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Author Topic: New ClearCoin feature: refund-to-charity  (Read 3268 times)
Gavin Andresen
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February 26, 2011, 05:25:36 PM
 #1

I'm looking for feedback and suggestions for a new ClearCoin feature:  refund-to-charity

Here's how it works:

When Alice creates an escrow account at ClearCoin she says that, if the coins in the account are not released, they'll be donated to charity.

She then funds the account, and shows Bob (the person she's trading with) that the coins are sitting in escrow.

Alice knows that if Bob doesn't complete the trade he won't get the coins.
Bob knows that if Alice doesn't release the coins she won't get them either.

So neither Alice nor Bob has a strong incentive to cheat.  They each have a weak incentive if they'd rather the charity get the coins (and they're not worried about potential harm to their reputation).

I've got an initial implementation up and running, with the list of charities from the Bitcoin wiki Trade page.
I'm thinking of a few enhancements, and would love feedback on which ones you think are critical and which would be just nice-to-have:

1. Give Bob (the person receiving the coins) a way to setup the escrow and send a link to Alice (who controls the account).
2. Let Bob and Alice agree (in advance) to refund the bitcoins to an arbitrary address instead of a fixed list of charities.
3. If the coins are refunded to charity, show Alice and Bob the transaction ID so it is easier for them to make sure ClearCoin isn't taking the coins.

General feedback, criticism, etc. is also very welcome!

How often do you get the chance to work on a potentially world-changing project?
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dacoinminster
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February 26, 2011, 08:07:41 PM
 #2

You'll want to make sure any new charities are real, otherwise this could be used for fraud.

It is also possible, though unlikely, that someone associated with a real existing charity could use this for fraud.

ribuck
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February 26, 2011, 08:25:33 PM
 #3

The "pay out or donate to charity" model is a big improvement, because it gives the seller of goods/services more assurance that the buyer is committed to spending the coins.

As a buyer, I would happily use this option. If the seller doesn't deliver and I divert the bitcoins to charity, I won't lose out. I donate to charity anyway, so I'll just donate less next time.

As dacoinminster implies, it needs to be clear that the buyer is not a beneficiary of the charity. But this is easily solved by having a short list of unambiguously independent charities.

Your second option (allowing the coins to be diverted to any mutually-agreed address) will be useful in the future when the coins can be diverted to an arbitrator.
Stephen Gornick
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February 26, 2011, 09:55:51 PM
 #4

1. Give Bob (the person receiving the coins) a way to setup the escrow and send a link to Alice (who controls the account).
That might be nice.  Here's a question though.  If I'm willing to pay the escrow fee, I'ld like to be able to do that such that by the time my trading partner sees the escrow account the fees have already been paid.  

However if the transaction never happens (e.g., my trading partner backs out and doesn't end up sigining in to ClearCoin) then is there a way for me to get the escrow fee that I prepaid back?

Quote
2. Let Bob and Alice agree (in advance) to refund the bitcoins to an arbitrary address instead of a fixed list of charities.
Like a mediator's address?  This is the most critical feature, IMO.  Though it will be awkward to try to obtain in advance a bitcoin address for the mediator for each transaction.  Hmm ...

Quote
3. If the coins are refunded to charity, show Alice and Bob the transaction ID so it is easier for them to make sure ClearCoin isn't taking the coins.
If they are a 501 (c)  3 (U.S. charitable organization) , I might like that so that, at a minimum, I have a "receipt" to claim that refund as a charitable contribution.

Quote
General feedback, criticism, etc. is also very welcome!

  • I want greater control over the escrow ending date.  Contracts generally have specific date for things to happen and ClearCoin should match that practice by allowing me to specify the exact date (and time?) that the escrow ends.
  • Will the threshold continue to be 100 BTC?  When ClearCoin started, that 100 BTC represented about a $25 max amount.  Today that is about a $93 amount.   I'ld like to know if there is a general USD dollar amount target for the "no fee / fee" threshold, or can I cound on up to 100 BTC being free for quite some time yet?
  • Jurisdiction: Might there be plans for a ClearCoin service residing in a different jurisdiction?
  • Anonymity: Currently if my Google account gets hacked, then my ClearCoin escrows are vulnerable should the attacker know that I use ClearCoin.  Are there any plans to allow registration using an authentation method other than a Google account?

