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What will prevent seller fraud? (The kind of fraud discussed here: https://news.ycombinator.com/item?id=10857478 https://news.ycombinator.com/item?id=10857478 )

What will prevent seller fraud? (The kind of fraud discussed here: https://news.ycombinator.com/item?id=10857478 https://news.ycombinator.com/item?id=10857478 ) edit: The site's having trouble, but here's a link to the subreddit, https://www.reddit.com/r/OpenBazaar https://www.reddit.com/r/OpenBazaar

deleted 11y ago
[deleted]
jerguismi 11y ago
I guess there is multi-sig escrow built-in somehow. If not, then it is quite stupid project I guess.
- kin 11y ago
  According to their blog, there is a multisig set up. See here: https://blog.openbazaar.org/what-is-openbazaar/ https://blog.openbazaar.org/what-is-openbazaar/
- hoffmabc 11y ago
  You have the choice between direct payment transactions which is more risky and should only be used between known parties and then there is a 2 of 3 party multisig escrow transaction that allows a moderator to be an arbitrator for problems and funds are only released if 2 of the 3 parties agree.
- SamPatt 11y ago
  Yes, it uses a 2-of-3 multisig escrow by default. The third party is selected on an open marketplace.
pat2man 11y ago
They have moderators and ratings. Moderators are a third party in a multi sig transaction. More info here: https://blog.openbazaar.org/decentralized-reputation-in-openbazaar/ https://blog.openbazaar.org/decentralized-reputation-in-open...
- joosters 11y ago
  So as well as finding a trustworthy seller, you now have to also find a trustworthy moderator. Hasn't this just doubled the trust problem?
  - pat2man 11y ago
    You don't need to find a trustworthy seller, just a trustworthy moderator. Like buying something on Amazon. You don't trust the seller, you trust Amazon. This is similar to any real world transaction. I can buy directly from someone if I trust them, but if not we both need to agree to use the same third party to facilitate the transaction.
    - joosters 11y ago
      Saying you don't need a trustworthy seller is so obviously wrong... even proper, regulated, reliable and biased-towards-the-buyer companies like eBay and Amazon still publish seller ranks, ratings and reviews. Furthermore, they actively filter out the scammers. You are closing your eyes to the problems OB is creating itself.
      - dmix 11y ago
        This problem exists in market capitalism as well. The solution to this problem is that there will always be a massive incentive not to scam people - to earn a strong reputation and userbase - by being a legitimate business person. Secondly, despite a small minority who are amoral, the vast majority of people aren't short-term thinking opportunistic scammers. The rewards of being legit can be massive and rewarding on a long-term basis. Inspiring others to follow suit. Scamming is always a short-term, high-risk low-reward act that always exists as a niche in every market. The odds will always be against these people because the opposition is better financed and incentivized to counter their schemes. Thirdly, Most consumers have a certain level of tolerance for being scammed but as long as the majority of transactions are legit then the trade-offs of reduced fees, lack of censorship, and pseudonymity will keep people using the market. Finally, if someone doesn't have the tolerance or analytical ability to not get scammed then there still exists many options outside of the market. What matters is a significant enough amount of buyers/sellers use the service. It doesn't need everyone.
exo762 11y ago
OpenBazaar model may be good enough or not good enough. Hard to tell. Fraud prevention may work with help of 3rd party arbiters, but 3rd party may not be 3rd party at all. And it's not even that hard to set up. Situation where seller and buyer have two distinct sets of trusted arbiters is also easy to imagine. There is a much more interesting solution for this problem. No third party needed. Two parties, game theory and one established fact about human psychology could be enough. Idea is following - if any of parties can't possibly gain anything from fraud in the long run, there will be no fraud. To achieve that, buyer freezes two prices of the item, seller freezes one price of the item. Money is frozen atomically, and is defrosted atomically. Money is freed only if both parties are happy. Some studies indicate that people have very strong feelings about justice IF they are dealing with strangers. This should cause strong revulsion of any unjust solution (e.g. buyer caving in just to unfreeze some of frozen money). To prevent such blackmail and other forms of psychological manipulation, both parties are anonymous by default and can't communicate using this software. Project is called Bitmarkets [1], it's published on MIT license and it's amazing. Read about it. [1] https://voluntary.net/bitmarkets/ https://voluntary.net/bitmarkets/
- RealityVoid 11y ago
  That is great! I was just thinking that might be a viable solution to the escrow problem. Will check out bitmarkets, I think those guys are onto something. On the other Hand, OpenBazaar also has the social and rating system going for it, I'd love to eventually to see a solution fusing these two.
- soared 11y ago
  Very interesting idea. I haven't read through your link entirely, but I'm always a bit of wary of things based on how we think humans should behave and not how we actually see them behave.

