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> That is an incredibly valuable service, and one that adds a lot of consumer protection to services that are able to leverage it well. From my perspective, th

> That is an incredibly valuable service, and one that adds a lot of consumer protection to services that are able to leverage it well. From my perspective, the blockchain significantly reduces consumer protection. If I buy a product online, to be shipped to my house, how does the blockchain provide consumer protection? It doesn't. If the seller absconds with my money, and fails to ship the product or ships a counterfeit product, then there's absolutely nothing that I can do about it. With a credit card, I can report that fraud to the credit card bureau, who will reverse the transaction by default, then investigate and require the merchant to provide proof that the transaction was authorized and legitimate. I can take a photo of an obviously counterfeit product and send that to the credit card company as evidence of the fraud. Or if the product never arrived, it's on the merchant to prove that they shipped something to my address, and they'll need to provide a tracking number. As a consumer, this is a significant protection for me, and it's a significant fraud deterrent. Merchants who are bad actors and engage in fraud will be cut off from the network. Furthermore, buyers who are bad actors and issue an unreasonable number of chargebacks will also be cut off. There is no similar oversight of blockchains. If my credit card is stolen and used by a thief, then that's no problem for me. All of the fraudulent transactions are reversed, and the only real inconvenience is waiting for the replacement card to arrive. That's another important consumer protection: my money can't be stolen. With blockchain technology, thieves can steal anyone's money in an irreversible way if they get access to it. Chargebacks are one of the most valuable and most important consumer protection capabilities of the traditional banking system. Removing chargebacks significantly reduces consumer protection. Blockchain-based payment systems that do not involve a trusted central party will have worse consumer protection, not better. The only circumstance in which they'll be better is if the entire transaction, and delivery of goods and services, can be validated by a smart contract. That will only be possible for a small number of real-world transactions. It will not apply to the majority of day-to-day commerce. I am not claiming that the blockchain has no redeeming qualities. It has a bunch of valuable characteristics and benefits that I'm not mentioning here. However, consumer protection is not one of them.

wellboy 8y ago
Regarding charge backs, why can validation node not simply make a transaction back from the fraudulent vendor to the consumer. Obviously, there would need to be adequate proof that the nodes then review, but once that is given, what's the problem. Furthermore, the fraudulent vendor would be investigated for fraud and facing a fine or jailtime. This could be a dapp on the blockchain. I don't see why this can't be done by a team of trained lawyers and judges that review these fraudulent transactions.
tfha 8y ago
The service we provide is not a physical one that gets shipped, it's a digital one where we can use the blockchain to escrow payments until there is a cryptographic proof that the digital service has been provided according to the contract created between the consumer and the storage provider. Blockchains are most powerful when dealing with purely digital transactions, such as data hosting, information trading, prediction markets, digital currency exchange, non-fungible tokens, digital gambling, micropayments for digital services (like CDNs, viewing web articles, etc.).
- vkou 8y ago
  How can I cryptographically prove that the seller shipped me a brick, instead of an iPhone?
  - tfha 8y ago
    You can't, but that doesn't mean you can't do the same for fully digital services like cloud storage.
  - sparkie 8y ago
    This can't be proven in a traditional market either. The reverse is also true: as a seller, you can't prove they shipped the iPhone and not the brick the user claimed to receive (or that it wasn't tampered with by someone in between). The big difference in the existing marketplaces is that the marketplace is usually both the service provider and the escrow, where Bitcoin allows these two services to be separated. In the case of Paypal, they will side with the buyer in most disputes, which puts you at a big disadvantage as a merchant. You're basically relying on the majority to be honest, and take into account that small scale fraud is not going to be a major risk to your business. There's also the disaster that is buying digital goods with Paypal, where the seller has virtually no comeback in the case of fraud, and is one of the means people use to empty hacked accounts, since it leaves no physical trail. The seller of the digital service almost always takes the hit. This is the real biggest use-case for Bitcoin, as cryptography can be used to prove the sale of the digital goods.
    - 8y ago

wellboy 8y ago

Regarding charge backs, why can validation node not simply make a transaction back from the fraudulent vendor to the consumer. Obviously, there would need to be adequate proof that the nodes then review, but once that is given, what's the problem. Furthermore, the fraudulent vendor would be investigated for fraud and facing a fine or jailtime. This could be a dapp on the blockchain. I don't see why this can't be done by a team of trained lawyers and judges that review these fraudulent transactions.

tfha 8y ago

The service we provide is not a physical one that gets shipped, it's a digital one where we can use the blockchain to escrow payments until there is a cryptographic proof that the digital service has been provided according to the contract created between the consumer and the storage provider. Blockchains are most powerful when dealing with purely digital transactions, such as data hosting, information trading, prediction markets, digital currency exchange, non-fungible tokens, digital gambling, micropayments for digital services (like CDNs, viewing web articles, etc.).

vkou 8y ago
How can I cryptographically prove that the seller shipped me a brick, instead of an iPhone?
- tfha 8y ago
  You can't, but that doesn't mean you can't do the same for fully digital services like cloud storage.
- sparkie 8y ago
  This can't be proven in a traditional market either. The reverse is also true: as a seller, you can't prove they shipped the iPhone and not the brick the user claimed to receive (or that it wasn't tampered with by someone in between). The big difference in the existing marketplaces is that the marketplace is usually both the service provider and the escrow, where Bitcoin allows these two services to be separated. In the case of Paypal, they will side with the buyer in most disputes, which puts you at a big disadvantage as a merchant. You're basically relying on the majority to be honest, and take into account that small scale fraud is not going to be a major risk to your business. There's also the disaster that is buying digital goods with Paypal, where the seller has virtually no comeback in the case of fraud, and is one of the means people use to empty hacked accounts, since it leaves no physical trail. The seller of the digital service almost always takes the hit. This is the real biggest use-case for Bitcoin, as cryptography can be used to prove the sale of the digital goods.
  - 8y ago