I don't think a 2-of-3 with a third party mediator having the third key would prevent a repeat of what happened with master-p because it would be possible that a scammer could use an alt account to direct trades to their escrow service, and the scammer would have sufficient keys to spend funds held in escrow.
A 2-of-2 multi-sig setup would allow one party to hold funds held in the "escrow" address "hostage" until the other party agrees to sign a transaction giving a certain percentage of btc that they are not due.
A M-of-N escrow setup in which say, 3 of 5 trusted members of the community need to sign a transaction in order to release funds in escrow would slow down trades significantly because all of the escrows would need to provide a public key, and would need to understand the terms of the trade. Also the escrows would essentially be working for 1/5 of the fee while taking essentially the same amount of risk.
I foresee the result of the master-p sagga be that companies like LBC will be more heavily used as escrow, and that they potentially will get into an expanded escrow business. I would also not be surprised if very high trust members start to see an uptick in the level of business they receive.
Topic: Let's talk about Escrow. (Read 591 times)
It's better that we use the first option while using an escrow. It would make the escrow a mediator and the one who could resolve the dispute as a third party. I don't prefer the 3 of 3 multisig address but instead it could be good if we could have a 3 of 4 multisig addresses where there would be 2 escrows used and hence if the seller and 1 escrow also would be the same, the other escrow would be the mediator to resolve any dispute and sign the transaction. This is because one escrow cannot be trusted due to escrows using their alts and selling their accounts to scammers.
However, after master-p's case, I don't think that escrows here could be trusted anymore. Escrows were used to protect users from getting scammed and if a trustworthy user can scam users, who else can be trusted now. There would be users who would even trick these multisig transactions and get the funds thus scamming the buyer/seller.
However, after master-p's case, I don't think that escrows here could be trusted anymore. Escrows were used to protect users from getting scammed and if a trustworthy user can scam users, who else can be trusted now. There would be users who would even trick these multisig transactions and get the funds thus scamming the buyer/seller.
3 of 3 multisig addresses is not good because one party(buyer or seller) will not approve it and nobody will receive anything.
2 of 3 is the best idea but there is still a risk if escrow and the seller are the same person, they both can confirm and the buyer gets nothing
2 of 3 is the best idea but there is still a risk if escrow and the seller are the same person, they both can confirm and the buyer gets nothing
Whats the job of an escrow is the most important question to ask here in my opinion.
An escrow is someone that the seller and the buyer trust, someone that is risking a reputation in order to make a deal happen. At least thats my understanding of what an escrow should be. In this case a 2-3 multi sig is perfect. If the buyer and seller agree the escrow has no job to do. If there is a dispute the escrow can step in, hear both sides and make a final decision to resolve the conflict. This is already the case, if everything is fine the escrow only holds the funds while one side of the deal checks the goods or waits for delivery. Once its confirmed the funds are released. Instead of an escrow holding the funds alone, all involved hold the funds together.
x out of y can be a viable option if multiple parties are involved or several escrow agents or mediators are needed or wanted. I dont think this would be common though as there are limits to the number of keys you can use for multisig before your transactions becomes non standard.
About the educational issue, that users might be required to learn something in order to trade, I dont think its a problem. Multi sig is not all that complicated, the question is whether or not your normal wallet can be used.
An escrow is someone that the seller and the buyer trust, someone that is risking a reputation in order to make a deal happen. At least thats my understanding of what an escrow should be. In this case a 2-3 multi sig is perfect. If the buyer and seller agree the escrow has no job to do. If there is a dispute the escrow can step in, hear both sides and make a final decision to resolve the conflict. This is already the case, if everything is fine the escrow only holds the funds while one side of the deal checks the goods or waits for delivery. Once its confirmed the funds are released. Instead of an escrow holding the funds alone, all involved hold the funds together.
x out of y can be a viable option if multiple parties are involved or several escrow agents or mediators are needed or wanted. I dont think this would be common though as there are limits to the number of keys you can use for multisig before your transactions becomes non standard.
About the educational issue, that users might be required to learn something in order to trade, I dont think its a problem. Multi sig is not all that complicated, the question is whether or not your normal wallet can be used.
I second this movement I am just surprised multi sig escrow is not more used already with especially larger deals or transactions.
So, following this master-P drama it is obvious that the current implementation of Escrow in this community does not work. With previous trusted escrows (master-P, defcon23, Tomatocage, Quickseller) either scamming or performing shady acts, I don't believe that a one-man escrow act is viable on this forum anymore.
What do we do about this? As has been mentioned in the Scam Accusation thread for master-P, I personally see the only way to move forward and reduce scamming is by using Multi-sig addresses with escrow. This way, the parties involved in the transaction don't have to worry about one of them running with the goods/coin without the risk of the escrow pulling an exit-scam and clearing out with the held funds. However, this brings up other questions about the implementation of multi-sig escrow. I've been reading some ideas of the community which I will list, in addition to an idea of my own.
1. 2 of 3 addresses with the buyer, escrow and seller.
An advantage of this implementation does not require all parties to confirm the sending of funds, meaning that one person pulling out and not confirming does not halt the transaction.
However, this implementation basically makes the escrow it's self useless. All that the escrow would do in this would be create an address and only step in if one party refuses to confirm the address, as the other two parties (buyer and seller) can simply confirm the transaction themselves. In this case, one of the parties involved in the transaction could simply create a 2 of 2 multi-sig address which each of them could confirm during the transaction. Obviously, it would still be useful to have a middle-man in the case of the escrow going rogue, however when between two 'trusted' members (that term really doesn't mean much now, huh?) using an escrow could simply prolong the transaction for longer than necessary.
