BitBazaar concept

[gamey]

This is interesting.  So it doesn't appear to be a true Nash equilibrium if I understand correctly.  I'm trying to think of why this would be.  Why not use a true Nash equilibrium? 

I suspect it has something to do with the asymmetry of the "game".  Since the buyer always has to put up the purchase price and the seller doesn't, the game has no true equilibrium.  ie it can't be made fair therefore no equilibrium exists.

NashX + trust system seems to be quite useful though.

[Ander]

  Now that I think about it there is one way that this can be counteracted:  if an individual can see the number of unresolved disputes.  In this case leaving an issue unresolved with harm the merchant by the loss of future sales.   A scammer would have to keep his margins thin to appear within the noise of normal business disputes.

Exactly...reputation systems work better than this escrow system.

[bytemaster]

The main problem with the blackcoin escrow system is:

If I scam you, you have a choice:

Lose your original money PLUS the collateral, in order to hurt me back.  But you get hurt even worse this way.

OR.

Lose just your original money, and agree to let me have the money I scammed from you.



Once you have suffered the original loss, that money is basically a sunk cost at this point.  Sure, you can lose MORE money (the escrow collateral) in order to hurt me back, but what do you really gain from hurting me?  If this is a one time deal and you're never going to interact with me again either way, you are better off sucking it up and not losing more money.


If that's not enough, I might even sweeten the deal, offering you half your initial money back if you agree to release the funds out of escrow.

 Every decision should be neutral.  The "scammer" won't scam because he gains nothing by "scamming" and infact loses. Like the global nuke strategy of MAD.

Hrmmm. 

There other side is the buyer can't claim they didn't receive the item so maybe that is correct.  It just has to be looked at as a monolithic process. 

This is where I first heard of it being used in crypto-currencies.  This is a great infographic.  http://nashx.com/HowItWorks

NashX ignores the fact that the criminal can play the odds and win on average.

Lets assume the following both people put $100 into a hat and now both have to agree how to divide the proceeds from the hat.

1) Honest individuals would clearly just agree to each pull out $100
2) Dishonest individual will say give me $190 and you take $10 or you get nothing.    Now the honest party is faced with a choice of getting $10 or nothing.  $10 is clearly better than nothing to they agree to it.   The dishonest individual just stole $90.    In this case the honest party may feel that it is worth the loss of $10 to cause the other guy to lose $100 and say no.   In this case the dishonest individual can back off and say, "ok, 120:80" final offer.   The dishonest individual can back all the way back to $101:99 and still make a profit.  The honest individual is faced with the choice, "Am I willing to lose $99 to prevent the other party from earning $1? 

   Now the attacker doesn't have to win every time.  He can play the Odds.   If 99% of the time an honest individual will settle for $95 and he repeats the scam 100 times, then he will earn $500 when he wins and lose $100 for a net profit of $400.   

   So NashX only works when the honest individuals are willing to take one for the team rather than defect for personal profit.   Because few people are willing to "trust the crowd" they will almost always defect and thus the scammer can almost always win.   

  Now that I think about it there is one way that this can be counteracted:  if an individual can see the number of unresolved disputes.  In this case leaving an issue unresolved with harm the merchant by the loss of future sales.   A scammer would have to keep his margins thin to appear within the noise of normal business disputes. 




 

[CryptoPrometheus]

I am not convinced that it really makes sense , as an ultimate end goal, for most business transactions to be so opaque. I understand the present need, since we are still under duress (threat of violence, theft-tax, and coersion from gov't). But  assuming we found our way to a mostly "voluntary" society, wouldn't this opaqueness just encourage more underhandedness and shady dealings?

Just food for thought, but here's something to chew: how to prevent the sale of Stolen goods? If I was a criminal inclined towards stealing property, an anonymous and seamless way to transport "goods" around the world would be a huge boon for me and my gang.  I am not arguing against the right and option for personal privacy, just trying to figure out if we are barking up the right tree....I mean, besides "black market" items, who really needs, or will need in the future, this type of anonymity when it comes to legitimate business transactions?

As far as the escrow issue, won't insurance take care of that? Pay a spread, insure against theft/loss. The actuary company/DAC will determine rates based on the (soon to come) sophisticated reputation system.

