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One interesting application is virtual economies with very low levels of trust and high degrees of fraud. Lets say I'm selling virtual gold items in an MMORPG l

by tmpz22 6y ago

One interesting application is virtual economies with very low levels of trust and high degrees of fraud. Lets say I'm selling virtual gold items in an MMORPG like WoW or Runescape, if I sell my gold to somebody through Paypal the buyer can quite easily revert the charge or use a stolen credit card found online, the cash will eventually be removed from my financial account or my financial account will be locked or even terminated as a result - while the buyer gets to keep their virtual gold. It's no surprise that Bitcoin becomes a preferred payment method here because once it's sent it's sent and not going back. Bitcoin provides an opportunity to remove consumer protections when that effect may be desired, weird as it sounds it is very effective in a trusted seller : untrusted buyer relationship. This process lubricates trade between some international exchanges with countries with higher amounts of fraud or fewer legal protections.

wpietri 6y ago
Interesting! But isn't this a "there's no honor among thieves" issue? My understanding is that this sort of trading is not permitted by the platforms. Are there markets with this kind of trust asymmetry that aren't up to something totally dodgy?
- tmpz22 6y ago
  Can't say for sure, there are probably more instances in third world countries were corruption or monopoly creates market inefficiencies that bitcoin can blast through - though I think it boils back to "bitcoin will save us from predatory transaction fees" which I think has been invalidated at this point. Notably the same virtual grey market forums I mentioned for WoW and Runescape have been using high reputation middle men (who charge a 10% fee) to broker the transaction for over a decade. Bitcoin is just more efficient then those middlemen transactions because people are willing to trust entities in exchange for the convenience of a near-instant transaction.

by tmpz22 6y ago

wpietri 6y ago

Interesting! But isn't this a "there's no honor among thieves" issue? My understanding is that this sort of trading is not permitted by the platforms. Are there markets with this kind of trust asymmetry that aren't up to something totally dodgy?

tmpz22 6y ago
Can't say for sure, there are probably more instances in third world countries were corruption or monopoly creates market inefficiencies that bitcoin can blast through - though I think it boils back to "bitcoin will save us from predatory transaction fees" which I think has been invalidated at this point. Notably the same virtual grey market forums I mentioned for WoW and Runescape have been using high reputation middle men (who charge a 10% fee) to broker the transaction for over a decade. Bitcoin is just more efficient then those middlemen transactions because people are willing to trust entities in exchange for the convenience of a near-instant transaction.