Topic: Need help with Escrow Research 1 btc Bounty Offered (Read 2824 times)

How i can get my BTC?

Hello Everyone, GOeureka are live now with Bounty Campaign. Please follow given link to participate.
Click Here: https://bitcointalksearch.org/topic/m.44898515

I was just looking at Monetas. Good work, I hope the second round goes well. I hope you attend C3 to watch Daniel and my presentation on Invictus.

FYI, Open-Transactions supports smart contracts, and there is a sample "Escrow" smart contract that comes with OT.

(So you can use OT for escrow.)

Another site (by the same author) that can be used by anyone to act as an escrow agent in a more traditional 3-party escrow (and without the ability to steal funds) is bitescrow.org

It implements the Casascius escrow proposal, which uses some interesting properties of of elliptic curve math to generate an address that can't be spent without cooperation of two of the 3 parties to obtain the private key, similar to an m of n multisig transaction but somewhat easier to use and compatible with every client regardless of whether or not they support multisig (P2SH) addresses. I don't think I can explain the math involved or the security any better than Casascius did at https://en.bitcoin.it/wiki/User:Casascius/Escrow_scheme_draft

Just noticed the new site above. Cool. Thanks for tipping us.
And I do have an Escrow site too. See my sig. thanks all

The one thing I have not seen is any system where escrow agents post surety bonds with other escrow agents and where the blockchain prevents the escrow agent from doing anything other than releasing the money to some split between the two parties. 

I have also not seen any systems that allow each user to specify their own escrow agent where the escrow agents have agreed to allow a 3rd agent settle the dispute if the two escrow agents cannot agree.    Agents only get involved progressively if there is a dispute.   Combine this with some Nash Equilibrium-like features to encourage parties to settle rather than dispute and you have a very solid system that almost never has to be used.

Obviously the more 'levels of appeal' and surety bonds posted the more people that would have to colude to pull of a scam and ultimately no one would bother trying because they would take losses due to posted surety bonds.

Bonus Bounty Paid:

ecdd88cbbf28a4e9348b20792840d2c27bebaeca1e86a3386ba825555ad3accf

0.05 btc

18xbCH19TzWxm86rEq2opaHrsS5EHACLuP

 

I'll try and contribute more a little bit later, but if I don't good luck with the rest of your research!

Pajamaw send an address you earned a bonus bounty.

I'm not sure if this will qualify for the bounty but I admire your project and thought I could put my 2 cents in. I won't bother you with random sites that offer escrow services as you now have a plethora of those, but I'll just give you my thought and trust of the whole escrow system as is.

 Bitcoin, as a digital currency, deals with irrevocable transactions, because of this bitcoin has always been a viable option for scammers engaged in foul play.

Because of this systems of trust in an otherwise lawless Wild West scenario needed to be created, this is how the current escrow systems came to be.

We see these escrow systems in the current marketplace.

1-Member isolated third party escrows, where individuals act as an escrow for two other individuals.

2-Company based third part escrows, where a website will offer the service of creating an escrow that may or may not be disputable if fraud occurs.

For the most part most regular escrowing systems as seen in various lists throughout Bitcoin forums rely upon a "trusted" third party member

https://bitcointalksearch.org/topic/escrow-list-108716

This 'trusted' status differs in how its gained from place to place but relies upon the same ideas that an individual that displays a large amount of activity upon their profile in addition to the fact that they have had a large number of successful trades is a reputable individual.

This entire scenario relies on the concept that this individual finds it more worth his time to engage in respectable transactions that allow his own trading to continue, rather than to steal and subsequently ruin his reputation thus ending his trading business.

As noticed this creates a very high risk scenario once large transactions come into play. Is the escrow willing to waste his reputation upon this sum of money?

This answer comes from looking at the only mechanisms given in the bitcoin community, his trust and activity. Sites like bitcoin-otc thrive off of these systems, but are flawed by their lack of future assurance. Nothing is stopping an individual from calling quits on bitcoin all of a sudden and running with the money.

There's a true story that's often told in the silk road forums about a dealer that was trusted throughout the black market site, to a point where his name was synonymous with silk road. He became so trusted that escrow services were no longer thought necessary within his dealings. Then one 4th of july weekend (coincidence haha) he had a firesale, where he was going to give everything away for blowout prices. The blockchain estimated that there were over 20 million dollars worth of transactions made that weekend. It is not known whether he was raided or if he died, all that was known was that the trusted dealer did not send any of his promised bud to his mates.

