8 ms·

Chargebacks from the business side. Rip-off protection from the consumer side. I personally will not be quick to give up the ability to dispute charges. That is

Chargebacks from the business side. Rip-off protection from the consumer side. I personally will not be quick to give up the ability to dispute charges. That is a feature that just isn't possible in bitcoin without involving a third party.

mjevans 8y ago
Both of those are what escrow is for. A trusted and publicly audited thing where a payment is held until the services are rendered.
- Filligree 8y ago
  Escrow is far more expensive than chargebacks. And if we're involving a third party either way, I'd rather have the regulated, battle-tested, already existing banking system.
  - wcoenen 8y ago
    Chargebacks essentially are escrow. The merchant can't stop them from happening because the money is taken from the merchant account reserve, i.e. a minimum balance that the merchant can't withdraw. Sounds similar to money held by an escrow agent doesn't it? And credit card transactions are also expensive, between 1.5% and 3% and even higher[1]. It's just that the cost is hidden from the consumer by accounting for it in a higher product price. (Some merchants like gas stations may offer a cash discount, which can be used as a rough estimate of that hidden cost.) On top of this, merchants get charged a hefty fee (on the order of $50) for each chargeback that they receive. [1] https://www.creditdonkey.com/credit-card-processing-fees.html https://www.creditdonkey.com/credit-card-processing-fees.htm...
    - adrianN 8y ago
      The EU proposed limiting transaction fees to 0.2%. I don't know whether that is law already or not.
      - thesimon 8y ago
        0.2% for debit cards, 0.3% for credit cards. Only applies to consumer cards and only the interchange (ie. the part that the bank of your card gets). MasterCard and Visa fees are still quite substantial. A regular merchant would now pay < 1%, so quite a bit cheaper than before.
      - dalore 8y ago
        Looks like it was 0.3% https://www.europeanpaymentscouncil.eu/news-insights/insight/18-months-impact-interchange-fee-regulation-european-union-cards-market https://www.europeanpaymentscouncil.eu/news-insights/insight... The outcome was that they cut back on lots of loyalty programs, and not many businesses passed on the cost savings to the consumers. So sounds like limiting the fees had an adverse effect on the consumer.
  - sneak 8y ago
    That system that you use, while international, is only available to a small fraction of internet users. Entire countries, and billions of potential customers, are cut off from transacting with you under that model.
  - decentralised 8y ago
    There's the possibility to have escrow without a third party using smart-contracts.
    - throwaway2048 8y ago
      The problem is that there is no way for a smart contract to actually know if goods have been received or not, so it is still subject to abuse.
      - decentralised 8y ago
        That's true but it can be made to work with oracles or a third-party arbitration (eg: check out Kleros, Truebit and Plasma) system.
        mikeash 8y ago
        But now you’re no longer “without a third party.”
        decentralised 8y ago
        There are nuances to the type of third parties we are talking about here. The type I'm discussing, something like the Lightning Channel and Plasma operators, these are roles that have cryptoeconomic properties that don't allow them to take over your wallet or refuse your service. edit: The base premise of having a smart-contract being itself the escrow is perfectly achievable. This doesn't mean that such a setup is the best solution to every use case and I believe that we'll see plenty of developments in this area in the coming years. For now the best approaches use game theory and computer science to reduce the amount of "trust" the parties must have in each other and the system itself but they are very much under active research & development.
        spookthesunset 8y ago
        That isn't "trustless" anymore! You gotta trust a bunch of unknown crypto startups now. Are these guys really add more value to the economy than chargebacks? I very much doubt it.
- bunderbunder 8y ago
  The problem there is, nobody likes using escrow for everyday things. Example: Renting a car. The rental companies want a way to recoup costs from any damage you do by, e.g., smoking in the car. They give you two options for how this can work: You can either pay with a credit card, which has a way for htem to do that built-in. Or, if you don't want to pay with a credit card, you can give them a bunch of extra money to hold in escrow. Guess which option people basically never choose, when both options are available to them. I would assume that merchants feel similarly about chargebacks vs escrow, and for similar reasons.
decentralised 8y ago
There is no way of having charges "deducted from your account" with Bitcoin so there's no need for dispute or chargebacks. The way cyrptocurrencies work, in order for there to be an interface that allows third parties from charging your account, you would need a smart-contract for counterfactual transactions instatiation. Right now, I can't think of a "problem" that would require chargeback or dispute resolution and couldn't be solved this way.
- hoffs 8y ago
  You buy a good online from a seller, seller doesn't ship the item and refuses to pay back. What then? With credit cards you can go to the bank and demand chargeback or whatever.
  - decentralised 8y ago
    Do you buy the good directly from the seller? If so, and if you believe the seller isn't trustworthy, I'd recommend the use of a smart-contract that only releases the coins if both parties sign a message.
    - ss248 8y ago
      But how would you protect the seller from the "evil buyer"? The one who receives the goods, but never releases the lock? Sure, he is not getting his money back, but the seller is not getting that money also.
      - decentralised 8y ago
        The buyer has to pay to make the order, that's usually the case in most e-commerce transactions I can think of. If the evil buyer convinces the naive seller to ship products without a payment being executed or a smart-contract based bond, then the situation is exactly the same with or without cryptocurrencies.... the seller must report the buyer to the police and either hire a collection agency or take some other action to recover the goods. edit: on a second look, I think I misread your comment... are you asking about the mechanics of conterfactual transactions? If so, the idea is that the contract is entered with the buyer signing a transaction with some form of conditional operation. One the seller ships the product, the shipping code could very well be the condition that allows releasing the funds. There's plenty to talk about here around game theory and mechanism design, but if you are interested in the topic I can recommend some cool state-channel and plasma contracts we can go over and discuss.
krupan 8y ago
How many times in your life have you had to use a charge back? I never have.
- yifanl 8y ago
  Just because you've never had to use it doesn't mean it's useless.
  - kkkaizer 8y ago
    I personally feel crypto users will goto any lengths to glorify the shitty db blockchain is. If (!Supported by blockchain): Print("Useless tech and I dont use it") Else Print("HODL")
- schmichael 8y ago
  Chargebacks are like seatbelts: ideally only a tiny percentage of users ever need to actually use them, but their presence increases the safety of the system for all users.
  - deleted 8y ago
    [deleted]
- bascule 8y ago
  If you've ever had your credit card number stolen and used by a criminal for fraudulent purchases which you later disputed, you've used chargebacks.
  - krupan 8y ago
    Right, you need a remedy for the inherent insecurity of credit cards. Is it always a charge back though? In other words, are merchants eating all the costs of fraudulent credit card transactions? I guess either way the cost really gets passed on to us consumers in the end.
    - 8y ago
ric2b 8y ago
> That is a feature that just isn't possible in bitcoin without involving a third party. It's also not possible in fiat currency without a third-party. But Bitcoin not only gives you the option but also provides better solutions on how to involve the third-party. A Bitcoin escrow doesn't need to control your funds, only the permission to approve or deny a transaction, using multi-signature.

