3 ms·

What happens if both Bob and Alice dispute? Bob says Alice received a game, Alice says she didn't? No automatic system can solve that.

dragontamer 8y ago
In this case, if both dispute, then Alice gets the money back after 30 days. As I said earlier: this is insufficient for a serious car purchase. But it IS a sufficient mechanism for Steam Games (if "Bob" is Valve/Steam, then Bob can simply revoke access to that game). Amazon and Ebay also work on this mechanism. Not on Blockchain... but these companies overwhelmingly side with the paying customer (in this case: Alice)... leaving the business owners / service providers at a disadvantage. But Ebay also has a customer-review system attached, so people can tattletale on each other if a particular customer becomes abusive. --------- So in effect, you have a "cheap" default policy (in this case: Alice always gets the money back in 30 days by default) for the Escrow, but then you still have to create a review mechanism to handle the various cases of abuse. If 30-days is insufficient, then 60-day or 180-day return policies exist as well. The point is, anything you can imagine can be the default escrow policy. You can even lock the money away forever by default (IE: FORCE Alice and Bob to work together)... if you really want to go there. Alternatively, the Escrow can have the policy of "We'll only email you the key once you win a court case", if they really want to integrate into the system of law / courts we already have. That wouldn't be fully automated, but it'd be relatively effort from the perspective of the Escrow business.
- Jasper_ 8y ago
  OK, so what part of that needs a smart contract and blockchain rather than a cron job?
  - dragontamer 8y ago
    Well, for one, Bob can see the BTC or Ethereum in the wallet due to the public blockchain. Bob can be assured that Alice has indeed sent the funds. Furthermore, the Escrow service isn't actually holding any money. If you were to implement Escrow using today's banking technology, you have to give Escrow the money, and then Escrow gives the money to Bob (or Alice) pending the results of the automated service. Ex: You can't implement an escrow service using ACH... not at least... without actually taking the money. But with Bitcoin or Ethereum, you can implement an escrow WITHOUT taking any money at all. Escrow can only give the money to Bob (or give it to Alice), provable through encryption. In effect: Blockchain provides a way to divide the responsibility and prove it through cryptography. The Blockchain Escrow NEVER has access to the funds, throughout the entire transaction. And therefore, it is easier to bootstrap Escrow's reputation. True, we can use well-trusted banks and courts to handle these transactions. Trusted Escrow services do exist. But my point is that Blockchain could make it cheaper and easier to do. ---------- I mean, provided that Bitcoin actually can stabilize, among other things. There are a lot of reasons to not do this with BTC or Ethereum, primarily because of the gross variance in price. But still, its a nifty concept. Its not "change the world" level, but it is certainly a technological advancement in my eyes. Something that could allow new businesses (with lower-trust models) to accomplish things that previously took a lot of trust, and a lot of effort. (IE: Escrow services).
tim333 8y ago
In the above case "Escrow" decides who could be a person who looks at evidence like receipts.

dragontamer 8y ago

In this case, if both dispute, then Alice gets the money back after 30 days. As I said earlier: this is insufficient for a serious car purchase. But it IS a sufficient mechanism for Steam Games (if "Bob" is Valve/Steam, then Bob can simply revoke access to that game). Amazon and Ebay also work on this mechanism. Not on Blockchain... but these companies overwhelmingly side with the paying customer (in this case: Alice)... leaving the business owners / service providers at a disadvantage. But Ebay also has a customer-review system attached, so people can tattletale on each other if a particular customer becomes abusive. --------- So in effect, you have a "cheap" default policy (in this case: Alice always gets the money back in 30 days by default) for the Escrow, but then you still have to create a review mechanism to handle the various cases of abuse. If 30-days is insufficient, then 60-day or 180-day return policies exist as well. The point is, anything you can imagine can be the default escrow policy. You can even lock the money away forever by default (IE: FORCE Alice and Bob to work together)... if you really want to go there. Alternatively, the Escrow can have the policy of "We'll only email you the key once you win a court case", if they really want to integrate into the system of law / courts we already have. That wouldn't be fully automated, but it'd be relatively effort from the perspective of the Escrow business.

Jasper_ 8y ago
OK, so what part of that needs a smart contract and blockchain rather than a cron job?
- dragontamer 8y ago
  Well, for one, Bob can see the BTC or Ethereum in the wallet due to the public blockchain. Bob can be assured that Alice has indeed sent the funds. Furthermore, the Escrow service isn't actually holding any money. If you were to implement Escrow using today's banking technology, you have to give Escrow the money, and then Escrow gives the money to Bob (or Alice) pending the results of the automated service. Ex: You can't implement an escrow service using ACH... not at least... without actually taking the money. But with Bitcoin or Ethereum, you can implement an escrow WITHOUT taking any money at all. Escrow can only give the money to Bob (or give it to Alice), provable through encryption. In effect: Blockchain provides a way to divide the responsibility and prove it through cryptography. The Blockchain Escrow NEVER has access to the funds, throughout the entire transaction. And therefore, it is easier to bootstrap Escrow's reputation. True, we can use well-trusted banks and courts to handle these transactions. Trusted Escrow services do exist. But my point is that Blockchain could make it cheaper and easier to do. ---------- I mean, provided that Bitcoin actually can stabilize, among other things. There are a lot of reasons to not do this with BTC or Ethereum, primarily because of the gross variance in price. But still, its a nifty concept. Its not "change the world" level, but it is certainly a technological advancement in my eyes. Something that could allow new businesses (with lower-trust models) to accomplish things that previously took a lot of trust, and a lot of effort. (IE: Escrow services).

tim333 8y ago

In the above case "Escrow" decides who could be a person who looks at evidence like receipts.