[starspirit]

Just an FYI. In a previous thread from early November, I raised the idea of establishing such a market-place on the exchange of scripts, for which I think there would be high demand in the current community, as well as helping the broader bitShares environment. See reply #7 here https://bitsharestalk.org/index.php?topic=11004.msg145279#msg145279 if interested in the types of scripts I thought people might find of value.

[gamey]

The main problem with the blackcoin escrow system is:

If I scam you, you have a choice:

Lose your original money PLUS the collateral, in order to hurt me back.  But you get hurt even worse this way.

OR.

Lose just your original money, and agree to let me have the money I scammed from you.



Once you have suffered the original loss, that money is basically a sunk cost at this point.  Sure, you can lose MORE money (the escrow collateral) in order to hurt me back, but what do you really gain from hurting me?  If this is a one time deal and you're never going to interact with me again either way, you are better off sucking it up and not losing more money.


If that's not enough, I might even sweeten the deal, offering you half your initial money back if you agree to release the funds out of escrow.

 Every decision should be neutral.  The "scammer" won't scam because he gains nothing by "scamming" and infact loses. Like the global nuke strategy of MAD.

Hrmmm. 

There other side is the buyer can't claim they didn't receive the item so maybe that is correct.  It just has to be looked at as a monolithic process. 

This is where I first heard of it being used in crypto-currencies.  This is a great infographic.  http://nashx.com/HowItWorks

[Ander]

The main problem with the blackcoin escrow system is:

If I scam you, you have a choice:

Lose your original money PLUS the collateral, in order to hurt me back.  But you get hurt even worse this way.

OR.

Lose just your original money, and agree to let me have the money I scammed from you.



Once you have suffered the original loss, that money is basically a sunk cost at this point.  Sure, you can lose MORE money (the escrow collateral) in order to hurt me back, but what do you really gain from hurting me?  If this is a one time deal and you're never going to interact with me again either way, you are better off sucking it up and not losing more money.


If that's not enough, I might even sweeten the deal, offering you half your initial money back if you agree to release the funds out of escrow. 

[gamey]

Thoughts on BlackCoin's double deposit two party escrow?


http://www.reddit.com/r/Bitcoin/comments/2fil2x/does_openbazaar_plan_on_implementing_twoparty/

"For example, I want to sell you a bauble. You deposit your payment into a multi-sig address that requires both our consent to release the funds. I can verify that deposit before sending you the bauble.

In addition to that, we also agree to deposit a certain amount of funds into a second multi-sig address that requires both our consent, to be used as collateral against the trade.

If I don't satisfy the trade, you won't release me the funds. If I satisfy the trade and you still don't release the funds, then you risk losing those funds and your collateral. This is important, because it means we both have more to lose by scamming each other, than by completing an honest trade.
"

This is a Nash equilibrium.  AFAIK solutions that are workable fall into 2 categories.  Game-theory which requires more money upfront or a escrow system utilizing a  third party which charges a %.

Nash equilibrium has the upside of low overhead because there is no arbiter but requires people selling expensive items to have capital available and willing to risk it on the tiny chance something strange happens.

Escrow/arbiter charges people a fee on every transaction and is likely more difficult to program.  (You need all the communication & management infrastructure )

Oh yea, there is a third option and thats caveat emptor and rely on a trust system.

[hpenvy]

Thoughts on BlackCoin's double deposit two party escrow?


http://www.reddit.com/r/Bitcoin/comments/2fil2x/does_openbazaar_plan_on_implementing_twoparty/

"For example, I want to sell you a bauble. You deposit your payment into a multi-sig address that requires both our consent to release the funds. I can verify that deposit before sending you the bauble.

In addition to that, we also agree to deposit a certain amount of funds into a second multi-sig address that requires both our consent, to be used as collateral against the trade.

If I don't satisfy the trade, you won't release me the funds. If I satisfy the trade and you still don't release the funds, then you risk losing those funds and your collateral. This is important, because it means we both have more to lose by scamming each other, than by completing an honest trade.
"

[gamey]

Is the following a possible solution? Evidence of physical transfer and receipt could be provided by postal tracking. Once the escrow agent is provided copy of delivery receipt, the money is released to the seller. People could still exchange without such an arrangement, but at their own risk.