2. 3 of 3 address with the same parties.
I'm not going to list an advantage of this, because personally I do not see one. I am only listing it due to seeing it discussed previously. The disadvantage with this implementation is that one party pulling out would stop the transaction going through, rendering the escrow completely useless.
With the previous two implementations mentioned there are also several problems. The first is that both the buyer and seller would have to be knowledgeable in how the multi-sig process works as they will need to confirm the address themselves, in addition to the escrow. This will put off less technically inclined users from using this service, perhaps jeopardizing larger transactions. In addition to this, these methods do not stop practices such as escrowing for alt accounts, and the funds can easily be released if the buyer or seller were in cahoots with the escrow. This puts these methods at a risk for use.
3. x of y address with several escrows, the buyer and seller.
Personally, I see this as the best implementation (though this may be a bias due to this being the idea aforementioned). What is meant by this, is that several trusted users in the community combine their services into one central escrow service. For every transaction using this implementation, several members would need to confirm the address in order to get the funds released. This would still allow trusted escrows to continue their jobs without rendering them somewhat useless (as the first implementation did) whilst minimizing the possibility of the escrow disappearing with the money or a single party disrupting the transaction. In addition, in some cases it would make forum escrow's jobs significantly easier as they will not need to be around due to others being there to back them up; possibly speeding up the process of the escrow slightly.
Where I can imagine this implementation going wrong is by several of the escrow's partnering with others in order to prolong or disrupt the transaction. Also the escrow's judgement could be clouded by personal view, though that is a problem with every possible implementation. I don't see these as very large problems, as with a large amount of members working together (hence x and y in the title, as the number of escrows/confirmations are variable) these problems could likely be diminished without much hassle. This implementation does not require any technical knowledge from those involved in the transaction (buyer and seller) as the trade could be completed solely by escrows, making it the best available to the less tech-savvy users.
I would appreciate the communities feedback on these, as well as other possible implementations. This is an important matter which could hinder transactions on this forum significantly if wrongly done.
Also, this thread is for discussing the practice of escrow only. Unless making a point, please refrain from discussing incidents with previous members, doing so in their respective threads or through other means.
What do we do about this? As has been mentioned in the Scam Accusation thread for master-P, I personally see the only way to move forward and reduce scamming is by using Multi-sig addresses with escrow. This way, the parties involved in the transaction don't have to worry about one of them running with the goods/coin without the risk of the escrow pulling an exit-scam and clearing out with the held funds. However, this brings up other questions about the implementation of multi-sig escrow. I've been reading some ideas of the community which I will list, in addition to an idea of my own.
1. 2 of 3 addresses with the buyer, escrow and seller.
An advantage of this implementation does not require all parties to confirm the sending of funds, meaning that one person pulling out and not confirming does not halt the transaction.
However, this implementation basically makes the escrow it's self useless. All that the escrow would do in this would be create an address and only step in if one party refuses to confirm the address, as the other two parties (buyer and seller) can simply confirm the transaction themselves. In this case, one of the parties involved in the transaction could simply create a 2 of 2 multi-sig address which each of them could confirm during the transaction. Obviously, it would still be useful to have a middle-man in the case of the escrow going rogue, however when between two 'trusted' members (that term really doesn't mean much now, huh?) using an escrow could simply prolong the transaction for longer than necessary.
2. 3 of 3 address with the same parties.
I'm not going to list an advantage of this, because personally I do not see one. I am only listing it due to seeing it discussed previously. The disadvantage with this implementation is that one party pulling out would stop the transaction going through, rendering the escrow completely useless.
With the previous two implementations mentioned there are also several problems. The first is that both the buyer and seller would have to be knowledgeable in how the multi-sig process works as they will need to confirm the address themselves, in addition to the escrow. This will put off less technically inclined users from using this service, perhaps jeopardizing larger transactions. In addition to this, these methods do not stop practices such as escrowing for alt accounts, and the funds can easily be released if the buyer or seller were in cahoots with the escrow. This puts these methods at a risk for use.
3. x of y address with several escrows, the buyer and seller.
Personally, I see this as the best implementation (though this may be a bias due to this being the idea aforementioned). What is meant by this, is that several trusted users in the community combine their services into one central escrow service. For every transaction using this implementation, several members would need to confirm the address in order to get the funds released. This would still allow trusted escrows to continue their jobs without rendering them somewhat useless (as the first implementation did) whilst minimizing the possibility of the escrow disappearing with the money or a single party disrupting the transaction. In addition, in some cases it would make forum escrow's jobs significantly easier as they will not need to be around due to others being there to back them up; possibly speeding up the process of the escrow slightly.
Where I can imagine this implementation going wrong is by several of the escrow's partnering with others in order to prolong or disrupt the transaction. Also the escrow's judgement could be clouded by personal view, though that is a problem with every possible implementation. I don't see these as very large problems, as with a large amount of members working together (hence x and y in the title, as the number of escrows/confirmations are variable) these problems could likely be diminished without much hassle. This implementation does not require any technical knowledge from those involved in the transaction (buyer and seller) as the trade could be completed solely by escrows, making it the best available to the less tech-savvy users.
I would appreciate the communities feedback on these, as well as other possible implementations. This is an important matter which could hinder transactions on this forum significantly if wrongly done.
Also, this thread is for discussing the practice of escrow only. Unless making a point, please refrain from discussing incidents with previous members, doing so in their respective threads or through other means.
Jump to: