Separating Bitcoin's Legitimate Business's

bitprotection

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Activity: 103

Merit: 10

Quote from: lakeluke on March 09, 2012, 04:17:49 AM

I like some components of this idea. I have a simple way of actualising this in a fast manner.

At present in the community there are several Escrow businesses; like btcrow.com . So my idea is that these Escrow businesses "expand" their role and do the following: For persons wanting to start a new BTC business and who are lacking enough Trustwothyness due to the reason that they are very new, they would deposit an amount of their choosing into the Escrow business, and have this as a Public record. The more they deposit, the more Trustworthy they can be perceived by the community.

The new BTC business would launch, and advertise the fact that they are "registered depositors" at XYZ Escrow service. XYZ can get a percentage for playing this role from the deposit; they can also charge a fee for future arbitration.

If any client in the future has a serious issue with the business, they can claim against the deposit at the Escrow service; these issues will also be public record.

Basically, what you said is exactly what I have in the works. You are spot on with your thinking. Grin

lakeluke

member

Activity: 64

Merit: 10

I like some components of this idea. I have a simple way of actualising this in a fast manner.

At present in the community there are several Escrow businesses; like btcrow.com . So my idea is that these Escrow businesses "expand" their role and do the following: For persons wanting to start a new BTC business and who are lacking enough Trustwothyness due to the reason that they are very new, they would deposit an amount of their choosing into the Escrow business, and have this as a Public record. The more they deposit, the more Trustworthy they can be perceived by the community.

The new BTC business would launch, and advertise the fact that they are "registered depositors" at XYZ Escrow service. XYZ can get a percentage for playing this role from the deposit; they can also charge a fee for future arbitration.

If any client in the future has a serious issue with the business, they can claim against the deposit at the Escrow service; these issues will also be public record.

stochastic

hero member

Activity: 532

Merit: 500

Quote from: bitprotection on March 05, 2012, 12:10:39 PM

Quote from: stochastic on March 05, 2012, 01:47:44 AM

Quote from: bitprotection on February 24, 2012, 06:24:25 PM

I'm sure this idea has been played about before here but to lazy to search around on here but what if there was some sort of Bitcoin Business Insurance? In other words, the bitcoin business front's a certain amount of bitcoins to insure he/she is serious about doing bitcoin business in this community. In other words, some new bitcoin company comes along and doesn't know how to "gain any trust" ( looks overwhelming) can at least rest assure anyone he does business with that he has enough coins to compensate them for whatever happens. So it would be transparent - a certain amount of coins for the public to see against their business - if they decide the run and there are people effected by this people can issue claims and have funds released. I don't know just trying to see how we can introduce more trustworthy business to our ecosystem! Grin

obviously, by my handle here I'm interested in this stuff! haha

I have been thinking about this a lot too. How to insure people's money when no one trusts each other. Bitcoin is a system that allows people to exchange money that don't need to trust each other.

Maybe a better way is to set up an exchange that allows bets by the community on the likelihood of some type of business failure (ie, wallet theft, business incompetence, or outright scams).

For example, lets say I put some money into Bitscalper, but I am hesitant because I don't trust them. I buy a bet on the website that says that Bitscalper will fail. There needs to be clear contractual agreement of what constitutes a win when the business fails.

Anyway, say I have 100 bitcoins in Bitscalper and I insure 0 to 100% of those bitcoins. A speculator bets that Bitscalper wills stay solvent so they take the bet.

The market needs to stay liquid enough so that if I close my Bitscalper account I can also sell back my bet to the market since I don't need it anymore.

People may not trust anyone else, but they sure like to speculate.

I do like the idea as you are right people love to speculate. Probably could bring that over to that bitcoin betting site that lets you bet on everything forget the name of it. You could still speculate if you wanted to "add" to the bitcoin business's deposit amount because you have confidence they will remain. Maybe in return , if they are there 6 months later you get the excat amount you put in 1 to 1 - so you add 10 btc to the 100 btc the business put up. In 6 months, you get 10 of that 100 btc for being right and the company has to front another 10 btc thus you start seeing a community rallying around the success of a company. Good thinking!

Another good thing about doing it this way is that this is not considered gambling. Since risk already exists by someone putting their money in a bitcoin financial company, that risk is just being transferred to someone else in exchange for a cost. Something is considered gambling if risk is created like when someone goes in a casino and bets on a craps table. The act of betting is creating risk.

