6 ms·

Bitmarkets: Private decentralized marketplaces based on two party escrow

78 points by stevedekorte 12y ago

voisine 12y ago
Very cool Steve, congratulations. I think this is the first 2 party escrow market to come out. Exciting stuff.
jdfellow 12y ago
What are the chances that this could be built for Windows or Linux using GNUStep?
- oleganza 12y ago
  It uses BitcoinJ for Bitcoin stuff and Bitmessage library, those are multi-platform already. Anyone could fork the code and build alternative UI using these components for their platform.
zaroth 12y ago
Some background I wrote last year on two-party escrow: http://opine.me/future-of-bitcoin-escrow/ http://opine.me/future-of-bitcoin-escrow/ I think its a great approach. The reputation system and efficient private search which doesn't require copying the entire database are the hard parts!
em3rgent0rdr 12y ago
very great! And as a voluntaryist myself, I love the voluntary.net branding! It would be nice if they made these tools cross-platform with linux and windows builds.
fernly 12y ago
Could you please go through your whitepaper document and change all the possessive "it's" to the proper "its"? (Mnemonic: possessive its uses the same number of apostrophes as his and hers and theirs do.)
- stevedekorte 12y ago
  Done. Thanks for the suggestion.
slagfart 12y ago
Could this be hosted somewhere else? It's blocked as a suspicious site for a few of us corporate readers.
- gojomo 12y ago
  You should mention what blocking-service/blacklist is being consulted, so that if it's an error, it can be corrected. (If it's not an error, moving the content will just get another domain/IP blocked... so it could make more sense for you to circumvent your minders locally.)
Animats 12y ago
Cute. Here's the short version: "So for the sale of an item costing X, the buyer would put up 2X (1X for payment and 1X for deposit) and the seller 1X so a total of 3X would be locked in escrow." If the buyer approves the transaction stuck in escrow, they get their 1x the price back, the seller gets their 1x deposit and 1x payment. If the seller gives a refund, everybody gets back what they put in. If neither party does anything, the buyer is out 2x and the seller is out 1x. This encourages the buyer to pay up and the seller to deliver. This is bolted onto Bitcoin, but it could be bolted onto any payment system - Visa, PayPal/eBay, Venmo, Snapcash, MMORPG in-game currencies, etc. It would probably be more useful on Venmo than on Bitcoin.
- nodata 12y ago
  How does this work for expensive items where the buyer doesn't have 2X?
  - ada1981 12y ago
    The same way other things work in the real world where you don't have the resources / can't afford it -- you don't utilize the service ;)
    - nodata 12y ago
      But other things don't require 2X
      - ada1981 12y ago
        Higher education in general seems to be an example of putting up several times the worth of the product and not getting anything back in return :) It's a service -- if you want it and can't afford it, you don't get it. It doesn't work any differently than anything else you can't afford.
  - oleganza 12y ago
    You simply don't. If it's your last 2X bitcoins, you probably should not trade on anonymous p2p marketplace in the first place. Ask your relatives and friends to help you with whatever problem you are trying to solve.
murbard2 12y ago
Please, do not run this on Tor. The p2p aspect will definitely help, as it will be harder to locate a single server with traffic analysis, but it isn't enough. Run this on bitmessage (or a fork thereof) which broadcast messages to all peers, making traffic analysis futile for an attacker.
- oleganza 12y ago
  This runs on bitmessage over Tor. Tor is just another layer to make it more difficult for merchant to recognize your location. Think of it this way: 1) Bitmessage ensures that FBI has to catch merchants or buyers individually instead of catching them in one single server like SR. 2) Tor makes it harder for them to locate a party by tracing where message came from. Tor is not perfect, but Bitmessage is not better, but worse than Tor in terms of tracing the origin of the message (because BM does not use onion routing with layers of encryption).
  - murbard2 12y ago
    How cam bitmessage possibly be worse than Tor? All that bitmessage indicates is that you're taking part in the network, not what you're actually saying or who you're talking to.
    - oleganza 12y ago
      When Alice and Bob communicate over Bitmessage, Eve can only see garbage being propagated through the network. But when Alice sends a message to Bob (who is an undercover TLA agent), Bob could monitor traffic and statistically figure that certain IP address sends messages addressed to him earlier than other nodes. So he goes and busts the owner of that IP address. Onion routing attempts to make this discovery harder for Bob because Bob will always receive messages from different IPs that supposedly do not belong to him. They have little value to him because they themselves are connected to relaying nodes, not to initial senders. Bob would have to bust too many IPs before finding the sender, which could be too expensive. Onion routing begins to fail when Bob has a lot of his own nodes in the Tor network, so for a large enough number of messages he can trace route back to the sender's physical address. To achieve real anonymity when chatting with strangers (e.g. blackmarket merchants), one needs to use a combination of these factors: 1) Bitmessage or alike to avoid evesdropping. 2) Tor to make it harder for recipient to find location of the sender. 3) Low-latency network to make statistical analysis less efficient. Every relaying node (both Tor and Bitmessage) should delay broadcasting messages randomly. 4) Infrequent communication, so it takes time for recipient to gather data. (This is a variant of #3) 5) Change physical location frequently, randomly and rarely reuse them. E.g. connect from various free wi-fi points in cafes, parks, shops, Apple Stores etc. 6) Never reuse identity between people you communicate with. Merchants must have separate Bitmessage and Bitcoin address per invoice (once item is sold, post another item with different identity). Buyers must use different Bitmessage and Bitcoin address for each purchase. This way amount of information available to an adversary will be strictly limited to just one deal. And that deal will be limited to one unique location and a few exchanged messages that hopefully won't be enough to locate the person. And even if that happens, person couldn't be charged with more than one sin. If you communicate with people you trust (friends, family members), you only need #1 and that would be enough.
oleganza 12y ago
The idea is that everyone locks up more value than they can potentially win by cheating. So every side is egoistically interested in getting their money back, so they have to find a compromise. Trolling people at your own expense is possible, but I expect it to happen infrequently to not be a big concern (just like vandalism does not happen everywhere all the time, but only somewhere, some of the time; plus in this case vandalism is quite pricey). Many people discuss extortion scenario, so let me reply to all of you. Extortion is limited when both parties are anonymous or have little knowledge about personality of another person. If I try to play dirty with you, how do I know that you are in a desperate position and will submit? Maybe you will turn out a better player in this poker? Or maybe you will simply send me a message "no, please pay as we agreed initially, period" and we won't be able to discuss this longer. This Nash Equilibrium approach is particularly great for automated agents. E.g. two apps paying each other for measurable service and owners of both apps know perfectly well how another app will behave - there's no one to extort. Either you follow the contract, or you don't. So you can troll someone by simply losing your own funds, all alone in a sad silence.

