How about decentralized community blockchain marketplaces without escrow?

[SelfCustody]

What about making a community peer to peer marketplace for goods and services that trades directly on blockchain without the need for an escrow service?

The problem
The currently available peer to peer marketplaces are just a centralized list of items for sale that accept crypto for payment. These need to use an escrow service that make the seller wait for a long period of time before receiving the payment for the item they sold.

The solution
Using a full blockchain proof of reserves to verify the marketplaces reserves as well as obligations in real time. This will reduce marketplace friction by allowing sellers to receive instant payment for their sold items and also allow both buyers and sellers to be confident that the marketplace is fully solvent at all times.

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[Bitcoin_Arena]

The problem is not one way, though.

Have you thought about sellers who are scammers and sell fake items to buyers? Now if the seller is going to receive instant payment minus the buyer verifying if what they have received is legitimate, and it turns out to be the opposite, how are you going to solve such disputes minus and active escrow service?

[robelneo]

What about making a community peer to peer marketplace for goods and services that trades directly on blockchain without the need for an escrow service?


The problem
The currently available peer to peer marketplaces are just a centralized list of items for sale that accept crypto for payment. These need to use an escrow service that make the seller wait for a long period of time before receiving the payment for the item they sold.

I don't think this is an issue at all, escrow guaranteed that the buyer will get correctly the stuff or that the description the buyer posted in the marketplace is correct, it's an assurance that the seller will be satisfied and he can reject the product or service if it fails to his expectation and the seller will try to be as transparent and true to what he is offering because of the possibility of rejection of the seller.

The solution
Using a full blockchain proof of reserves to verify the marketplaces reserves as well as obligations in real-time. This will reduce marketplace friction by allowing sellers to receive instant payment for their sold items and also allow both buyers and sellers to be confident that the marketplace is fully solvent at all times.

It only guarantees reserves how about the condition of the product you cannot do that if it only guarantees supply there may be testimonials but we cannot guarantee that those testimonials are not fake, I like the present setup of doing escrow its safe and its a buyer and seller protection

[Solosanz]

You're only talk about your idea, but you still not really understand about proof of reserves. The concern about proof of reserves is the data isn't real time, so your idea will not work. We should also need to think about the collateral, since you're use blockchain, the collateral must be cryptocurrency or fiat since it's liquid. It's impossible if we talk about lending where you receive crypto and give your other crypto as a collateral.

But not possible if you trade for goods or service.

Concerns About Proof of Reserves (PoR)

Although proof of reserves offers assurance that a crypto company has the assets in place to cover its liabilities, it is only a single snapshot in time, not a live accounting of balances over time. It also only shows the on-chain assets of the custodian; it does not track where those assets come from (i.e., whether the assets were borrowed for the purposes of the audit).

What assets can be considered reserves?

Assets that are considered reserves are cryptocurrencies (or other types of assets) that offer strong liquidity. In other words, the company could sell off the assets to cover withdrawals or other liabilities, if needed. These may include cash or other fixed income assets. As for cryptocurrencies, this would include the more popular coins, such as Bitcoin and Ethereum, and stablecoins, like Tether, USDC, or BUSD.

[joniboini]

I just checked your post history, and it seems one of your projects still relies on having somebody help filter out bad actors. I don't think it is that different from how escrow works in a marketplace. If you plan to solve the necessity of an escrow then you need to build a tool that is smart enough, easy to understand for everyone, and not prone to false alarms so that it can solve any issues from both sides. I'm not sure if removing human intervention is the only solution since contexts do matter and a code might not be able to handle it. CMIIW.

[un_rank]

An escrow does not necessarily have to be a real person checking in on both parties to ensure that a deal goes smoothly. It can be a smart contract or any other means of ensuring that both parties which are involved in the trade get what they bargained for out of it.

Attempting to create a marketplace without escrow means that both traders are trusting the other person not to scam them with no cushion to protect themselves should they get swindled.

- Jay -

[Faisal2202]

Well, after reading your post and other member's reply, i can tell your model lacks only one or two things. Which are liquidation problem like why the amount will be provided by everyone and the data shown to us will not be live. Second is the scammers. So, how one can solve such limitations.

i think ZK-proof mechanism might be used to identify that the seller of any goods or thing has the legitimate thing and on the other side the person has the right and legit amount. This, will decrease the fear of getting scam. As, this Zero knowledge proof mechanism will also secure your personal identity too.

And to get the live reserves information instead of just getting a screenshot information you could use chainlink or Harmony platforms. But i have no experience of any of them. So before selecting one you must ask here.

[Pmalek]

An escrow does not necessarily have to be a real person checking in on both parties to ensure that a deal goes smoothly. It can be a smart contract or any other means of ensuring that both parties which are involved in the trade get what they bargained for out of it.

OP wants a marketplace where the seller will be paid immediately, but that can't work. The buyer must confirm that the product or service they purchased is legitimate. That's going to take time, especially for physical goods that need to be shipped across towns and countries. Smart-contract enabled confirmation that the goods are legitimate aren't a problem. That can be built in. The waiting time needed to receive, test, and confirm everything is in perfect working order won't be reduced with automated escrow.     