mjevans 8y ago

Both of those are what escrow is for. A trusted and publicly audited thing where a payment is held until the services are rendered.

Filligree 8y ago
Escrow is far more expensive than chargebacks. And if we're involving a third party either way, I'd rather have the regulated, battle-tested, already existing banking system.
- wcoenen 8y ago
  Chargebacks essentially are escrow. The merchant can't stop them from happening because the money is taken from the merchant account reserve, i.e. a minimum balance that the merchant can't withdraw. Sounds similar to money held by an escrow agent doesn't it? And credit card transactions are also expensive, between 1.5% and 3% and even higher[1]. It's just that the cost is hidden from the consumer by accounting for it in a higher product price. (Some merchants like gas stations may offer a cash discount, which can be used as a rough estimate of that hidden cost.) On top of this, merchants get charged a hefty fee (on the order of $50) for each chargeback that they receive. [1] https://www.creditdonkey.com/credit-card-processing-fees.html https://www.creditdonkey.com/credit-card-processing-fees.htm...
  - adrianN 8y ago
    The EU proposed limiting transaction fees to 0.2%. I don't know whether that is law already or not.
    - thesimon 8y ago
      0.2% for debit cards, 0.3% for credit cards. Only applies to consumer cards and only the interchange (ie. the part that the bank of your card gets). MasterCard and Visa fees are still quite substantial. A regular merchant would now pay < 1%, so quite a bit cheaper than before.
    - dalore 8y ago
      Looks like it was 0.3% https://www.europeanpaymentscouncil.eu/news-insights/insight/18-months-impact-interchange-fee-regulation-european-union-cards-market https://www.europeanpaymentscouncil.eu/news-insights/insight... The outcome was that they cut back on lots of loyalty programs, and not many businesses passed on the cost savings to the consumers. So sounds like limiting the fees had an adverse effect on the consumer.
- sneak 8y ago
  That system that you use, while international, is only available to a small fraction of internet users. Entire countries, and billions of potential customers, are cut off from transacting with you under that model.
- decentralised 8y ago
  There's the possibility to have escrow without a third party using smart-contracts.
  - throwaway2048 8y ago
    The problem is that there is no way for a smart contract to actually know if goods have been received or not, so it is still subject to abuse.
    - decentralised 8y ago
      That's true but it can be made to work with oracles or a third-party arbitration (eg: check out Kleros, Truebit and Plasma) system.
      - mikeash 8y ago
        But now you’re no longer “without a third party.”
        decentralised 8y ago
        There are nuances to the type of third parties we are talking about here. The type I'm discussing, something like the Lightning Channel and Plasma operators, these are roles that have cryptoeconomic properties that don't allow them to take over your wallet or refuse your service. edit: The base premise of having a smart-contract being itself the escrow is perfectly achievable. This doesn't mean that such a setup is the best solution to every use case and I believe that we'll see plenty of developments in this area in the coming years. For now the best approaches use game theory and computer science to reduce the amount of "trust" the parties must have in each other and the system itself but they are very much under active research & development.
      - spookthesunset 8y ago
        That isn't "trustless" anymore! You gotta trust a bunch of unknown crypto startups now. Are these guys really add more value to the economy than chargebacks? I very much doubt it.
bunderbunder 8y ago
The problem there is, nobody likes using escrow for everyday things. Example: Renting a car. The rental companies want a way to recoup costs from any damage you do by, e.g., smoking in the car. They give you two options for how this can work: You can either pay with a credit card, which has a way for htem to do that built-in. Or, if you don't want to pay with a credit card, you can give them a bunch of extra money to hold in escrow. Guess which option people basically never choose, when both options are available to them. I would assume that merchants feel similarly about chargebacks vs escrow, and for similar reasons.

