I'm probably overthinking this one. Another way to think of this would be like a deposit or down-payment, except it is a gamble for the entire sum to go either way. The rate of insurance would be a reflection of the seller's trust of the buyer and a loyalty reward. New seller's don't have much standing and should take higher risks or use other methods such as couter-party escrow. This was a whimsical idea that may or may not have merit when compared to other escrow schemes. Insurance is legalized gambling and this is a gambling device with a similar use.
tl;dr This is just another way of asking for a percentage down-payment from buyers based on your trust of them. Instead of a set rate, it is a set odds of winning your money back.
Topic: [Idea] Escrow Self-Insurance (Read 995 times)
How would escrow decide on increasing/decreasing the rating of participants? How would new vendor and new buyer (with no reputation yet) decide on amount of insurance deposit?
Think of it as insurance. Instead of paying a premium that pays if you get scammed or paying an arbitration service to settle transaction disputes, just offer your customers Statistical Escrow Arbitration. Vendors can require a down payment to be made with the rest locked in a 2-of-3 transaction. Three keys are created, one by the seller, one by the buyer, and one by an automated third party service. If the two parties are satisfied with their own resolution, then the private keys can go to whomever it belongs, if they cannot, then the third party is activated.
The service might payout to the vendor a percentage based on agreed terms. Depending on the relationship between the buyer and seller it could be 1-100%. The vendor already has a down payment and not as much to lose. Scammers would be deterred by the fact that they will lose their down payment and probably their escrow if they are not rated highly by the vendor. Good customers will be assured that even if something goes wrong and they are not able to resolve a dispute with the vendor, they still have a chance to get some of their money back.
Many businesses offer money-back guarantees. Most businesses allow returns. This can be just a useful good-faith business practice that ensures customers and vendors keep each other honest.
For instance:
100% = I don't trust you yet, but I will not take the money until either the goods are delivered and a period has elapsed. Let's do business.
80% = Our business relationship is improving. I'm offering additional insurance to win you over.
50% = Things are going great. I trust you, you trust me. This insurance will keep things improving.
20% = I really enjoy our business relationship and trust you to make the best judgements.
1% = You have been such a loyal customer for so long that I want you to be happy no matter what. But I at least need a chance to get paid.
The service might payout to the vendor a percentage based on agreed terms. Depending on the relationship between the buyer and seller it could be 1-100%. The vendor already has a down payment and not as much to lose. Scammers would be deterred by the fact that they will lose their down payment and probably their escrow if they are not rated highly by the vendor. Good customers will be assured that even if something goes wrong and they are not able to resolve a dispute with the vendor, they still have a chance to get some of their money back.
Many businesses offer money-back guarantees. Most businesses allow returns. This can be just a useful good-faith business practice that ensures customers and vendors keep each other honest.
For instance:
100% = I don't trust you yet, but I will not take the money until either the goods are delivered and a period has elapsed. Let's do business.
80% = Our business relationship is improving. I'm offering additional insurance to win you over.
50% = Things are going great. I trust you, you trust me. This insurance will keep things improving.
20% = I really enjoy our business relationship and trust you to make the best judgements.
1% = You have been such a loyal customer for so long that I want you to be happy no matter what. But I at least need a chance to get paid.
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