I'll sell you a box of gold if you think this is a solution.  How many kilos you want?  Low low price $100 a kg. 

edit - Ok I'm being a bit dickish.  There  is nothing preventing people from sending bricks in the mail.  THere is nothing stopping people from taking pictures of bricks in the box after removing the legitimate shipped items.  This sort of proof does nothing.  Although E-bay/Paypal may use it, they also know identities which limits how much it can be done.

[starspirit]

The biggest problem for a fully crypto ebay is that it will suffer from the opposite problem that ebay does. Ebay suffers from rouge buyers, who receive the item and then complain that they didn't. Ebay always sides with the buyer since there are more of them and reverses the charges.

Since there are no reversible charges in crypto, a crypto ebay will suffer from rouge sellers, who wont ship the item, but will take payment.

The only possible way of resolving this is to have a trusted physical distribution center which sellers post their items to, the center then confirms the item, forwards it on and acts as escrow for the payment as well.

This is fantastically difficult and expensive to do in practice.

What we need is way to get as close to this as possible with the least amount of pain.

Is the following a possible solution? Evidence of physical transfer and receipt could be provided by postal tracking. Once the escrow agent is provided copy of delivery receipt, the money is released to the seller. People could still exchange without such an arrangement, but at their own risk.

[xeroc]

oh .. I meant for the mobile wallet to agree on the QR code syntax .. kind of obvious

[bytemaster]

I should be able to see order on laptop, then pay on phone by entering the same info in my phone wallet.

Best would (IMHO) be to come up with the same kind of payment scheme as is used in bitcoin QR-codes .. something like "ADDRESS?amount=3&asset=USD" ..

We already have that.   But QR and URL links are not always functional and so you ALSO need to show the user:  "account": X,  "memo": Y, "amount": Z USD so they can manually pay if they like or use a wallet that does not support QR / URL.

[xeroc]

I should be able to see order on laptop, then pay on phone by entering the same info in my phone wallet.

Best would (IMHO) be to come up with the same kind of payment scheme as is used in bitcoin QR-codes .. something like "ADDRESS?amount=3&asset=USD" ..

[bytemaster]

[12/12/14, 1:10:36 PM] macman2k: The plugin does not work for me and doesn't provide me the info to manually pay
[12/12/14, 1:11:05 PM] macman2k: The link should work but sometimes the Operating System screws up or you are using a non standard wallet
[12/12/14, 1:11:40 PM] macman2k: or paying from a different computer, so it needs to give the user payment instructions and show the robohash + memo + amount


I would go back and refine your recent one.   Any cart that does not display manual instructions for making payment when the URL support is unavailable has problems.

I should be able to see order on laptop, then pay on phone by entering the same info in my phone wallet. 

[jsidhu]

I have contacted bitmarkets.  They said that they would be willing to do a fork so that their bitmarkets program works with bitshares.

The want to charge $200/hour as a consulting fee... I mentioned applying for a delegate job but they don't seem interested.

Does this seem like something that we would want to do???

This is their website: Voluntary.net and  http://cofactorsoftware.com

If its open source I can do it.

How is your delegate push coming along?  I really want to see you working on Open Bazaar and bitBazaar.

Hey,

I completed 3 of the carts... 8 left to go, in this round! Testing along the way. My delegate is up dev.sidhujag... I'd appreciate the votes. I hope by the time I'm done with the carts I'll be voted in by then.

[Rune]

What's the difference between hiring a delegate to pay for this, or having them own a delegate that pays them to do it?

The important thing is that they clearly don't "get" the vision of bitshares. They also made sure to mention that they "accept USD and bitcoin" i.e. They do not want anything to do with our altcoin. If we were to collaborate with them, we would want to have the official bitmarkets client have bitUSD support.

Anyway it could still be really cool if we could just copy their code and improve and integrate it into our ecosystem (if it's worth it compared to developing a system from scratch). One of the cool things their system has is 2 of 2 escrow for bitcoin - we could simply keep that in place so that our bitbazaar will also support BTC with escrow, and then have third party escrow support only for bitUSD transactions. That will give us the desirable situation where the platform would be usable by bitcoiners who then are exposed and slowly converted to using bitUSD instead. It would give us something very valuable that we can advertise directly to bitcoin users that they will want to support.