[SelfCustody]

The problem is not one way, though.

Have you thought about sellers who are scammers and sell fake items to buyers? Now if the seller is going to receive instant payment minus the buyer verifying if what they have received is legitimate, and it turns out to be the opposite, how are you going to solve such disputes minus and active escrow service?

Yes I have thought about bad sellers. The marketplace operator would have to first allow the marketplace user seller privileges before they would be able to sell. There could be some rules set in place such as the user must have a certain amount of positive feedback before they would be able to sell. The disputes would be over seen by the marketplace operator through a feedback system and bad actors would have their marketplace account cancelled.

I was one of the original international sellers on both Ebay and Amazon in the 1990s. This was before electronic internet payment systems such as Paypal even existed and buyers had to snail mail the sellers the payment for the item. I think using similar practices that Ebay had set in place when first launching their online marketplace could successfully be used again to launch community blockchain marketplaces.

[SelfCustody]

It only guarantees reserves how about the condition of the product you cannot do that if it only guarantees supply there may be testimonials but we cannot guarantee that those testimonials are not fake, I like the present setup of doing escrow its safe and its a buyer and seller protection

I Think using escrow would give the buyer unfair privileges over the seller. In my decades of experience buying and selling on the internet it is usually the buyers that tend to be the more problematic users of online marketplaces.

[SelfCustody]

You're only talk about your idea, but you still not really understand about proof of reserves. The concern about proof of reserves is the data isn't real time, so your idea will not work. We should also need to think about the collateral, since you're use blockchain, the collateral must be cryptocurrency or fiat since it's liquid. It's impossible if we talk about lending where you receive crypto and give your other crypto as a collateral.

But not possible if you trade for goods or service.

Concerns About Proof of Reserves (PoR)

Although proof of reserves offers assurance that a crypto company has the assets in place to cover its liabilities, it is only a single snapshot in time, not a live accounting of balances over time. It also only shows the on-chain assets of the custodian; it does not track where those assets come from (i.e., whether the assets were borrowed for the purposes of the audit).

What assets can be considered reserves?

Assets that are considered reserves are cryptocurrencies (or other types of assets) that offer strong liquidity. In other words, the company could sell off the assets to cover withdrawals or other liabilities, if needed. These may include cash or other fixed income assets. As for cryptocurrencies, this would include the more popular coins, such as Bitcoin and Ethereum, and stablecoins, like Tether, USDC, or BUSD.

In the same article you quoted under KEY TAKEAWAYS it also states that "a real-time track of reserves" is something that could be made available to users.

Concerns About Proof of Reserves (PoR)

Crypto companies may publish periodic proof-of-reserves audit results or have a real-time track of reserves available on their website.

The marketplace users could use blockchain explorers verify the real-time balances of both the reserve accounts and all the obligations that have been issued.

I just checked your post history, and it seems one of your projects still relies on having somebody help filter out bad actors. I don't think it is that different from how escrow works in a marketplace. If you plan to solve the necessity of an escrow then you need to build a tool that is smart enough, easy to understand for everyone, and not prone to false alarms so that it can solve any issues from both sides. I'm not sure if removing human intervention is the only solution since contexts do matter and a code might not be able to handle it. CMIIW.

Yes the marketplace operator would help filter out bad actors from even being able to list in the first place and being an arbitrator should disputes arise. A robust feedback system would be used to filter out bad actors. Users of the marketplace are incentivized to keep excellent feedback reports for their account if they want to keep using the marketplace and deal with other highly rated users.

[un_rank]

There could be some rules set in place such as the user must have a certain amount of positive feedback before they would be able to sell.

They will need to sell something to get positive feedback, so how will they be able to get that feedback if they cannot sell without it?

I Think using escrow would give the buyer unfair privileges over the seller. In my decades of experience buying and selling on the internet it is usually the buyers that tend to be the more problematic users of online marketplaces.

Using escrows protects both parties who can be malicious in their own way. Sellers can try to sell sub standard products and buyers can be too demanding on what they expect.
The way your suggestion can work is if you have all sellers registered and the buyers have a return policy if they do not get the product in the quality that was advertised.
You will be acting as the escrow in that case.Note that writing consecutive posts as you are doing is against the rules of the forum.

- Jay -

[SelfCustody]

Well, after reading your post and other member's reply, i can tell your model lacks only one or two things. Which are liquidation problem like why the amount will be provided by everyone and the data shown to us will not be live. Second is the scammers. So, how one can solve such limitations.

i think ZK-proof mechanism might be used to identify that the seller of any goods or thing has the legitimate thing and on the other side the person has the right and legit amount. This, will decrease the fear of getting scam. As, this Zero knowledge proof mechanism will also secure your personal identity too.

And to get the live reserves information instead of just getting a screenshot information you could use chainlink or Harmony platforms. But i have no experience of any of them. So before selecting one you must ask here.

