of the three parties involved to be dishonest, rather than only one.

[TheRandomGuy]

The idea is good but it is still based on trust to unknown 3rd party.
How do you know the buyer is not conspiring with the arbitrator, wait for the delivery and subsequently leave with the BTCs?
Even if they implement a feedback system it will require trust.

1. Suppose that Alice wants to send money to Bob through escrow. To start off, Alice goes to the Bitrated website and goes to “Browse arbitrators”. She then selects an escrow agent (say, Trent) and clicks “Start transaction”.
...
Finally, Trent himself has no opportunity to run away with the funds. In theory, Trent can conspire with Alice to split the funds fifty-fifty and leave Bob with nothing, but such a situation would require two of the three parties involved to be dishonest, rather than only one.

Yeah. That's what I'm worrying about.

[eldentyrell]

In all cases where there is no dispute Trent is not involved at all. As a result, nearly all transactions will have no fee. ... fees are charged only when the escrow agent is actually brought in

That is a really, really nice feature.

Hopefully no-cost-unless-there-is-a-dispute will lead to escrow becoming more commonplace.

And hopefully it will lead to more thorough escrow adjudication.  I might be willing to set an escrow fee as high as 5% if I knew it would only be incurred in case of a dispute.  At that level the fee can pay for quite a considerable amount of effort from the escrow agent, if necessary.

[shesek]

In all cases where there is no dispute Trent is not involved at all. As a result, nearly all transactions will have no fee. ... fees are charged only when the escrow agent is actually brought in

That is a really, really nice feature.

Hopefully no-cost-unless-there-is-a-dispute will lead to escrow becoming more commonplace.

And hopefully it will lead to more thorough escrow adjudication.  I might be willing to set an escrow fee as high as 5% if I knew it would only be incurred in case of a dispute.  At that level the fee can pay for quite a considerable amount of effort from the escrow agent, if necessary.

This really depends on the market, Bitrated doesn't enforce any specific fees or payments. There are two possible models that I anticipate:

• Low fees (probably 0.5%-1.5%) for all transactions
• Higher fees (probably 3%-7%) for disputed transactions
• (or a combination of the two)

I personally think that paying for disputed transactions only makes more sense and will end up cheaper in the long run, but I think most people would be more comfortable paying small fees for all transactions than higher fees once in a while and would look at it kinda like insurance. Also, this would provide a more steady and predictable income to arbitrators.

As I said, Bitrated doesn't intervene at all with that; the market will decide on his own.

(I'm the developer behind Bitrated)

[e521]

The idea is good but it is still based on trust to unknown 3rd party.
How do you know the buyer is not conspiring with the arbitrator, wait for the delivery and subsequently leave with the BTCs?
Even if they implement a feedback system it will require trust.

1. Suppose that Alice wants to send money to Bob through escrow. To start off, Alice goes to the Bitrated website and goes to “Browse arbitrators”. She then selects an escrow agent (say, Trent) and clicks “Start transaction”.
...
Finally, Trent himself has no opportunity to run away with the funds. In theory, Trent can conspire with Alice to split the funds fifty-fifty and leave Bob with nothing, but such a situation would require two of the three parties involved to be dishonest, rather than only one.

shesek, do you agree/disagree?

I think arbitrators should put down an amount of BTC and be limited to escrow for that amount.
Not sure this is the best solution tho

What do you think?

[shesek]

The idea is good but it is still based on trust to unknown 3rd party.
How do you know the buyer is not conspiring with the arbitrator, wait for the delivery and subsequently leave with the BTCs?
Even if they implement a feedback system it will require trust.

1. Suppose that Alice wants to send money to Bob through escrow. To start off, Alice goes to the Bitrated website and goes to “Browse arbitrators”. She then selects an escrow agent (say, Trent) and clicks “Start transaction”.
...
Finally, Trent himself has no opportunity to run away with the funds. In theory, Trent can conspire with Alice to split the funds fifty-fifty and leave Bob with nothing, but such a situation would require two of the three parties involved to be dishonest, rather than only one.

This is a risk, but one that can be extremely small if you're using reputable, high-rated, reliable and trustworthy arbitrators that care about their reputation. Its still pretty early, but I'm hoping that the more well-known arbitrators would build a reputation that could allow people to trust them and know they won't do anything fishy.

shesek, do you agree/disagree?

I think arbitrators should put down an amount of BTC and be limited to escrow for that amount.
Not sure this is the best solution tho

What do you think?

We're planning to add a sort of fidelity bond in the form of verified accounts, but I think that reputation would do a much better job at ensuring the arbitrators are reliable.