What will prevent seller fraud? (The kind of fraud discussed here: https://news.ycombinator.com/item?id=10857478 )
edit: The site's having trouble, but here's a link to the subreddit, https://www.reddit.com/r/OpenBazaar
edit: The site's having trouble, but here's a link to the subreddit, https://www.reddit.com/r/OpenBazaar
There is a much more interesting solution for this problem. No third party needed. Two parties, game theory and one established fact about human psychology could be enough.
Idea is following - if any of parties can't possibly gain anything from fraud in the long run, there will be no fraud. To achieve that, buyer freezes two prices of the item, seller freezes one price of the item. Money is frozen atomically, and is defrosted atomically. Money is freed only if both parties are happy. Some studies indicate that people have very strong feelings about justice IF they are dealing with strangers. This should cause strong revulsion of any unjust solution (e.g. buyer caving in just to unfreeze some of frozen money). To prevent such blackmail and other forms of psychological manipulation, both parties are anonymous by default and can't communicate using this software.
Project is called Bitmarkets [1], it's published on MIT license and it's amazing. Read about it.
This is similar to any real world transaction. I can buy directly from someone if I trust them, but if not we both need to agree to use the same third party to facilitate the transaction.
Secondly, despite a small minority who are amoral, the vast majority of people aren't short-term thinking opportunistic scammers. The rewards of being legit can be massive and rewarding on a long-term basis. Inspiring others to follow suit. Scamming is always a short-term, high-risk low-reward act that always exists as a niche in every market. The odds will always be against these people because the opposition is better financed and incentivized to counter their schemes.
Thirdly, Most consumers have a certain level of tolerance for being scammed but as long as the majority of transactions are legit then the trade-offs of reduced fees, lack of censorship, and pseudonymity will keep people using the market.
Finally, if someone doesn't have the tolerance or analytical ability to not get scammed then there still exists many options outside of the market. What matters is a significant enough amount of buyers/sellers use the service. It doesn't need everyone.