The blockchain proofs can be live and users could use blockchain explorers to verify the live data for themselves. The blockchain I plan to use could provide real-time blockchain proof of the obligations of the marketplace. The scammers would be solved by using feedback mechanisms I briefly described in my other responses. People should always be very skeptical of marketplace users with low or bad feedback and all marketplace users have an incentive to keep their feedback clean.

[SelfCustody]

Because in some case, peer to peer only means buyer interact directly with seller. Although there are non-centralized P2P marketplace such as OpenBazaar, which unfortunately never took off.

And how the blockchain handle dispute between buyer and seller?

I have never had a chance to use OpenBazaar, so I can't really give an opinion about why it never took off.

A feedback system similar to what worked for Ebay when they first launched their online marketplace would be used. This would allow other marketplace users to be warned of bad actors.

[SelfCustody]

OP wants a marketplace where the seller will be paid immediately, but that can't work. The buyer must confirm that the product or service they purchased is legitimate. That's going to take time, especially for physical goods that need to be shipped across towns and countries. Smart-contract enabled confirmation that the goods are legitimate aren't a problem. That can be built in. The waiting time needed to receive, test, and confirm everything is in perfect working order won't be reduced with automated escrow.     

Both Ebay and Amazon never used an escrow service that made sellers wait to receive payment for the items they sold and shipped. Not using an escrow seemed to have worked out well for them.

[SelfCustody]

They will need to sell something to get positive feedback, so how will they be able to get that feedback if they cannot sell without it?

The marketplace would at first be used within online communities that have had contact with each within the community.

Using escrows protects both parties who can be malicious in their own way. Sellers can try to sell sub standard products and buyers can be too demanding on what they expect.
The way your suggestion can work is if you have all sellers registered and the buyers have a return policy if they do not get the product in the quality that was advertised.
You will be acting as the escrow in that case.Note that writing consecutive posts as you are doing is against the rules of the forum.

- Jay -

It would be up to the seller to declare the terms of sale for the item, they could offer a return policy if they chose. There would be no escrow involved to use the marketplace. Sorry, I wanted to respond to several different comments and doing it separately really helped to keep things somewhat organized. I will try to not do it in the future now that I am getting more familiar with posting here.

[rat03gopoh]

OP, obviously you don't understand what the role of escrow is here. Their task is more complex than you think and there is no reason to eliminate them especially to ensure the satisfaction of both parties. Some services that automate the escrow system also don't work well and many fail to resolve transaction disputes.

[SelfCustody]

OP, obviously you don't understand what the role of escrow is here. Their task is more complex than you think and there is no reason to eliminate them especially to ensure the satisfaction of both parties. Some services that automate the escrow system also don't work well and many fail to resolve transaction disputes.

I guess we can agree to disagree then. Like I mentioned earlier I was an international seller on Ebay and Amazon before electronic payment systems like Paypal even existed. I remember the rules in place and how it was made to work primarily based on marketplace user rating and feedback. I think the near instant settlement of crypto is very applicable to how it was before there was a Paypal or other electronic payment systems.

[Faisal2202]

The blockchain proofs can be live and users could use blockchain explorers to verify the live data for themselves. The blockchain I plan to use could provide real-time blockchain proof of the obligations of the marketplace. The scammers would be solved by using feedback mechanisms I briefly described in my other responses. People should always be very skeptical of marketplace users with low or bad feedback and all marketplace users have an incentive to keep their feedback clean.

Well, that will work too, but at the start when people will start to test out your marketplace. Then your platform might already be filled with scammers then how will you deal it then. Because until other users will not test out other party with his/her money or digital goods. Till then they can not give reviews about them. And in my thoughts, When you are making a new platform you must try to put as much effort as you can in building trust.

You have to look from all sides. As people are already very frustrated with the recent payment hack in which millions of dollars are already gone i think the name is Alphapo. Well, again best of luck

[rat03gopoh]

OP, obviously you don't understand what the role of escrow is here. Their task is more complex than you think and there is no reason to eliminate them especially to ensure the satisfaction of both parties. Some services that automate the escrow system also don't work well and many fail to resolve transaction disputes.

I guess we can agree to disagree then. Like I mentioned earlier I was an international seller on Ebay and Amazon before electronic payment systems like Paypal even existed. I remember the rules in place and how it was made to work primarily based on marketplace user rating and feedback. I think the near instant settlement of crypto is very applicable to how it was before there was a Paypal or other electronic payment systems.

Yeah, the problem is there are many unknown seller intentions in decentralized markets, especially in the crypto space where scammers are more likely to disappear without a trace or most cases of fraud are simply forgotten because the amount is too small to chase.
Removing escrow for the sake of efficiency of transaction settlement does sound beneficial to honest sellers, but you also have to look at it from the buyer's perspective before saying it's worth implementing. Btw, during your profession as a seller, have you ever sent counterfeit products just to try to test the platform's security system?