78 points by stevedekorte 12y ago

voisine 12y ago

Very cool Steve, congratulations. I think this is the first 2 party escrow market to come out. Exciting stuff.

jdfellow 12y ago

What are the chances that this could be built for Windows or Linux using GNUStep?

oleganza 12y ago
It uses BitcoinJ for Bitcoin stuff and Bitmessage library, those are multi-platform already. Anyone could fork the code and build alternative UI using these components for their platform.

zaroth 12y ago

Some background I wrote last year on two-party escrow: http://opine.me/future-of-bitcoin-escrow/ http://opine.me/future-of-bitcoin-escrow/ I think its a great approach. The reputation system and efficient private search which doesn't require copying the entire database are the hard parts!

em3rgent0rdr 12y ago

very great! And as a voluntaryist myself, I love the voluntary.net branding! It would be nice if they made these tools cross-platform with linux and windows builds.

fernly 12y ago

Could you please go through your whitepaper document and change all the possessive "it's" to the proper "its"? (Mnemonic: possessive its uses the same number of apostrophes as his and hers and theirs do.)

stevedekorte 12y ago
Done. Thanks for the suggestion.

slagfart 12y ago

Could this be hosted somewhere else? It's blocked as a suspicious site for a few of us corporate readers.

gojomo 12y ago
You should mention what blocking-service/blacklist is being consulted, so that if it's an error, it can be corrected. (If it's not an error, moving the content will just get another domain/IP blocked... so it could make more sense for you to circumvent your minders locally.)

Animats 12y ago

Cute. Here's the short version: "So for the sale of an item costing X, the buyer would put up 2X (1X for payment and 1X for deposit) and the seller 1X so a total of 3X would be locked in escrow." If the buyer approves the transaction stuck in escrow, they get their 1x the price back, the seller gets their 1x deposit and 1x payment. If the seller gives a refund, everybody gets back what they put in. If neither party does anything, the buyer is out 2x and the seller is out 1x. This encourages the buyer to pay up and the seller to deliver. This is bolted onto Bitcoin, but it could be bolted onto any payment system - Visa, PayPal/eBay, Venmo, Snapcash, MMORPG in-game currencies, etc. It would probably be more useful on Venmo than on Bitcoin.

