it seems escrow/multisig is a good tool to bootstrap seller's reputation but is not really necessary afterwards when the seller is well established.
this is an interesting point of view - it would mean that openbazaar can use such seller bootstrapping with multisig/escrow using any crypto and than let buyers use monero simply out of convenience.
Exactly. If you look at Evolution's escrow system, the seller chooses what option to use: fe or escrow.
The buyer is faced with a very simple choice: if the fe is only offered, does the seller's reputation warrant the risk I'm taking of not getting my items (this has a lot to do with price and that you can still give a bad review and hurt the seller's reputation). If the seller has a good reputation and offers escrow, it's a no brainer. Someone might want to go onto Evolution and see how they do it; it's functioning and people like using it.
In simple terms it works like this:
A new seller with a low reputation needs to do one of two things to compete with established sellers:
1. Lower the price so much that buyers will take a risk by using fe.
2. Take escrow and give the buyer extra security until a good reputation can be established.
FE is king. Just a simple measure of outcomes. Here are the two options:
1) Three-party multi-sig escrow where the escrow is kept in a free-floating cryptocurrency (e.g. BTC/XMR).
This is totally secure for the buyer, but the merchant takes a huge volatility risk. It's currently unpopular with bitcoin and will likely never become popular, hence my skepticism of OpenBazaar.
2) Centralized escrow + (FE). This is totally unsecure for the buyer, as he loses control of his coins immediately, but it is totally secure for the seller. The seller offers a competitive discount to entice buyers, which the buyer likes. Buyers can minimize their risk by choosing a seller with an established, honest reputation. However, this does not prevent scams because a seller with a established reputation is sometimes just building trust so that he can steal an even bigger sum of money in the end. This is currently the most popular style on darknet markets with bitcoin.
To try to quantify it:
Option 1. Seller Satisfaction: 2, Buyer Satisfaction: 10
Option 2: Seller Satisfaction: 10 , Buyer Satisfaction: 5
Option 1 just absolutely sucks for sellers, so they won't do it unless they are doing it temporarily to build a reputation. Buyers are forced to take Option 2 or refuse to participate. Seller offers a nice discount to entice them. Buyers aren't happy but they can live with it. I'm just about finished writing a very long post about a third option that I believe is superior to Option 2, which I'll post in the main alt section shortly.
Can you post a link here when it's done? 
