A couple things, I am paying you for trust. Why?
Fair question.
I'm not sure if your phrase "paying you for trust" means that "Alice is paying AudenX for trust" or "Alice is paying Bob for trust". Perhaps you mean both. Either way, the idea is not that people are paying "for trust", but rather to incorporate data into normal blockchain transactions that adds a layer of meaning that indicates trust/satisfaction. The amounts involved in this signaling can be trivially small — far smaller than what would constitute meaningful payment amounts — and you could even incorporate the signal into some part of the transaction that isn't an output value.
The idea is not to create a way for someone to "buy" credibility. Credible trust would have to be built up over the course of many transactions. You can't just pay 1,000 BTC to AudenX to get an awesome trust score.
What the difference in me making a thread on here saying "Alice and Bob had a smooth transaction".
The difference between using the blockchain and you making a forum thread that says "Alice and Bob had a smooth transaction" is that we can verify that transactions on the blockchain actually occurred between Alice and Bob's addresses, and (most likely, unless their wallets were compromised) that those transactions were voluntarily entered into by Alice and Bob.
You could of course watch the Blockchain for transactions that match the AudenX pattern and then report them on a forum thread, but the transactions would actually have to be created by Alice and Bob before you could report them on the thread.
I can't rate someone in the negative that isn't good, now I just had a transaction which I lost money and now I have to send you something to rate this person kinda like salt on the wounds.
No, this is incorrect. There are lots of ways we could choose to signal negative experiences. For example, if we standardized around a system where "scoring" values were 1 Satoshi at the low end and 20 Satoshis on the high end, a final rating of 1 from Alice to Bob could indicate that Alice is totally dissatisfied with the transaction.
However, the scale that I was suggesting in my original posting would allow participants to arbitrarily choose the number that means "satisfied". Alice could initiate a transaction with a baseline score of 13, and if she decided to award Bob a final score of 14, that would be like saying "satisfied + 7%" — basically meaning Bob went above and beyond the call of duty. Or she could award a score of 1 to Bob, which basically means he was awful.
I think I've read somewhere that you can have output amounts that are 0, so if that's actually possible I guess Alice could use 0 as a value to indicate that she was totally scammed.
In any event, regardless of the rating scale used, if you pick a standard way to interpret the numbers, then you can have a rating system that's as granular as you want, with both positive and negative ratings possible.
What about a scammer, how does he not make many profiles on your site to boost up his rating? I mean spending .01 to boost up ratings and sending 50btcs around to make your system think there is transactions happening?
There is nothing to stop a scammer from creating many Bitcoin addresses and using them to build up the appearance of trustworthiness. This is true on bitcoin-otc as well.
Also, just to be clear, you wouldn't be creating "profiles on my site". The "identity" of someone on AudenX is simply a Bitcoin address. You could generate that address however you like.
Similar to bitcoin-otc, you can see that the AudenX scoring system would allow you to create your own sort of personal "trust algorithm" based on your trading network, so that you value apparent trustworthiness in a stranger more highly if they've already received a trust score from someone you trust. The social graph matters. You could choose to ignore the apparent trustworthiness of someone unless they meet a high standard — like maybe they have to have 100 or more satisfactorily concluded transactions with people you already trust before you do business with them. In the future, users might not even want to build their own algorithms for calculating trustworthiness — they could just rely on third-party algorithms created by companies that study the blockchain.
There's of course the chicken-and-the-egg problem of how a new person in the network gets started building trust. Just as in real life, though, you trust someone with a little bit to begin with, and then more over time, rather than trusting a stranger with $1,000,000 of your money right off the bat. This could mean that new people get their first scores by trading with friends, or people whose real-life identities they already know.
I'm not trying to create a system that's impossible to game, and I'm not interested in trying to create a bulletproof identity-verification system. The goal is to create a system where the cumulative value of your trustworthiness is greater than the incentive to scam. Basically, if you spent a year building a history of trustworthiness, there would be a monetary incentive to continue your good behavior, because you have a bigger pool of trading partners interested in trading with you. It's the same reason people strive to keep a high credit score.
I am sorry but if this the best trustworthy approach then I would stick with GPG keys and bitcoin-otc.
I don't see any problem with that. If you're comfortable with bitcoin-otc, you like using it, and you like your trading partners in it, then you're all set. But as CIYAM Open notes, and I think many people would agree, there are really a lot of potential users of Bitcoin for whom using IRC and GPG keys would be a major barrier to entry. Getting a bitcoin wallet and learning to use it is, for people unfamiliar with IRC and GPG keys, much more accessible. And a wallet is all you'd need to get started using AudenX.