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Comment by vlasta2 | Hacker News Reader

One of the advantages of bitcoin is that you do not need a middle man to do a transaction. Some people may choose one for whatever reason, but would they be OK with paying the transaction fees? Would you use a credit card if you had to pay 4% more than if you paid in cash? I do not think many people would be OK with that.

It may sound as if I am a PayPal lover and bitcoin hater, which is NOT the case. I just do not see them cooperating sensible.

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Interestingly, Bitcoin does support transactions which have a third party acting as an arbitrator; these transaction require the consent of two out of three participants in order for the money to be transferred. PayPal is essentially a fraud detection business disguised as a money-transfer business, so this seems like a natural niche for them.

(Technically, every Bitcoin transaction has a script in a Forth-like, non-Turing-complete bytecode which specifies the conditions needed for the transaction to be valid. It supports m-out-of-n signature requirements, among many other fun things.)

> Interestingly, Bitcoin does support transactions which have

> a third party acting as an arbitrator

Can you please share some references? I'm looking to implement exact scenario, but couldn't find any references yet.

As I take it, it's not really possible yet. In any case, we're talking about 'multi-signature transactions' [0]:

    A multi-signature transaction is one where a certain number of Bitcoins are "encumbered" with more than one recipient address. The subsequent transaction that spends these coins will require each party involved (or some subset, depending on the script), to see the proposed transaction and sign it with their private key. This necessarily requires collaboration between all parties -- to propose a distribution of encumbered funds, collect signatures from all necessary participants, and then broadcast the completed transaction. [0]

If you are using Blockchain's Mywallet, you might already be able to use them, as an end-user. [1]

One way to implement them is by allowing a more generic 'script execution per transaction' (not sure of wording) mechanism, proposed in BIPs 16 and 17. [2] [3]

Also see bitcoin.stackexchange question about multisig TXes. [4]

As I understand it, if you're a developer wanting to implement arbitrated bitcoin transactions, you'll have to wait. Correct me if I'm wrong though.

[0] https://en.bitcoin.it/wiki/BIP_0010

[1] https://blockchain.info/wallet/escrow

[2] https://en.bitcoin.it/wiki/BIP_0016

[3] https://en.bitcoin.it/wiki/BIP_0017

[4] http://bitcoin.stackexchange.com/questions/3718/what-are-mul...

Thank you

You write: "Would you use a credit card if you had to pay 4% more than if you paid in cash? "

That is exactly what happens today on the real world. If you make it convinient for me to use your "credit card", I will use it, and because of that, vendors pay the 4% fee. All paypal needs to do is to make it easy (at non bitcoin vendors for example) for me to spend my bitcoins and I will use it. Vendors will fall in line because they want my business.

The above said.. IMHO, there is no way in hell that "the man" will allow bitcoin in its current form to prosper (at least not without a heck of a fight), as to much visibility & control would be lost.

Today, the buyer does not experience the fee. Sellers accept it, because the middle man gives them no other choice. With bitcoins, the middle man has no leverage anymore as the buyer and the seller can interact directly. That was my point.

The buyer does experience the fee in the form of increased price. They just don't notice it because it's baked in. Anyone who buys stuff at the grocery store in cash is financing other people's rewards points.

Ever wonder why Arco is the cheapest gas?

In some cases you can end up paying a charge for using a credit card. Low cost airlines are an example. EasyJet adds a 2.5% surcharge for credit cards. People still use them.

http://www.easyjet.com/book/paymentoptions

You don't need a middle man for physical cash (let's use USD as the example), but services like credit cards and debit cards are extremely convenient. Middle men can certainly be of great value to the bitcoin economy, by providing similar services to the ones that already exist on top of government currencies.

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