So despite whatever relative ease or assurance that may be given when a 'trusted' member is offering escrow, there's nothing to say that the escrow will end bad, and the more money that's escrowed, the higher the risk of total losses.

This risk was somewhat mitigated with company based escrow services that started like ClearCoin and BTcrow. These methods offered DISPUTE RESOLUTION SERVICES. ClearCoin became a leading example of the strength of this little principle but unfortunately lasted only 6 months. But in a marketplace that demands anomonitity and deals with these irrevocable transactions, escrow services like this are seeing a field ripe for picking.

As for any future implementations of new bitcoin escrow policies, the only one that I think remains relevant other than creating more trusted company based services that allow disputes and insuranced transactions is the fact that bitcoin is in fact supported by scripts. As rethaw pointed out a few posts above this allows for educated clients to create there own dispute mediation service, unfortunately this can also be subject to fraud.

Bounty increased to 1 btc

Thanks!

Bonus Bounty Paid:

https://blockchain.info/tx/cab3a8ce117affc408a5d79e52b2f116cdba669afe1e53ebf0f843806be3c816

Here you go:

1CYNQBmD6kmtmSfZ3hMSQyrS6oirDA9P8H

Abdussamad, you earned a bonus bounty. Send address

I'd like to write about escrow systems that don't involve (human) third parties but instead use the technology behind bitcoin.

• First up there is the variation on the multisig where you use public keys belonging to the buyer and the seller to create a multisig address. Bitcoins are then sent to that address and can only be redeemed with the cooperation of both the buyer and seller. The technical explanation of how this is done is here:
  
  https://people.xiph.org/~greg/escrowexample.txt
  
  
• Another approach is to use a site called bit2factor.org. It works like this:
  
  • The buyer of the coins enters a secret passphrase of his choice to generate an intermediate code. He then shares the intermediate code with the seller.
    
  • The seller uses the intermediate code to generate an encrypted private key, corresponding address and "confirmation code". He keeps the private key to himself but shares the address and confirmation code with the buyer.
    
  • The buyer enters the confirmation code and his secret passphrase to see if the same bitcoin address the seller gave him is generated. If yes he gives the seller the go ahead to send the coins to that address.
    
  • Now the coins are in an address whose encrypted private key is in the hands of the seller and the passphrase that will decrypt that private key are in the hands of the buyer. Neither party can spend the coins on their own.
    
  • After the buyer has paid the seller for the coins the seller sends him the encrypted private key. The buyer then enters that and his passphrase in the "Decrypt Key" form to get the decrypted private key behind the coins.
    
  • If the transaction goes south neither party can spend the coins on their own and have to cooperate to get access to the coins.
    

Disadvantages

• The last point is the biggest downside to this sort of system. When you don't have a third party to mediate you end up in a situation where the buyer and seller have to cooperate to get at the coins. Depending on the stage of the transaction the situation can be in one or the other party's favour and they can exploit it to their advantage:
  
  • If the seller has sent the coins to the multisig/bit2factor address but the buyer has not yet paid the buyer is at an advantage. He has nothing to loose. The seller OTOH stands to loose his coins forever. The buyer can ask for money in exchange for the passphrase that decrypts the private key.
    
  • If the buyer has paid then he is at a disadvantage. The seller can ask for more money to release the encrypted private key.
    
• It can get complicated and is not for newbies. Also the more complicated something is the higher the chances of monetary loss.
  

Advantages

The advantage is that there is no third party escrow agent who's fees you have to pay and who you have to trust. This fits nicely into the whole bitcoin philosophy of not having to trust your money to third parties.

Payment confirmed.

Also, just stumbled upon this which went live yesterday.

http://www.jobs4bitcoins.net/ Escrow for jobs & services (from the mods of /r/jobs4bitcoins subreddit so it's kinda verified)

Bonus Bounty Paid:

https://blockchain.info/tx/7be9132ff75b73158a3469f6957d3a2e5464a38b18452354575c3d708b652c6c

1G6EQwiAfTVyTpK4j3XZ65CvonjDGrPsQ

Thanks and good luck on your project.