The below quote better explains the process of insurance betting, but in my case I am suggesting to allow institutions and individuals to use them.

Quote

insurance derivatives base their value on a predetermined insurance-related statistic. For example, an insurance derivative could offer a cash payout to its owner if a specific index of hurricane losses reached a target level. This would protect an insurance company from catastrophic losses if an exceptional hurricane caused unforeseen amounts of damage.

cunicula

legendary

Activity: 1050

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Quote from: the founder on March 05, 2012, 06:10:13 PM

Mybitcoin would have had ZERO problem forking over 100 BTC ...

Hence this just makes it more expensive to start up, not stop fraud.

Of course, the amount of money on the line needs to be proportional to the profit opportunity from fraud. Is that your point?

bitprotection

member

Activity: 103

Merit: 10

Quote from: the founder on March 05, 2012, 06:10:13 PM

Mybitcoin would have had ZERO problem forking over 100 BTC ...

Hence this just makes it more expensive to start up, not stop fraud.

It's at least something and that is 100 more bitcoins we all would have gotten back! actually the only bitcoins we would have gotten back since they never paid 50 percent like they said they would.

the founder

sr. member

Activity: 448

Merit: 251

Bitcoin

Mybitcoin would have had ZERO problem forking over 100 BTC ...

Hence this just makes it more expensive to start up, not stop fraud.

stochastic

hero member

Activity: 532

Merit: 500

Quote from: bitprotection on March 05, 2012, 12:10:39 PM

I do like the idea as you are right people love to speculate. Probably could bring that over to that bitcoin betting site that lets you bet on everything forget the name of it. You could still speculate if you wanted to "add" to the bitcoin business's deposit amount because you have confidence they will remain. Maybe in return , if they are there 6 months later you get the excat amount you put in 1 to 1 - so you add 10 btc to the 100 btc the business put up. In 6 months, you get 10 of that 100 btc for being right and the company has to front another 10 btc thus you start seeing a community rallying around the success of a company. Good thinking!

I don't think the business would even need to put up money. A person that opened an account with a bitcoin financial service company wants to insure their money. That person just wants to lower their risk. A speculator is willing to take that risk in return for a potential profit. The "insurance company" makes standard contracts that expire every quarter. They can also help out their customers by rating each company to give their customers a better idea of the solvency of the company. Some people may not get insurance, but if they get burned by a scam company everyone can say, "you should have gotten insurance!"

bitprotection

member

Activity: 103

Merit: 10

Quote from: stochastic on March 05, 2012, 01:47:44 AM

Quote from: bitprotection on February 24, 2012, 06:24:25 PM

I'm sure this idea has been played about before here but to lazy to search around on here but what if there was some sort of Bitcoin Business Insurance? In other words, the bitcoin business front's a certain amount of bitcoins to insure he/she is serious about doing bitcoin business in this community. In other words, some new bitcoin company comes along and doesn't know how to "gain any trust" ( looks overwhelming) can at least rest assure anyone he does business with that he has enough coins to compensate them for whatever happens. So it would be transparent - a certain amount of coins for the public to see against their business - if they decide the run and there are people effected by this people can issue claims and have funds released. I don't know just trying to see how we can introduce more trustworthy business to our ecosystem! Grin

obviously, by my handle here I'm interested in this stuff! haha

I have been thinking about this a lot too. How to insure people's money when no one trusts each other. Bitcoin is a system that allows people to exchange money that don't need to trust each other.

Maybe a better way is to set up an exchange that allows bets by the community on the likelihood of some type of business failure (ie, wallet theft, business incompetence, or outright scams).

For example, lets say I put some money into Bitscalper, but I am hesitant because I don't trust them. I buy a bet on the website that says that Bitscalper will fail. There needs to be clear contractual agreement of what constitutes a win when the business fails.

Anyway, say I have 100 bitcoins in Bitscalper and I insure 0 to 100% of those bitcoins. A speculator bets that Bitscalper wills stay solvent so they take the bet.

The market needs to stay liquid enough so that if I close my Bitscalper account I can also sell back my bet to the market since I don't need it anymore.

People may not trust anyone else, but they sure like to speculate.

I do like the idea as you are right people love to speculate. Probably could bring that over to that bitcoin betting site that lets you bet on everything forget the name of it. You could still speculate if you wanted to "add" to the bitcoin business's deposit amount because you have confidence they will remain. Maybe in return , if they are there 6 months later you get the excat amount you put in 1 to 1 - so you add 10 btc to the 100 btc the business put up. In 6 months, you get 10 of that 100 btc for being right and the company has to front another 10 btc thus you start seeing a community rallying around the success of a company. Good thinking!