Stephen Gornick
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February 26, 2011, 10:21:47 PM
 #5

Incidentally, I had just assumed the words mediator and arbitrar meant the same thing.  Guess not:

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Both can be binding; however, it is customary to employ mediation as a non-binding procedure and arbitration as a binding procedure.
http://library.findlaw.com/1999/Jun/1/129206.html

caveden
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February 26, 2011, 10:24:33 PM
 #6

Nice feature.

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Gavin Andresen
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February 26, 2011, 10:34:26 PM
 #7

However if the transaction never happens (e.g., my trading partner backs out and doesn't end up sigining in to ClearCoin) then is there a way for me to get the escrow fee that I prepaid back?

Great suggestion, I will modify the code to refund the escrow fee (if any) and donate the rest.

Quote
Like a mediator's address?  This is the most critical feature, IMO.  Though it will be awkward to try to obtain in advance a bitcoin address for the mediator for each transaction.  Hmm ...

I have some preliminary plans for mediated escrows that will require all three parties to have ClearCoin accounts.  I'm still thinking about how to make it as simple to use as possible.

Quote
Quote
3. If the coins are refunded to charity, show Alice and Bob the transaction ID so it is easier for them to make sure ClearCoin isn't taking the coins.
If they are a 501 (c)  3 (U.S. charitable organization) , I might like that so that, at a minimum, I have a "receipt" to claim that refund as a charitable contribution.
Great idea, I'll put it on the "nice to have" list.

Quote
I want greater control over the escrow ending date.  Contracts generally have specific date for things to happen and ClearCoin should match that practice by allowing me to specify the exact date (and time?) that the escrow ends.
Easy to do.  How critical is time?  Plus or minus 1 hour would be easy (there's a 'cron job' that runs once per hour to process refunds), but I don't want to make the Create an Escrow page more complicated than it really needs to be.

Quote
Will the threshold continue to be 100 BTC?  When ClearCoin started, that 100 BTC represented about a $25 max amount.  Today that is about a $93 amount.   I'ld like to know if there is a general USD dollar amount target for the "no fee / fee" threshold, or can I cound on up to 100 BTC being free for quite some time yet?
I'll probably target transactions under $50 remaining free, and I'm thinking of capping fees at $4... but it is likely I'll experiment with different pricing models as I fill out features.  Paying mediators (before and/or when mediation is required) adds lots more wrinkles...
Quote
Jurisdiction: Might there be plans for a ClearCoin service residing in a different jurisdiction?
Nope.  Maybe I'll franchise later if Bitcoin and ClearCoin really take off.
Quote
Anonymity: Currently if my Google account gets hacked, then my ClearCoin escrows are vulnerable should the attacker know that I use ClearCoin.  Are there any plans to allow registration using an authentation method other than a Google account?
No-- what authentication method would you like to see?  I don't like the idea of supporting arbitrary OpenID authentication, because it is so easy to create throwaway OpenID identities (creating throwaway Google identities is at least a LITTLE bit harder...).

How often do you get the chance to work on a potentially world-changing project?
Dude65535
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February 26, 2011, 10:47:01 PM
 #8

If you are worried about the security of your google account set up two factor authentication via sms or cellphone app. http://googleonlinesecurity.blogspot.com/2010/09/moving-security-beyond-passwords.html

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Stephen Gornick
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February 26, 2011, 11:03:37 PM
 #9


Quote
I want greater control over the escrow ending date.  Contracts generally have specific date for things to happen and ClearCoin should match that practice by allowing me to specify the exact date (and time?) that the escrow ends.
Easy to do.  How critical is time?  Plus or minus 1 hour would be easy.