[hpenvy]

I have contacted bitmarkets.  They said that they would be willing to do a fork so that their bitmarkets program works with bitshares.

The want to charge $200/hour as a consulting fee... I mentioned applying for a delegate job but they don't seem interested.

Does this seem like something that we would want to do???

This is their website: Voluntary.net and  http://cofactorsoftware.com

If its open source I can do it.

How is your delegate push coming along?  I really want to see you working on Open Bazaar and bitBazaar.

[fluxer555]

What's the difference between hiring a delegate to pay for this, or having them own a delegate that pays them to do it?

[jsidhu]

I have contacted bitmarkets.  They said that they would be willing to do a fork so that their bitmarkets program works with bitshares.

The want to charge $200/hour as a consulting fee... I mentioned applying for a delegate job but they don't seem interested.

Does this seem like something that we would want to do???

This is their website: Voluntary.net and  http://cofactorsoftware.com

If its open source I can do it.

[gamey]

This is only of significant initial value if we are  able to piggyback on the network effect of something larger.  A BTS only market by itself will bring very little value at this point. 

Go talk to enough random everyday crypto-geeks and you're going to hear at least one guy who wants to make the next Ebay.  Some of them may even try it.  It never works except for black-market stuff but BTC has that covered now.

All these sites die because sellers don't have enough buyers.  Why would BTS market be different?  It would in fact be worse.  Are sellers worried about volatility so much they'll adopt a platform with a small amount of buyers?  Doubtful.  What we'll end up with is a sad little market with a handful of people selling cheap commodity/digital items.

I know we have to start somewhere but I'd recommend people rethink the value of a market at this stage. 

If it is going to have value, it needs to be a BTC/bitUSD hybrid and the BTC guys would likely have to be bribed to go along with it.

[lil_jay890]

$200/hr is reasonable for contract-based development. I bet you guys were "asking" too much instead of "offering" to sponsor their project with a delegate if they added bitUSD support.

I did tell them how a delegate would be able to offer them compensation for their work.  I still think this would be a viable option, but I'm not sure if something similar to bitmarkets is in the works right now by the core dev team.  I don't want to double up on work that's already being done.

[toast]

$200/hr is reasonable for contract-based development. I bet you guys were "asking" too much instead of "offering" to sponsor their project with a delegate if they added bitUSD support.

[lil_jay890]

It's their way of politely declining our offer. I got the same answer.

I figured as much... Too bad. I liked their product.

[Rune]

It's their way of politely declining our offer. I got the same answer.

[xeroc]

$200/hour? seriously? why am I doing all my stuff for almost free? .. ah .. I remember ... because I am a voluntary

[lil_jay890]

I have contacted bitmarkets.  They said that they would be willing to do a fork so that their bitmarkets program works with bitshares.

The want to charge $200/hour as a consulting fee... I mentioned applying for a delegate job but they don't seem interested.

Does this seem like something that we would want to do???

This is their website: Voluntary.net and  http://cofactorsoftware.com

[xeroc]

The biggest problem for a fully crypto ebay is that it will suffer from the opposite problem that ebay does. Ebay suffers from rouge buyers, who receive the item and then complain that they didn't. Ebay always sides with the buyer since there are more of them and reverses the charges.

Since there are no reversible charges in crypto, a crypto ebay will suffer from rouge sellers, who wont ship the item, but will take payment.

Would Gateways help with this? Let's say the platform functions with the UIA "crypto_ebay_USD_IOU" it can do chargebacks in those situations correct?

That's the plan for more sofisticated UIAs .. however .. if you cannot trade them freely on the decentralized exchange you gain nothing against ebay/paypal

[cob]

The biggest problem for a fully crypto ebay is that it will suffer from the opposite problem that ebay does. Ebay suffers from rouge buyers, who receive the item and then complain that they didn't. Ebay always sides with the buyer since there are more of them and reverses the charges.

Since there are no reversible charges in crypto, a crypto ebay will suffer from rouge sellers, who wont ship the item, but will take payment.

