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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 c

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.

vkou 8y ago
In the traditional market, I send a photo of the brick to PayPal or my Visa issuer, and they refund me. You've explained how transferring all this risk to the customer is great for the merchant, but how is it great for the customer?
- sparkie 8y ago
  There's nothing stopping you from receiving an iPhone, taking a photo of a brick, and getting a refund either. The payment provider will most likely side with you and refund your money, unless you do it repeatedly, in which case they'll investigate before just refunding. The difference with a third-party escrow is that they should not have a bias towards either the buyer or the seller. The traditional markets are clearly biased towards the buyers because they don't want to lose buyers from their platforms. They don't want to lose sellers either, but the risk is smaller, because it's more difficult for a seller to switch to using another platform, and a certain amount of fraud is kind of expected from sellers. The use of one or more independent escrows can prevent the marketplace from unilaterally taking money from the seller and refunding the buyer without performing their due diligence (which PayPal frequently do not)

vkou 8y ago

In the traditional market, I send a photo of the brick to PayPal or my Visa issuer, and they refund me. You've explained how transferring all this risk to the customer is great for the merchant, but how is it great for the customer?

sparkie 8y ago
There's nothing stopping you from receiving an iPhone, taking a photo of a brick, and getting a refund either. The payment provider will most likely side with you and refund your money, unless you do it repeatedly, in which case they'll investigate before just refunding. The difference with a third-party escrow is that they should not have a bias towards either the buyer or the seller. The traditional markets are clearly biased towards the buyers because they don't want to lose buyers from their platforms. They don't want to lose sellers either, but the risk is smaller, because it's more difficult for a seller to switch to using another platform, and a certain amount of fraud is kind of expected from sellers. The use of one or more independent escrows can prevent the marketplace from unilaterally taking money from the seller and refunding the buyer without performing their due diligence (which PayPal frequently do not)