When the trust comes into place decentralization lose its flavor. If it is about chosen escrow then either I'll do the trade on BitcoinTalk marketplace using a forum escrow or will use a eBay type site that is legacy centralized. When the volume of sell goes up, manual escrow system becomes obsolete.
Centralized escrow has proven to be vulnerable as there is one failure point where funds can be stolen by governments(silk Road) or either hackers or the black market operators(Too many examples to cite).
So what exactly is the problem with a reputation based arbitration market? Because then reputation will be sold, like u see on BitcoinTalk. If u r not aware, check the Digital Goods section of this forum. Moreover, manual escrows are not a feasible solution for high trade volume.
This. Plus the fact that in the beginning no one will have any trust at all, so how will anyone know who is appropriate to trust?
By using proof-of-burn
https://blog.openbazaar.org/proof-of-burn-and-reputation-pledges/Can u please tell me the difference between Proof of Burn and Buying Reputation ? If reputation is bought, NOT earned, it'll also be SOLD... effectively jeopardizing the whole system. In a centralized marketplace like eBay, reputation is of highest importance to them because their reputation is not in competition within the system but outside of the system. In a de-centralized marketplace, the scenario will be different. Escrows are part of the free market supply-demand and hence reputation will itself become a commodity, leading to the formation of a reputation buying/selling system. A stable marketplace cant run like this... though I'm not sure about the black market dynamics.
This is a very good point. Reputation would essentially be something that could be freely traded. I would say that people will likely trust people with more bitcoin then their reputation is worth. You would also have the issue of blackmail. If one person is willing to risk their reputation then they could threaten to leave negative reputation to the other person unless something is done in their favor. I would argue that a person's reputation would only be valid until the first dispute comes up at which point it would likely be ruined even if they are in the right.
You people really should watch this
https://www.youtube.com/watch?v=E_iZvKw0IZUMost of your points are being addressed.
Basically the reputation system for escrows will looks something like this; When a dispute has been done, both side vote for the escrow so if:
1. both give bad feed back = negative points
2. one good and one bad feed back = no point or neutral
3. both give good feed back = positive points.
So the system will give incentives for escrows to satisfy both party at once as much as possible.
Of course we don't really know how this will sort out but they will obviously adjust the pointing system according to the market behaviors.
Also, if buying and selling escrows' reputation becomes really a problem there will probably be a system for escrows to be able to prove their identities for those who don't mind. There are a lot of solutions to remove bad actors. It just depends on the market behaviors which is hard to predict precisely at that point.