deleted 11y ago

[deleted]

jerguismi 11y ago

I guess there is multi-sig escrow built-in somehow. If not, then it is quite stupid project I guess.

kin 11y ago
According to their blog, there is a multisig set up. See here: https://blog.openbazaar.org/what-is-openbazaar/ https://blog.openbazaar.org/what-is-openbazaar/
hoffmabc 11y ago
You have the choice between direct payment transactions which is more risky and should only be used between known parties and then there is a 2 of 3 party multisig escrow transaction that allows a moderator to be an arbitrator for problems and funds are only released if 2 of the 3 parties agree.
SamPatt 11y ago
Yes, it uses a 2-of-3 multisig escrow by default. The third party is selected on an open marketplace.

pat2man 11y ago

They have moderators and ratings. Moderators are a third party in a multi sig transaction. More info here: https://blog.openbazaar.org/decentralized-reputation-in-openbazaar/ https://blog.openbazaar.org/decentralized-reputation-in-open...

joosters 11y ago
So as well as finding a trustworthy seller, you now have to also find a trustworthy moderator. Hasn't this just doubled the trust problem?
- pat2man 11y ago
  You don't need to find a trustworthy seller, just a trustworthy moderator. Like buying something on Amazon. You don't trust the seller, you trust Amazon. This is similar to any real world transaction. I can buy directly from someone if I trust them, but if not we both need to agree to use the same third party to facilitate the transaction.
  - joosters 11y ago
    Saying you don't need a trustworthy seller is so obviously wrong... even proper, regulated, reliable and biased-towards-the-buyer companies like eBay and Amazon still publish seller ranks, ratings and reviews. Furthermore, they actively filter out the scammers. You are closing your eyes to the problems OB is creating itself.
    - dmix 11y ago
      This problem exists in market capitalism as well. The solution to this problem is that there will always be a massive incentive not to scam people - to earn a strong reputation and userbase - by being a legitimate business person. Secondly, despite a small minority who are amoral, the vast majority of people aren't short-term thinking opportunistic scammers. The rewards of being legit can be massive and rewarding on a long-term basis. Inspiring others to follow suit. Scamming is always a short-term, high-risk low-reward act that always exists as a niche in every market. The odds will always be against these people because the opposition is better financed and incentivized to counter their schemes. Thirdly, Most consumers have a certain level of tolerance for being scammed but as long as the majority of transactions are legit then the trade-offs of reduced fees, lack of censorship, and pseudonymity will keep people using the market. Finally, if someone doesn't have the tolerance or analytical ability to not get scammed then there still exists many options outside of the market. What matters is a significant enough amount of buyers/sellers use the service. It doesn't need everyone.

exo762 11y ago

OpenBazaar model may be good enough or not good enough. Hard to tell. Fraud prevention may work with help of 3rd party arbiters, but 3rd party may not be 3rd party at all. And it's not even that hard to set up. Situation where seller and buyer have two distinct sets of trusted arbiters is also easy to imagine. There is a much more interesting solution for this problem. No third party needed. Two parties, game theory and one established fact about human psychology could be enough. Idea is following - if any of parties can't possibly gain anything from fraud in the long run, there will be no fraud. To achieve that, buyer freezes two prices of the item, seller freezes one price of the item. Money is frozen atomically, and is defrosted atomically. Money is freed only if both parties are happy. Some studies indicate that people have very strong feelings about justice IF they are dealing with strangers. This should cause strong revulsion of any unjust solution (e.g. buyer caving in just to unfreeze some of frozen money). To prevent such blackmail and other forms of psychological manipulation, both parties are anonymous by default and can't communicate using this software. Project is called Bitmarkets [1], it's published on MIT license and it's amazing. Read about it. [1] https://voluntary.net/bitmarkets/ https://voluntary.net/bitmarkets/

RealityVoid 11y ago
That is great! I was just thinking that might be a viable solution to the escrow problem. Will check out bitmarkets, I think those guys are onto something. On the other Hand, OpenBazaar also has the social and rating system going for it, I'd love to eventually to see a solution fusing these two.
soared 11y ago
Very interesting idea. I haven't read through your link entirely, but I'm always a bit of wary of things based on how we think humans should behave and not how we actually see them behave.