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Comment by legutierr | Hacker News Reader

What if there is no clearinghouse operating in that particular market?

You build one because it's way easier and cheaper to build a clearinghouse than it is to build a massively decentralized network of trust-less computers?

Yeah, but what if that decentralized network of trustless computers already exists, and transaction costs relative to costs you would otherwise incur are very low?

The premise of your argument is that building a clearinghouse is cheaper and easier than using a blockchain. That seems laughable, honestly.

If you use the Blockchain you still need to legislate such that whatever is on the chain is legally binding then create an agency to enforce it.

This should be possible to do only through standardizable contracts, with enforcement through arbitration and/or the courts.

> Yeah, but what if that decentralized network of trustless computers already exists, and transactions costs relative to costs you would otherwise incur are very low?

Sure and what if unicorns were real? Horses would seem pretty boring then I bet.

> The premise of your argument is that building a clearinghouse is cheaper and easier than using a blockchain. That seems laughable, honestly.

I guess it’s good that we are both laughing at each other then.

"hey let's facilitate this transaction on Ethereum"

"no, that's ridiculous, let's build a clearinghouse, get a bunch of lawyers and have paper contracts drafter, ad deal with differences in international law."

Lmfao. What is this straw man transaction that can be settled on ETH (keep in mind, you’re already completely leaning on sunk cost fallacy) but needs a lawyer off chain?!

Like, either the terms are known and you put them in a smart contract or they’re unknown and you need lawyers anyway.

I dig the energy, but at least be sort of realistic in your “owns”

I'm just going along with everyone else's rebuttal of "just use a lawyer", "just use a clearing house", "just pay someone to balance/record your own books", and whatever else they mention to avoid a solution that exists.

It's a bit like hearing people dismiss email and saying "just use snail mail", "just have a scribe write the letter for you", "just use a personal carrier so it's faster".

Then use an escrow.

> An escrow is a contractual arrangement in which a third party (the stakeholder or escrow agent) receives and disburses money or property for the primary transacting parties, with the disbursement dependent on conditions agreed to by the transacting parties.

https://en.wikipedia.org/wiki/Escrow

To implement a traditional escrow you need an escrow agent and an escrow agreement, as you rightly note. In the event of a dispute, the escrow just holds onto the money until the question is resolved in arbitration or litigation.

Expenses involved is such a process include legal fees to draft and negotiate the agreement; paying the escrow agent for their bother; paying for litigation in the event of a dispute. Plus, you have the risk of the escrow agent misappropriating the funds.

Escrows can be implemented on a blockchain as well. If the use case is suitable, you can save a lot of money and hassle! And if settlement is on-chain and is indisputable, you might not even need any escrow at all.

And what if the escrow runs off like SBF and spends your money on personal property in the Bahamas?

Then the legal system deals with them and your business insurance covers you (or doesn't). This stuff is a solved problem. Business transact in a low trust environment all the time all over the world.

A blockchain can perform escrow services in a more secure manner, 24/7.

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