decentralised 8y ago

There is no way of having charges "deducted from your account" with Bitcoin so there's no need for dispute or chargebacks. The way cyrptocurrencies work, in order for there to be an interface that allows third parties from charging your account, you would need a smart-contract for counterfactual transactions instatiation. Right now, I can't think of a "problem" that would require chargeback or dispute resolution and couldn't be solved this way.

hoffs 8y ago
You buy a good online from a seller, seller doesn't ship the item and refuses to pay back. What then? With credit cards you can go to the bank and demand chargeback or whatever.
- decentralised 8y ago
  Do you buy the good directly from the seller? If so, and if you believe the seller isn't trustworthy, I'd recommend the use of a smart-contract that only releases the coins if both parties sign a message.
  - ss248 8y ago
    But how would you protect the seller from the "evil buyer"? The one who receives the goods, but never releases the lock? Sure, he is not getting his money back, but the seller is not getting that money also.
    - decentralised 8y ago
      The buyer has to pay to make the order, that's usually the case in most e-commerce transactions I can think of. If the evil buyer convinces the naive seller to ship products without a payment being executed or a smart-contract based bond, then the situation is exactly the same with or without cryptocurrencies.... the seller must report the buyer to the police and either hire a collection agency or take some other action to recover the goods. edit: on a second look, I think I misread your comment... are you asking about the mechanics of conterfactual transactions? If so, the idea is that the contract is entered with the buyer signing a transaction with some form of conditional operation. One the seller ships the product, the shipping code could very well be the condition that allows releasing the funds. There's plenty to talk about here around game theory and mechanism design, but if you are interested in the topic I can recommend some cool state-channel and plasma contracts we can go over and discuss.

krupan 8y ago

How many times in your life have you had to use a charge back? I never have.

yifanl 8y ago
Just because you've never had to use it doesn't mean it's useless.
- kkkaizer 8y ago
  I personally feel crypto users will goto any lengths to glorify the shitty db blockchain is. If (!Supported by blockchain): Print("Useless tech and I dont use it") Else Print("HODL")
schmichael 8y ago
Chargebacks are like seatbelts: ideally only a tiny percentage of users ever need to actually use them, but their presence increases the safety of the system for all users.
- deleted 8y ago
  [deleted]
bascule 8y ago
If you've ever had your credit card number stolen and used by a criminal for fraudulent purchases which you later disputed, you've used chargebacks.
- krupan 8y ago
  Right, you need a remedy for the inherent insecurity of credit cards. Is it always a charge back though? In other words, are merchants eating all the costs of fraudulent credit card transactions? I guess either way the cost really gets passed on to us consumers in the end.
  - 8y ago

ric2b 8y ago

> That is a feature that just isn't possible in bitcoin without involving a third party. It's also not possible in fiat currency without a third-party. But Bitcoin not only gives you the option but also provides better solutions on how to involve the third-party. A Bitcoin escrow doesn't need to control your funds, only the permission to approve or deny a transaction, using multi-signature.