Would Gateways help with this? Let's say the platform functions with the UIA "crypto_ebay_USD_IOU" it can do chargebacks in those situations correct?

[matt608]

The more popular a site like this is the better the reputation systems work.

Durability against shutdown, lttle/no downtime + fast loading speeds would help increase transactions and therefore opportunities to build reputation, or scam, cutting the wheat from the chaff.

At the moment you hardly get any ordinary businesses on these kinds of market places but if one was set up that actually functioned as smoothly as ebay but without the fees, then it could bring in far more users.

e.g.  online advertising.  Having advertisers + content creators matched, like Google adsense or Izea https://www.youtube.com/watch?v=DyitfcJhRXA, but with much lower fees.  If the currency used had to be bitUSD that could being enough income to be allow virtually no fees.  The only fee is - risk using bitUSD.  There could be an online advertising section, someone could put up advertising space for sale on their blog.  Advertisers buy it.

Another market would be the buying/selling of websites, like flippa, but on bitzaaar.   

The site just needs to be reliable enough for people to trust it with other types of goods.

[Gentso1]

Its probably a good idea to get in touch and at least make contact with as many of these companies as possible. Its so early in the ebay-crypto race their is no telling which market will emerge as a leader or if their will be more then one.

I have also heard BM's talks of integrating a market but with a limited dev team that has more then enough work I wonder if it would make more sense to focus on partnering with one of the above or all the above companies instead of starting our own movement.

[Rune]

Coindesk had an interesting article on a company called bitmarkets.

Their escrow is pretty interesting since it only involves 2 people.

"Bitmarkets' escrow system could make it more attractive to users, however. OpenBazaar's is different in that it works with three parties consisting of the buyer, seller and a trusted third-party. Funds can only be released if two of those three parties sign off on a multi-signature account.

Bit markets cuts all the fat out of a transaction, relying solely on the buyer and seller. Sellers have to 'lock' in funds equal to the price of the item being sold. Buyers do the same, but lock double the amount. The locked funds are held in escrow in their Bitmarkets wallets. When a transaction is completed smoothly, the locked amounts are released and the seller is paid."

http://www.coindesk.com/bitmarkets-launches-decentralised-bitcoin-marketplace-tor-support/

interesting apps ... and good design ... maybe worth to contact them about possible coops ?

http://voluntary.net/

I'm writing them a fan mail right now, explaining bitshares and giving them my support should they decide to become bitshares delegates. I think it makes perfect sense for us to simply get their team on as delegates and then use their platform as the basis for the bitbazaar. Their platform even has a bitshares branded name already!

[cass]

Coindesk had an interesting article on a company called bitmarkets.

Their escrow is pretty interesting since it only involves 2 people.

"Bitmarkets' escrow system could make it more attractive to users, however. OpenBazaar's is different in that it works with three parties consisting of the buyer, seller and a trusted third-party. Funds can only be released if two of those three parties sign off on a multi-signature account.

Bit markets cuts all the fat out of a transaction, relying solely on the buyer and seller. Sellers have to 'lock' in funds equal to the price of the item being sold. Buyers do the same, but lock double the amount. The locked funds are held in escrow in their Bitmarkets wallets. When a transaction is completed smoothly, the locked amounts are released and the seller is paid."

http://www.coindesk.com/bitmarkets-launches-decentralised-bitcoin-marketplace-tor-support/

interesting apps ... and good design ... maybe worth to contact them about possible coops ?

http://voluntary.net/

[xeroc]

It should be difficult to establish trust in easy to lose .. much like pow .. difficult to find nounce yet easy to verify

[lil_jay890]

Coindesk had an interesting article on a company called bitmarkets.

Their escrow is pretty interesting since it only involves 2 people.

"Bitmarkets' escrow system could make it more attractive to users, however. OpenBazaar's is different in that it works with three parties consisting of the buyer, seller and a trusted third-party. Funds can only be released if two of those three parties sign off on a multi-signature account.