nodata 12y ago
How does this work for expensive items where the buyer doesn't have 2X?
- ada1981 12y ago
  The same way other things work in the real world where you don't have the resources / can't afford it -- you don't utilize the service ;)
  - nodata 12y ago
    But other things don't require 2X
    - ada1981 12y ago
      Higher education in general seems to be an example of putting up several times the worth of the product and not getting anything back in return :) It's a service -- if you want it and can't afford it, you don't get it. It doesn't work any differently than anything else you can't afford.
- oleganza 12y ago
  You simply don't. If it's your last 2X bitcoins, you probably should not trade on anonymous p2p marketplace in the first place. Ask your relatives and friends to help you with whatever problem you are trying to solve.

murbard2 12y ago

Please, do not run this on Tor. The p2p aspect will definitely help, as it will be harder to locate a single server with traffic analysis, but it isn't enough. Run this on bitmessage (or a fork thereof) which broadcast messages to all peers, making traffic analysis futile for an attacker.

oleganza 12y ago
This runs on bitmessage over Tor. Tor is just another layer to make it more difficult for merchant to recognize your location. Think of it this way: 1) Bitmessage ensures that FBI has to catch merchants or buyers individually instead of catching them in one single server like SR. 2) Tor makes it harder for them to locate a party by tracing where message came from. Tor is not perfect, but Bitmessage is not better, but worse than Tor in terms of tracing the origin of the message (because BM does not use onion routing with layers of encryption).
- murbard2 12y ago
  How cam bitmessage possibly be worse than Tor? All that bitmessage indicates is that you're taking part in the network, not what you're actually saying or who you're talking to.
  - oleganza 12y ago
    When Alice and Bob communicate over Bitmessage, Eve can only see garbage being propagated through the network. But when Alice sends a message to Bob (who is an undercover TLA agent), Bob could monitor traffic and statistically figure that certain IP address sends messages addressed to him earlier than other nodes. So he goes and busts the owner of that IP address. Onion routing attempts to make this discovery harder for Bob because Bob will always receive messages from different IPs that supposedly do not belong to him. They have little value to him because they themselves are connected to relaying nodes, not to initial senders. Bob would have to bust too many IPs before finding the sender, which could be too expensive. Onion routing begins to fail when Bob has a lot of his own nodes in the Tor network, so for a large enough number of messages he can trace route back to the sender's physical address. To achieve real anonymity when chatting with strangers (e.g. blackmarket merchants), one needs to use a combination of these factors: 1) Bitmessage or alike to avoid evesdropping. 2) Tor to make it harder for recipient to find location of the sender. 3) Low-latency network to make statistical analysis less efficient. Every relaying node (both Tor and Bitmessage) should delay broadcasting messages randomly. 4) Infrequent communication, so it takes time for recipient to gather data. (This is a variant of #3) 5) Change physical location frequently, randomly and rarely reuse them. E.g. connect from various free wi-fi points in cafes, parks, shops, Apple Stores etc. 6) Never reuse identity between people you communicate with. Merchants must have separate Bitmessage and Bitcoin address per invoice (once item is sold, post another item with different identity). Buyers must use different Bitmessage and Bitcoin address for each purchase. This way amount of information available to an adversary will be strictly limited to just one deal. And that deal will be limited to one unique location and a few exchanged messages that hopefully won't be enough to locate the person. And even if that happens, person couldn't be charged with more than one sin. If you communicate with people you trust (friends, family members), you only need #1 and that would be enough.

oleganza 12y ago

The idea is that everyone locks up more value than they can potentially win by cheating. So every side is egoistically interested in getting their money back, so they have to find a compromise. Trolling people at your own expense is possible, but I expect it to happen infrequently to not be a big concern (just like vandalism does not happen everywhere all the time, but only somewhere, some of the time; plus in this case vandalism is quite pricey). Many people discuss extortion scenario, so let me reply to all of you. Extortion is limited when both parties are anonymous or have little knowledge about personality of another person. If I try to play dirty with you, how do I know that you are in a desperate position and will submit? Maybe you will turn out a better player in this poker? Or maybe you will simply send me a message "no, please pay as we agreed initially, period" and we won't be able to discuss this longer. This Nash Equilibrium approach is particularly great for automated agents. E.g. two apps paying each other for measurable service and owners of both apps know perfectly well how another app will behave - there's no one to extort. Either you follow the contract, or you don't. So you can troll someone by simply losing your own funds, all alone in a sad silence.