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Author Topic: StickK as a convenient USD escrow?  (Read 898 times)
MoPac
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July 12, 2012, 02:15:19 PM
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I have been experimenting with getting an OTC loan of BTC to be repaid in BTC but also backed with the promise of dollar value.  It's an interesting way of seeing how the WoT interacts with the real world, etc.

Anyway, it led me to the general idea that there might be benefit to an easier USD escrow technique.  This would be a way to avoid the fees and fixed-referee nature of the commercial bitcoin escrow services: is there a place where USD escrow can be done more in the OTC spirit but in a standard format and backed by a real company?

StickK ( http://www.stickk.com/ ) is a site designed to help people achieve personal goals.  On it you can pledge to, say, lose weight.  You put $X up against this goal and choose your own referees and recipients.  If the referee says that you failed, StickK charges your pre-verified credit card and pays out to your designated beneficiary.  Of course, that means that one potential downside is that both parties and the referee have to reveal themselves as real people to the site.  I don't think that means they have to be revealed to each other, however, as the site uses screen names.

The point is that there is nothing stopping the "goal" being pledged from being the repayment of a loan or the keeping of one's own end of a financial/BTC transaction.  A goal might even be written in code (unless someone else reads the T&Cs differently than me...I haven't gone through every word http://www.stickk.com/faq.php#policies ).  In fact, the site even encourages people to escrow stakes in support of getting their mortgage payments in on time and so forth.  It is implied that the person putting up the stakes/collateral is promising to try to meet his or her commitment, so it might be a violation of the T&Cs to just try to use the site as an easy USD credit-card to credit-card payment service.

It seems that when trying to escrow USD for an OTC bitcoin transaction, the problem is not just the administrative hassle, inability to choose your own referee, and fees.  There is also the risk of chargeback, which limits the USD payment methods accepted and scares people away from the convenience and security of using credit card accounts.  With StickK, the person who has put up USD stakes/collateral could still theoretically make a chargeback.  However, if they did so, they would be ripping off a real company with a real ability to ruin their real-life credit, rather than simply creating a he said/she said situation with a counterparty who may have wanted to remain obscure or anonymous in the first place. 

Other thoughts?


Adam Colligan
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Lobstertorch
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July 12, 2012, 03:38:47 PM
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I think we'd need a BTC equivalent due to the volatile prices, interesting idea though!
Stephen Gornick
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July 12, 2012, 04:56:15 PM
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is there a place where USD escrow can be done more in the OTC spirit but in a standard format and backed by a real company?

Each jurisdiction can have different regulations on escrow.

Perhaps an escrow that deferred arbitration when the two parties don't agree to something like Judge.me would be viable:
 - http://bitcointalk.org/index.php?topic=83981.0

MoPac
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July 12, 2012, 09:03:48 PM
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I think we'd need a BTC equivalent due to the volatile prices, interesting idea though!

There definitely are established BTC escrow services.  What I've started wondering about is also due to volatility but in the other direction: how do you prevent a loss of USD value during arbitration or otherwise incident to the transaction times?  More directly, how could you enforce something that is the equivalent of an OTC futures contract to be paid out in USD?  For that kind of thing, you need an escrow that deals in USD for nothing or peanuts.

Perhaps an escrow that deferred arbitration when the two parties don't agree to something like Judge.me would be viable:
 - http://bitcointalk.org/index.php?topic=83981.0

Also relevant to the above: in this thought experiment, the purpose would be to avoid having to pay a standard fee to either a professional arbitration judge or a professional escrow service.  Shouldn't OTC counterparties be able to choose their own mutually trusted neutral party, on the OTC web of trust itself, to determine whether to release funds in escrow?  It's prohibitively difficult for such a person to set up their own dollar escrow service.  Your only other alternative is paying a professional service for both their infrastructure and the monkeysense they have to use in order to render judgment.

Something like StickK could act as an established infrastructure that allows neutral third parties to be enlisted to release funds in escrow in a way that requires no investment in anything other than a judgment and a few clicks.  The neutral party would only need to be compensated for this brief effort, and the compensation could be anything agreed by the parties rather than being locked into an escrow service's fee structure. 

Adam Colligan
AdamColligan.net/gpg
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