FreeMoney

legendary

Activity: 1246

Merit: 1016

Strength in numbers

Quote from: ?? on ??

Don't worry, the bar is set pretty low as to what constitues a legit bitcoin business! One metric is that scammers have made hands over fist more then what legitimate services have offered.

This is to be expected really. Scammers (usually) have short time preference and we're just getting started. People who are building good brand equity and reputation will make a buttload eventually.

stochastic

hero member

Activity: 532

Merit: 500

Quote from: bitprotection on February 24, 2012, 06:24:25 PM

I'm sure this idea has been played about before here but to lazy to search around on here but what if there was some sort of Bitcoin Business Insurance? In other words, the bitcoin business front's a certain amount of bitcoins to insure he/she is serious about doing bitcoin business in this community. In other words, some new bitcoin company comes along and doesn't know how to "gain any trust" ( looks overwhelming) can at least rest assure anyone he does business with that he has enough coins to compensate them for whatever happens. So it would be transparent - a certain amount of coins for the public to see against their business - if they decide the run and there are people effected by this people can issue claims and have funds released. I don't know just trying to see how we can introduce more trustworthy business to our ecosystem! Grin

obviously, by my handle here I'm interested in this stuff! haha

I have been thinking about this a lot too. How to insure people's money when no one trusts each other. Bitcoin is a system that allows people to exchange money that don't need to trust each other.

Maybe a better way is to set up an exchange that allows bets by the community on the likelihood of some type of business failure (ie, wallet theft, business incompetence, or outright scams).

For example, lets say I put some money into Bitscalper, but I am hesitant because I don't trust them. I buy a bet on the website that says that Bitscalper will fail. There needs to be clear contractual agreement of what constitutes a win when the business fails.

Anyway, say I have 100 bitcoins in Bitscalper and I insure 0 to 100% of those bitcoins. A speculator bets that Bitscalper wills stay solvent so they take the bet.

The market needs to stay liquid enough so that if I close my Bitscalper account I can also sell back my bet to the market since I don't need it anymore.

People may not trust anyone else, but they sure like to speculate.

bitprotection

member

Activity: 103

Merit: 10

Quote from: cablepair on March 04, 2012, 05:39:58 PM

as someone said earlier in the thread "Trust No One" is the best policy

but when trust is something that must be extended - really the best metric we have for trust in the Bitcoin world right now (other than the otc system which is cumbersome for many users) is the way our forum has evolved into a reputation system.

to me if a bitcoin business has absolutely no real ties to a real person on this forum its a major red flag
(case in point - Bitscalper)

I hear you on that point BUT at some point you have to trust someone in this case 3 people - I'm assuming the chances that 2-3 OTC trusted people or Hero/donator forum members doing sort of collusion would be remote I would believe.

For your scenario above the person regardless is fronting some sort of deposit to let everyone know he/she are serious. Good feedback! Grin

cablepair

hero member

Activity: 896

Merit: 1000

Buy this account on March-2019. New Owner here!!

as someone said earlier in the thread "Trust No One" is the best policy

but when trust is something that must be extended - really the best metric we have for trust in the Bitcoin world right now (other than the otc system which is cumbersome for many users) is the way our forum has evolved into a reputation system.

to me if a bitcoin business has absolutely no real ties to a real person on this forum its a major red flag
(case in point - Bitscalper)

bitprotection

member

Activity: 103

Merit: 10

Update: I've come up with a way to incorporate an "escrow" around this where it takes 2-3 trust people to release any fraud claim funds against a bitcoin business.

Essentially, the idea is x amount of (btc) is put up as a "deposit" by abc company - 2-3 bitcoin trusted members can apply to be "trusted key holders" against the business ( not associated w/ the business) all this in a transparent website I'm coming up with where it shows how much BTC bond the business has put up and who are the "trusted key holders". Those members get a small dividend for being "trusted key holder" .

This is my initial idea I'm working on.

cunicula

legendary

Activity: 1050

Merit: 1003

I think it would make sense to try to make it similar to a trade guild. Trade guilds can be self-regulating institutions. They have played an important role in regulating commerce, particularly in contexts lacking effective third-party enforcement mechanisms. Bitcoin is such a context.