The ability to pick a specific date would be more than adequate for my purposes. A contract would likely have a specific time so simply knowing what time ClearCoin will use so that the details in the contract can be written to match would be fine.  Probaby should use a UTC for that.

Dude65535
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March 12, 2011, 08:02:12 PM
 #10

It might be nice if the receiver could release the funds back to the sender if the deal fell through after the coins are in escrow. I think I know a way to do it without risk of exploitation.

If the receiver wanted to return the escrowed funds he would send an equal amount of bitcoins to clearcoin, then clearcoin would send half to the sender and half to the receiver. If the sender tried to get his coins back that way he would just end up releasing the bitcoins to the receiver.

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Stephen Gornick
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March 12, 2011, 08:19:45 PM
 #11

If the receiver wanted to return the escrowed funds he would send an equal amount of bitcoins to clearcoin, then clearcoin would send half to the sender and half to the receiver.

Awesome solution!

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March 12, 2011, 08:35:18 PM
 #12

This is great, Gavin!  I think that there is great promise in further generalizing the Clearcoin platform to one day allow for customized escrow contracts of standard templates.  Things that might be customized include the third-party receiving the coins, the time-frames, and perhaps the amounts that each side might contribute.

The key will be in making the contracts clear to both parties as to how exactly the contract will be executed by Clearcoin.  Eventually, you might be able to expand to other contract areas including arbitration and bonding.  Have you looked into any of Nick Szabo's work (http://szabo.best.vwh.net/contractlanguage.html )?

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May 22, 2011, 08:50:44 AM
 #13

the way its should be for Escrow

Buyer pays fees they made choice to use it (seller loses nothing)

Buyer puts up the BTC for escrow (Example 150 btc)
then the limit of time.

Seller has agreed to send item (And its what the seller said it was) they use 3rd party packing service with itemized inventory
they send the item with signature required and buyer receives the item buyer has 24 hours from getting the item to check it out and release the funds.
if buyer dont like the item then it is shipped back to Seller in same packing and condition as packed by persay 3rd party packer this take the cheating out of it.
then they have 3-5 days for shipping back to seller.

once seller gets it back everything that was there is shipped back buyer can have their funds back minus the fee.
and the seller oks it then its all good.

but if buyer send back item broken or damaged or possible missing items then funds are then donated to a choice of charity

thats how escrow should work but this clearcoin seems to be a perfect chance for noobs, like my self get taken
and the fact of the matter is there is NO recourse and the rep thing is crap if you dont have a seller rating proving with feedback like ebay then its like trusting  our president to fix
our economy ...LLOLL

I have done escrow through REAL services before I never heard of Clearcoin and the bullSh1t about seller take 100% risk is not right who care if the buyer loses their coins if they actualy get what they should have paid for. unless there is a seller ranking proving your 100% and you stand by your product and payment history.
but this is a noobs opinion.
Iceredwing
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May 22, 2011, 12:05:29 PM
 #14

the way its should be for Escrow

Buyer pays fees they made choice to use it (seller loses nothing)

Buyer puts up the BTC for escrow (Example 150 btc)
then the limit of time.

Seller has agreed to send item (And its what the seller said it was) they use 3rd party packing service with itemized inventory
they send the item with signature required and buyer receives the item buyer has 24 hours from getting the item to check it out and release the funds.
if buyer dont like the item then it is shipped back to Seller in same packing and condition as packed by persay 3rd party packer this take the cheating out of it.
then they have 3-5 days for shipping back to seller.

once seller gets it back everything that was there is shipped back buyer can have their funds back minus the fee.
and the seller oks it then its all good.

but if buyer send back item broken or damaged or possible missing items then funds are then donated to a choice of charity

thats how escrow should work but this clearcoin seems to be a perfect chance for noobs, like my self get taken
and the fact of the matter is there is NO recourse and the rep thing is crap if you dont have a seller rating proving with feedback like ebay then its like trusting  our president to fix
our economy ...LLOLL

I have done escrow through REAL services before I never heard of Clearcoin and the bullSh1t about seller take 100% risk is not right who care if the buyer loses their coins if they actualy get what they should have paid for. unless there is a seller ranking proving your 100% and you stand by your product and payment history.
but this is a noobs opinion.