Bit markets cuts all the fat out of a transaction, relying solely on the buyer and seller. Sellers have to 'lock' in funds equal to the price of the item being sold. Buyers do the same, but lock double the amount. The locked funds are held in escrow in their Bitmarkets wallets. When a transaction is completed smoothly, the locked amounts are released and the seller is paid."

http://www.coindesk.com/bitmarkets-launches-decentralised-bitcoin-marketplace-tor-support/

[Rune]

That's what escrow is for. Seems to work for online black markets, they're fine with using the anonymous site owner as the escrow because you're trusting their system with a lot anyway. In our case you would trust a mutually agreed-upon third party.

They physically take delivery of the item? If not, how does it work?

Buyers don't release the funds until they have taken delivery of the items. In case they never release the funds, the seller will open a dispute with the escrow agent (the black market operator). If the buyer never receives the item they will open up a dispute and try to get the money back from the escrow agent.

There's still plenty of seller fraud though, especially because it's normal for many sellers to demand early release for international sales. So there are instances of merchants building up a good reputation, then screwing over a lot of buyers simultaneously before disappearing. It should be possible to engineer a web of trust in such a way that this will never make sense economically though, because trust is very valuable asset. It just needs to be tracked reliably.

[monsterer]

That's what escrow is for. Seems to work for online black markets, they're fine with using the anonymous site owner as the escrow because you're trusting their system with a lot anyway. In our case you would trust a mutually agreed-upon third party.

They physically take delivery of the item? If not, how does it work?

[toast]

The biggest problem for a fully crypto ebay is that it will suffer from the opposite problem that ebay does. Ebay suffers from rouge buyers, who receive the item and then complain that they didn't. Ebay always sides with the buyer since there are more of them and reverses the charges.

Since there are no reversible charges in crypto, a crypto ebay will suffer from rouge sellers, who wont ship the item, but will take payment.

The only possible way of resolving this is to have a trusted physical distribution center which sellers post their items to, the center then confirms the item, forwards it on and acts as escrow for the payment as well.

This is fantastically difficult and expensive to do in practice.

What we need is way to get as close to this as possible with the least amount of pain.

That's what escrow is for. Seems to work for online black markets, they're fine with using the anonymous site owner as the escrow because you're trusting their system with a lot anyway. In our case you would trust a mutually agreed-upon third party.

[Rune]

The biggest problem for a fully crypto ebay is that it will suffer from the opposite problem that ebay does. Ebay suffers from rouge buyers, who receive the item and then complain that they didn't. Ebay always sides with the buyer since there are more of them and reverses the charges.

Since there are no reversible charges in crypto, a crypto ebay will suffer from rouge sellers, who wont ship the item, but will take payment.

The only possible way of resolving this is to have a trusted physical distribution center which sellers post their items to, the center then confirms the item, forwards it on and acts as escrow for the payment as well.

This is fantastically difficult and expensive to do in practice.

What we need is way to get as close to this as possible with the least amount of pain.

True, and this is already a big problem on some of the black markets without proper escrow.

I hope the BTS escrow system combined with a reliable, scalable way to determine  trustworthiness will solve this.

[monsterer]

The biggest problem for a fully crypto ebay is that it will suffer from the opposite problem that ebay does. Ebay suffers from rouge buyers, who receive the item and then complain that they didn't. Ebay always sides with the buyer since there are more of them and reverses the charges.

Since there are no reversible charges in crypto, a crypto ebay will suffer from rouge sellers, who wont ship the item, but will take payment.

The only possible way of resolving this is to have a trusted physical distribution center which sellers post their items to, the center then confirms the item, forwards it on and acts as escrow for the payment as well.

This is fantastically difficult and expensive to do in practice.

What we need is way to get as close to this as possible with the least amount of pain.

[Rune]

It's clear from BM's posts that he has ambitious plans for a BTS native bazaar system with improved features that allows it to actually be useful for ordinary people and have a UX similar to eBay.

We already know it will have no volatility due to bitassets, and that escrow will be very convenient to use since it will be inbuilt in the bitshares protocol.

There have also been some posts by BM revealing one of the killer features: hosted merchant nodes. This is probably the most important feature because most merchants will not want to deal with hosting their own node, and secure hosting services will allow anyone to quickly set up a shop simply by paying some fees.

What other features do you think a bitshares powered bitbazaar will have?

I think it would be interesting to jot down the concept of this future system, then take it to the open bazaar forums and see what they think of it and see if we can hire some of the talent from there to help us build it.