Trade guilds often work as follows:

There is a single account belonging to a collective regulatory organization. Each participating businesses holds a key to this account. Authorization of any txn requires a yes vote from the majority of keys. There are three types of txns.

1) Authorization of a new member and the issue of a key to this member on receipt of his deposit
2) Confiscation of a member's deposit and cancellation of the associated key
3) Refund of a member's deposit and cancellation of the associated key

All of these txn types should be a matter of public record (e.g. in the block chain with signed messages).

For the system to work, one needs to have the majority of businesses remain honest. The incentive to remain honest is that association with the guild provides some sort of commercial benefit (e.g. enhanced reputation).

bitprotection

member

Activity: 103

Merit: 10

Quote from: cunicula on February 25, 2012, 11:57:55 PM

Quote from: Littleshop on February 25, 2012, 10:41:25 PM

I started my bitcoin business small, and if I had to put out 100 BTC to some agency that kept it (not just a deposit) I would not have probably started. On top of that, 100 BTC is not a huge barrier to a true scammer if he was going to start taking deposits for underpriced 7990's for example.

The biggest thing that separates the scammers from the real businesses is time and physical addresses.

Of course it is just a deposit. The money is on the line in the event of a scam, but is refunded whenever the business wants provided that no scam has occurred yet. This refund is announced, so that the fact that the business is no longer "bonded" becomes known to consumers.

Most of these businesses are probably investing substantially in bitcoin on the side anyways. It should not matter for them that much if a trusted third-party holds their bitcoin savings to ensure good behavior.

Yes, the key is "transparency" . Basically, there would be a list of "bonded/insured" bitcoin business's who have "deposited" this amount. Like you said this is just a "deposit" that can be returned upon the company folding and thus announced to the community at large they aren't a "bonded/insured" company. I agree I thinking most legitimate business would have no problem fronting some bitcoin.

The biggest issue will be "fraud complaints" but this will have to come in the form of "class action lawsuits" sort of thing where a group of people will have to make the case not a single individual.

cunicula

legendary

Activity: 1050

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Quote from: Littleshop on February 25, 2012, 10:41:25 PM

I started my bitcoin business small, and if I had to put out 100 BTC to some agency that kept it (not just a deposit) I would not have probably started. On top of that, 100 BTC is not a huge barrier to a true scammer if he was going to start taking deposits for underpriced 7990's for example.

The biggest thing that separates the scammers from the real businesses is time and physical addresses.

Of course it is just a deposit. The money is on the line in the event of a scam, but is refunded whenever the business wants provided that no scam has occurred yet. This refund is announced, so that the fact that the business is no longer "bonded" becomes known to consumers.

Most of these businesses are probably investing substantially in bitcoin on the side anyways. It should not matter for them that much if a trusted third-party holds their bitcoin savings to ensure good behavior.

bitprotection

member

Activity: 103

Merit: 10

Quote from: Littleshop on February 25, 2012, 10:41:25 PM

Quote from: bitprotection on February 25, 2012, 10:08:05 PM

Quote from: gregwtmtno on February 25, 2012, 09:54:56 PM

This is a major problem in my opinion. It's a problem in with traditional businesses too. Some countries address it by requiring minimum capitalization to start a business. (China, Denmark)

Because the barrier of entry to start a bitcoin business is so low, it is really easy for scammers to open "businesses". But that's only part of the problem. The low barrier of entry allows businesses, even those with good intentions, to enter the market undercapitalized and underinsured. With minimal investment in a business, the owner really doesn't have much to loose if they want to fall off the face of the earth when the going gets tough unfortunately.

Another problem is lack of insurance options. When I started my site, I looked into ways I could possibly insure my it. Unfortunately, the closest thing I could find was digital intrusion insurance, but the policies were only concerned with damage to systems and loss of privacy information, not loss of digital assets, like bitcoin.

Good points. One thing is though the "low" barrier of entry turns into a "commitment" when you fork over 100 btc. It raises the stakes a tad higher weeding out anyone who is looking to scam people. As for your second point, no reason why you couldn't be insured against lost of bitcoin also. The other way around. Meaning you can file that you've lost money due to a hack and collect against a "pool" of money.

Good suggestions and thoughts btw: love btcbuckets!

I started my bitcoin business small, and if I had to put out 100 BTC to some agency that kept it (not just a deposit) I would not have probably started. On top of that, 100 BTC is not a huge barrier to a true scammer if he was going to start taking deposits for underpriced 7990's for example.

