Fiat transfer systems are typically unreliable. They can be intercepted, halted, delayed, reversed, and generally cannot be considered objectively predictable,

Fiat transfer systems are typically unreliable. They can be intercepted, halted, delayed, reversed, and generally cannot be considered objectively predictable, with a wide variety of unique and nontrivial failure modes - not all of which are recoverable - and no objective SLA / service description. The problem with assuming good faith and using actor reputation (even third-party arbitrated) is that, in becoming a trusted actor, the amount of money available for cut-and-run scenarios increases exponentially (both for arbitrator and actor), until it ultimately makes sense and happens (eg. numerous scam darknet markets, etc.)... often the claim is "sorry we got hacked!" Using real world user identities as insurance has the issue that using one's fiat bank account to perform automated or semi-automated trades on behalf of others is probably dubious to against terms of service, or at a minimum vaguely arguably so when politically expedient. Therefore, revealing the real world user identity of an accused bad actor (ie. fiat account holder) as an insurance against bad behavior is likely to expose them to an undue scale of legal hassle and/or asset seizure, which is not something wise to trust a third party with no matter how trustworthy the arbitrators are supposed to be. My gut feeling is that such systems work only at small scale, with a veneer of trust that can be established in different ways: deposit is placed with counterparty, reputation within some shared community, mafia boss will murder you if you rip off the system, etc. Between absolute strangers, it is exceptionally difficult to reliably scale, even if you can establish it. Finally, an important point is that frequent <1BTC transfer activity to random destinations on conventional fiat accounts are likely to trigger bank anti money laundering (AML) heuristics.