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I think Patrick sums it up quite well. Perhaps the interesting thing is imagining how this would go down 15 years later in 2015: Patrick asks if the bet is avai

by bdcs 12y ago

I think Patrick sums it up quite well. Perhaps the interesting thing is imagining how this would go down 15 years later in 2015: Patrick asks if the bet is available; it is. They enter into a 2-of-3 bitcoin transaction with 3rd-party escrow. Patrick and Mike sign the terms (probably written in pseudocode or python) using their sending bitcoin addresses (or GPG keys). Filesharing is an order-of-magnitude easier than setting up FTPs with personal IP addresses. The bet is promptly won by Patrick. Ah, how things have changed in 14 years

qopp 12y ago
They could have used an escrow service 15 years ago and the challenge terms could have been defined as a Python program since Python is 24 years old.
- nadaviv 12y ago
  Getting someone with domain expertise on the matter to provide escrow is non-trivial. Escrow trust accounts are heavily regulated in most parts of the world, and require licensing, bonds and lawyers. I highly doubt they would find someone willing to go through all this. The cost for (legally) operating an escrow is probably higher than the entire bet... (he could also do this without licensing, and take on the legal risk, I guess. this might go under the radar for small things like that, but doesn't really work at scale.) Bitcoin improves on that by not requiring a trust account - their trusted third party would simply hold one key in a 2-of-3 multi-signature scheme, giving him the authority to resolve disputes and adjudicate between them, but without holding any funds under his full control. I find the legal implications of Bitcoin smart contracts very exciting - this significantly lowers the entry barriers for providing many kinds of financial services and opens up these markets for competition in a way that was simply impossible before. There's lots of room for innovation and disruption with that. Disclaimer: standard IANAL/TINLA apply, but I'm the founder at a startup that facilitates exactly that (https://www.bitrated.com/ https://www.bitrated.com/) and received extensive legal guidance on the matter.
  - leereeves 12y ago
    Bitcoin makes the technical process easier but doesn't help with the hard problem (as you said): finding a third party with domain expertise, whom they both trust, who is willing to adjudicate at very low cost. It sounds like your startup is trying to solve that and create a "Trust Marketplace". Godspeed. Establishing trust between strangers is a very hard problem. And while you may find a way to innovate around existing laws, new laws will be written.
    - nadaviv 12y ago
      > finding a third party with domain expertise, whom they both trust I would say that in this specific instance, they could've quite easily agreed on a reputable user from the comp.compression newsgroup whom they both trust. > adjudicate at very low cost. It makes sense that arbitrators for niche markets with considerable domain expertise could charge a premium for their services. Say, $50-$150 for that specific case doesn't seem like a stretch. Also, note that the fee could be charged only in case of dispute. (and indeed, many trust agents on Bitrated offer their services for free or nearly-free when there's no dispute and no work on their part. 0.1% base fee + 2% for disputes seems to be a popular fee structure.) > Establishing trust between strangers is a very hard problem. Indeed! This is the main problem we're trying to tackle, which is arguably much harder than providing the technological platform for payments. > And while you may find a way to innovate around existing laws, new laws will be written. The thing is, we aren't taking advantage of some "loophole" or anything like that. The escrow regulations exists for a reason and makes a lot of sense - holding funds on behalf of others should have strict regulations attached to it. Escrow providers are trusted to keep the funds safe from thieves, not to "run away" with them, and to resist the temptation to invest user funds to make a (potentially quite high) profit while holding them (which could result in losing them, even in relatively "safe" investments). With multi-signature, none of that risk exists, and so it makes sense that the regulation won't either. Even when new laws gets written to address that, they're likely to be much less strict. The legal situation with multi-signature is very similar to a binding arbitration clause, so we anticipate regulations to be based off of that (and arbitration is significantly less strictly regulated than escrow).
- jfoutz 12y ago
  The greeks could have kickstarted the industrial revolution early if they'd used hero's engine. They just didn't think about the world in that way at that time.

by bdcs 12y ago

qopp 12y ago

They could have used an escrow service 15 years ago and the challenge terms could have been defined as a Python program since Python is 24 years old.

nadaviv 12y ago
Getting someone with domain expertise on the matter to provide escrow is non-trivial. Escrow trust accounts are heavily regulated in most parts of the world, and require licensing, bonds and lawyers. I highly doubt they would find someone willing to go through all this. The cost for (legally) operating an escrow is probably higher than the entire bet... (he could also do this without licensing, and take on the legal risk, I guess. this might go under the radar for small things like that, but doesn't really work at scale.) Bitcoin improves on that by not requiring a trust account - their trusted third party would simply hold one key in a 2-of-3 multi-signature scheme, giving him the authority to resolve disputes and adjudicate between them, but without holding any funds under his full control. I find the legal implications of Bitcoin smart contracts very exciting - this significantly lowers the entry barriers for providing many kinds of financial services and opens up these markets for competition in a way that was simply impossible before. There's lots of room for innovation and disruption with that. Disclaimer: standard IANAL/TINLA apply, but I'm the founder at a startup that facilitates exactly that (https://www.bitrated.com/ https://www.bitrated.com/) and received extensive legal guidance on the matter.
- leereeves 12y ago
  Bitcoin makes the technical process easier but doesn't help with the hard problem (as you said): finding a third party with domain expertise, whom they both trust, who is willing to adjudicate at very low cost. It sounds like your startup is trying to solve that and create a "Trust Marketplace". Godspeed. Establishing trust between strangers is a very hard problem. And while you may find a way to innovate around existing laws, new laws will be written.
  - nadaviv 12y ago
    > finding a third party with domain expertise, whom they both trust I would say that in this specific instance, they could've quite easily agreed on a reputable user from the comp.compression newsgroup whom they both trust. > adjudicate at very low cost. It makes sense that arbitrators for niche markets with considerable domain expertise could charge a premium for their services. Say, $50-$150 for that specific case doesn't seem like a stretch. Also, note that the fee could be charged only in case of dispute. (and indeed, many trust agents on Bitrated offer their services for free or nearly-free when there's no dispute and no work on their part. 0.1% base fee + 2% for disputes seems to be a popular fee structure.) > Establishing trust between strangers is a very hard problem. Indeed! This is the main problem we're trying to tackle, which is arguably much harder than providing the technological platform for payments. > And while you may find a way to innovate around existing laws, new laws will be written. The thing is, we aren't taking advantage of some "loophole" or anything like that. The escrow regulations exists for a reason and makes a lot of sense - holding funds on behalf of others should have strict regulations attached to it. Escrow providers are trusted to keep the funds safe from thieves, not to "run away" with them, and to resist the temptation to invest user funds to make a (potentially quite high) profit while holding them (which could result in losing them, even in relatively "safe" investments). With multi-signature, none of that risk exists, and so it makes sense that the regulation won't either. Even when new laws gets written to address that, they're likely to be much less strict. The legal situation with multi-signature is very similar to a binding arbitration clause, so we anticipate regulations to be based off of that (and arbitration is significantly less strictly regulated than escrow).
jfoutz 12y ago
The greeks could have kickstarted the industrial revolution early if they'd used hero's engine. They just didn't think about the world in that way at that time.