The biggest thing that separates the scammers from the real businesses is time and physical addresses.

This is because you are legit Tongue

If you were a scammer 100 btc is something your to lazy to deal with - even if you goal is to scam like a ton of BTC from people imho. Then again who knows because I'm not a scammer. All I know is as a customer if I knew the person was backed by some entity I would feel MUCH better shopping/ using a bitcoin related service.

I should add you aren't forced to do this if you provide a legit business then yes go ahead "earn" reputation organically

Littleshop

legendary

Activity: 1386

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Quote from: bitprotection on February 25, 2012, 10:08:05 PM

Quote from: gregwtmtno on February 25, 2012, 09:54:56 PM

This is a major problem in my opinion. It's a problem in with traditional businesses too. Some countries address it by requiring minimum capitalization to start a business. (China, Denmark)

Because the barrier of entry to start a bitcoin business is so low, it is really easy for scammers to open "businesses". But that's only part of the problem. The low barrier of entry allows businesses, even those with good intentions, to enter the market undercapitalized and underinsured. With minimal investment in a business, the owner really doesn't have much to loose if they want to fall off the face of the earth when the going gets tough unfortunately.

Another problem is lack of insurance options. When I started my site, I looked into ways I could possibly insure my it. Unfortunately, the closest thing I could find was digital intrusion insurance, but the policies were only concerned with damage to systems and loss of privacy information, not loss of digital assets, like bitcoin.

Good points. One thing is though the "low" barrier of entry turns into a "commitment" when you fork over 100 btc. It raises the stakes a tad higher weeding out anyone who is looking to scam people. As for your second point, no reason why you couldn't be insured against lost of bitcoin also. The other way around. Meaning you can file that you've lost money due to a hack and collect against a "pool" of money.

Good suggestions and thoughts btw: love btcbuckets!

I started my bitcoin business small, and if I had to put out 100 BTC to some agency that kept it (not just a deposit) I would not have probably started. On top of that, 100 BTC is not a huge barrier to a true scammer if he was going to start taking deposits for underpriced 7990's for example.

The biggest thing that separates the scammers from the real businesses is time and physical addresses.

bitprotection

member

Activity: 103

Merit: 10

Quote from: gregwtmtno on February 25, 2012, 09:54:56 PM

This is a major problem in my opinion. It's a problem in with traditional businesses too. Some countries address it by requiring minimum capitalization to start a business. (China, Denmark)

Because the barrier of entry to start a bitcoin business is so low, it is really easy for scammers to open "businesses". But that's only part of the problem. The low barrier of entry allows businesses, even those with good intentions, to enter the market undercapitalized and underinsured. With minimal investment in a business, the owner really doesn't have much to loose if they want to fall off the face of the earth when the going gets tough unfortunately.

Another problem is lack of insurance options. When I started my site, I looked into ways I could possibly insure my it. Unfortunately, the closest thing I could find was digital intrusion insurance, but the policies were only concerned with damage to systems and loss of privacy information, not loss of digital assets, like bitcoin.

Good points. One thing is though the "low" barrier of entry turns into a "commitment" when you fork over 100 btc. It raises the stakes a tad higher weeding out anyone who is looking to scam people. As for your second point, no reason why you couldn't be insured against lost of bitcoin also. The other way around. Meaning you can file that you've lost money due to a hack and collect against a "pool" of money.

Good suggestions and thoughts btw: love btcbuckets!

gregwtmtno

member

Activity: 77

Merit: 10

This is a major problem in my opinion. It's a problem in with traditional businesses too. Some countries address it by requiring minimum capitalization to start a business. (China, Denmark)

Because the barrier of entry to start a bitcoin business is so low, it is really easy for scammers to open "businesses". But that's only part of the problem. The low barrier of entry allows businesses, even those with good intentions, to enter the market undercapitalized and underinsured. With minimal investment in a business, the owner really doesn't have much to loose if they want to fall off the face of the earth when the going gets tough unfortunately.

Another problem is lack of insurance options. When I started my site, I looked into ways I could possibly insure my it. Unfortunately, the closest thing I could find was digital intrusion insurance, but the policies were only concerned with damage to systems and loss of privacy information, not loss of digital assets, like bitcoin.

Topic: Separating Bitcoin's Legitimate Business's (Read 2949 times)