ClearCoin safer bitcoin transactions | Hacker News Reader

ClearCoin safer bitcoin transactions

clearcoin.appspot.com

41 pointsTuxPirate13 comments

This site is ran by Gavin Andresen, technical lead of the bitcoin project.

If you are buying something using bitcoins, ClearCoin makes your transaction much safer.

Create an escrow transaction, and then instead of sending bitcoins directly to the seller, send them to ClearCoin.

Then show the seller that the bitcoins are secure by sending them a link to the transaction's status page, and wait for them to send you the product or provide the service.

After you've received the product or service, one click will release the bitcoins and complete the transaction.

If you don't receive the product or service, or if you're unhappy with it and the seller can't fix the problem, then don't release them. When the transaction expires, the bitcoins will either be refunded to you or donated to charity (you can choose which when you create a transaction).

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It's clearly a brilliant idea to set up a charity escrow service. The buyers and sellers have no incentives to cheat after all as they can't gain anything from fraudulent transactions.

As an aside, there are currently 6221100 bitcoins in circulation (not counting ones that were lost, I suppose) and they are currently trading at around $7.50, which means Bitcoin has an implied market capitalization of around $46 million.

Not enough to take over any banking systems anytime soon, but that is an awful lot of momentum for a weird crazy open source P2P thing.

This escrow service is developed by Gavin Andresen, the lead developer of bitcoin.

Why do we need 'safer options'? Shouldn't the original method just be updated if it needs to be?

It's about layers of abstraction. The Bitcoin architecture provides an abstract, lower-level interface for higher-level functionality to be built upon [1].

[1] http://en.wikipedia.org/wiki/Abstraction_layer

Which is exactly the way it should be.

The original method serves its function correctly: it acts as cash. Nothing inherent in cash allows you to un-spend it if you didn't get what you paid for. (The legal system can force someone to give cash back, if you can track them down, but BitCoin intentionally makes that difficult or impossible depending on whether they take steps to preserve their anonymity.)

Escrow services exist in the real world, too, for much the same reason: holding party A's cash and party B's item until the escrow service has both, then giving party A the item and party B most of the cash, minus their fee.

So this give the option of chargebacks? This seems to be much less safe for merchants.

seems to work for paypal

in a large mainstream bitcoin economy there would be multiple escrow services, both the consumer and merchant can decide what services they will use

clearcoin has the option of donating the money to charity if there is a dispute, seems like an interesting innovation to me

Paypal, credit cards, etc. have dispute resolution services. They don't just allow the buyer to renege arbitrarily. To be useful, it seems to me that an escrow service needs to offer a more robust dispute resolution mechanism, which will cost money.

not sure what your point is, my point is that in a bitcoin economy you would have choice

for a large purchase either the merchant or the customer may insist on an expensive escrow service that deals with disputes robustly

for small purchases this might not be so important

I saw a comment on HN recently asking why startups never challenge the VISA/MasterCard hegemony, with a response saying it is simply to expensive to enter the market with a low ROI

widespread bitcoin use would lower the barriers for this kind thing, unless you like monopolies and cartels, I can't see how anybody would argue this is a bad thing (regardless of whether you think bitcoin is good, will suceed, whaterver)

So, under "For Buyers", it says that if you don't release the funds, it gets refunded to you.

Under "For Sellers", it says that you get the funds unless they specifically block it.

WTF?

And so the process begins to make bitcoin as user friendly as credit cards.

Escrow has never worked well for consumer commerce because sellers dont like it.

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