Topic: Do-it-yourself Escrow with two-factor address utility - page 2. (Read 11983 times)

Whoa.  Gamechanger right there.

Yeah, m-of-n is the generic term, meaning you need m parties of the original n parties to be able to spend the coins. In a 2-of-3, you could have the buyer, the seller, and an arbiter as the 3 people who participate in the transaction. They sign it in such a way that two of those are needed to spend the coin to the final destination (the sellers wallet). In most cases, if the buyer an seller agree, then they would just sign it and the arbiter would never even be involved. If there was a problem, however, the arbiter would make a ruling and with the buyer spend it back to the buyer, or with the seller spend it to the seller. This would require trust in the judgement and integrity of the arbiter, but is does allow two people with relatively low reputation to leverage the reputation of a well known third party.

+1

What are 2-of-3 transactions?  
Is it a system in which the buyer and/or seller have to deposit some money that will be transferred back to them upon completion of a mutually satisfied transaction?  Because such a system would make sense to me.

I have seen the term "m-of-n transactions" before on this forum, is this a more generalised term?

Although I am not yet technically literate enough, do-it-yourself escrow seems like an awesome idea.  Thanks Casascius!

This essentially requires some kind of resolution between the two partners. However

- a seller could be a scammer just looking to grief "buyers".
- a buyer, once receiving the item, could random the locked up coins for a discount. The seller has no leverage here.

I'm not too keen on this and doubt I would agree to it. 2-of-3 transactions are where it's at.

tutorial please.

Good!
I'll check later and I'll make an easy guide for my italian colleagues

Are you going to add some features on this topic in the near future?

It looks like somebody has figured out a way to use the two-factor feature of my Bitcoin Address Utility to do an escrow transaction.

https://bitcointalksearch.org/topic/m.1383296

The way it works, is the person who is paying uses my utility to turn their Passphrase into an Intermediate Code.  They give it to the payee.

The Payee uses the Intermediate Code to generate an encrypted Bitcoin address.  The Payee also gives the "confirmation code" (appears on the printed Coin Inserts report) back to the payer.  The payer should be able to reproduce the same bitcoin address via the confirmation code and his passphrase.  The confirmation code also ensures that the payer will be paying an address that must have come from the passphrase, rather than one the payee got from his own wallet.

The payer pays.  Nobody can access the funds.

When the payer wants to release the funds, he gives the payee the passphrase.  If the payee wants to send the funds back, he gives the payer his private key.  If nobody gives the other their part, the funds are permanently locked up.

The concept is nothing new, but now that it's wrapped into a point-and-click utility, it's suddenly more reachable.

What do you think?  

Point-and-click two-factor escrow is also a plausible way to do collateral.  Imagine someone set up a trading platform or exchange where settling trades was done primarily on the honor system and the exchange held one factor of a two-factor collateral arrangement as a backstop.