I'm with you about the fact that clearcoin, even with this donate to charity option, fails to truly protect the seller in an equal way it does buyers. Personally at this point in time, I feel safer selling via paypal with seller protection rather than selling with btc via clearcoin donate escrow option. I also see that this is a problem that will need to be addressed. It's a growing issue brewing right here in our marketplace section as we speak for traders listing items to buy and sell.

There is just no way for the seller to be sure without putting complete faith on the buyer to act honestly "after" delivery. In fact they still have more incentive, albeit small, to just donate to charity and make up an excuse to get a write off rather than release the fund to the seller. There truly is a need for a real escrow services with ways to protect both involved parties. I think that the process of deciding when and who to release the fund needs to rest on a third party in some way to make it truly fair. Because leaving this decision only to the buyer, regardless funds going to charity or not, leaves the decision to pay only upto the good will of the buyer after receiving the item.

I also noticed that due to some recent events of trade scams that people are demanding the use of clearcoin to safeguard themselves. What most of them don't realize is that demanding sellers to use escrow services that they cannot count on to get paid is nothing more than saying "you take all the risk, because I'm paying with cash". Transferring of the risk from buyer to seller using Clearcoin accomplishes nothing in terms of providing a more trusting trade environment using btc. It certainly doesn't help btc being more accepted as a currency altogether. To me it only works to discourage individual sellers to accept btc as a currency of trade over the net and lowers the faith in the currency as a whole. This is a problem that I think can also have a large business potential for a solution provider in the long run.

Although I applaud the Gavin for seeing this problem early and trying to provide an automated solution in a creative way, Clearcoin still needs more great ideas to truly become the escrow service that both parties will want the other to use for a safe trade.




Littleshop
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May 22, 2011, 02:08:35 PM
 #15

One option would be to have a portion of the funds released to the seller when a tracking # shows DELIVERY from the seller address to the buyer address zip code.  Some minor checking could be done on the tracking to make sure it was at the right dates as well.  As far as I know there is not a large supply of tracking #'s out there to fake this with. 

klamathonsite
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May 22, 2011, 06:39:15 PM
 #16

That would be a great to have something like that 50% released when shipped then 50% when they get item if they feeel they got what they where promised.

other wise for me as a seller and Im honest about every thing  that why I use ebay and my feedback as reference to my business ethic that Im trust worthy I have 283 positives
and I own a business and I can give all my business and personal info to prove mmy claims when I sell something Until I can get a full rep built here on this forum.

Other wise if you want to use 1/2 azz escrow then I see it to have some protection for seller as well so we DONT GET SCREWED

I prepose the a front and back copy of your state ID with current address item is being shipped to to be scanned in and emailed before any transaction is made
then here on the forum this transaction should be dated by the posting of transaction so everyone in the community will know both parties are trust worthy and under each transaction made it just adds to their previous post. kinda like a purchase / sales history and No one but the people in trans action reply's on it. like a new thread.

I want some thing on the person I am send my HARD EARNED  product to so if they screw me You bet there will be repercussions to their dissension they make to screw someone and it will destroy their rep on this forum.

Like for every 5 positiv e transactions the member on this forum gets a 5 Bitcoin Gold avatar as seller next to their name and buyer gets 5 blue Bitcoin avatar

and the 50% down when tracking # is received is more like a real escrow then.
What do you all think

Cause with proven address by front and back copy of ID or LIC with photo give me the abilty to track down a scammer, Deal with it face to face or Court system that way.
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May 23, 2011, 03:37:53 AM
 #17

Consider also creating a 'send-coins-to-null' option: send them to an never seen on the network

Basiley
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May 23, 2011, 04:11:46 AM
 #18

why not establish 3-rd-party entity, responsible for ensurance/chargebacks/trust-deals instead ?
this also can be profitable biz with reasonable fee's .
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