Nashx allows trading using Nash equilibrium and mutually-assured destruction
nashx.com
nashx.com
Say Alice is a squillionaire and Bob is pretty skint, then under this scheme Alice might deliberately screw the deal to burn the funds on purpose, as for Alice it is a small loss, but for Bob it is devastating.
Q: Why don't we give destroyed funds to charity or miners?
A: It gives them a bad incentive to make fake accounts, get into fake deals with real people, and destroy risk funds. If destroyed risk funds are not really destroyed and given to anyone, then whoever gets that has bad incentive to do bad things to get more of it.
I have concern about btc removed "forever" [0] and btc-rich folk draining the funds of poorer folks. Like how megacorps with huge legal budgets can bankrupt the average joe if they attempt court combat. An entity with a massive mining % && btc-income could stockpile for the sake of draining funds in bad trades.
[0] as long as the crypto algorithms remain secure
Maybe the name is not perfect, but it's quite close to what NashX provides.
Just as in the case that MAD is not in equilibrium unless both parties have extensive and reliable knowledge about the nuclear capabilities and procedures of the other, so this is not in equilibrium if there is any doubt about either what the financial capabilities of the other party are, or if there are doubts about what your item is worth to them personally.
Also, the whole thing is a bit odd anyway as it is using a currency to facilitate a direct barter. I am trying to think of situations where someone would want to do a direct swap and use something like this to insure it.
Bob's worst scenario is no item and no money, with Alice getting both items and no money and Bob has no idea beyond Alice's say-so whether Alice values both items more than the money.
So for low value items, this would seem silly as it would be better to just risk the item rather than the item plus some money, but the higher the value of the item, the higher the risk of miscalculating the funds required to secure the transaction.
Strictly speaking, one can never possibly know other person's "real" valuation. People can always lie to themselves and change their mind. The only way we can know how much 1 BTC is worth is by seeing a successful 1 BTC transaction.
> Also, the whole thing is a bit odd anyway as it is using a currency to facilitate a direct barter.
There's nothing odd. If I want to exchange my bike for an iPhone, I have to be very lucky to find someone who wants my bike and does not want his iPhone. That's why we all use money, it's the most marketable product — you can sell it to anyone.
> Bob's worst scenario is no item and no money, with Alice getting both items and no money and Bob has no idea beyond Alice's say-so whether Alice values both items more than the money.
This is fixed easily by having insurance deposit 1.5x or higher that of the price. So Alice is motivated to pay the bill to release higher amount.
As far as I understand, the approach outlined in the exchange's MAD option requires the exchange to prove that they have destroyed the funds.
I assume that the exchange creates a new bitcoin address for each transaction. If the transaction ever reaches an unresolved dispute, it would be possible for the site owners to simply move that single address to their "long-term retirement fund^W^W backup system", instead of simply deleting it. At that point, if the system ever shuts down, the owners can then simply move (in reality: shuffle) all the supposedly destroyed funds to their own accounts.
Apparently one can send bitcoins to any address, and an existing address becomes public only when it is used in a transaction. So the fund destruction can't just be a transaction to a so far unknown address - that would, again, allow the site owners to use their own addresses for the purpose.
After thinking this through a bit, it seems to me that the only way to really prove that the funds are destroyed would be to send them to an all-zero address. While thinking about this, a friend came up with the idea of spending the destroyed funds exclusively on transaction fees. I don't know why, but I have a weird feeling that could still be subject to gaming the system somehow.
A fascinating idea for a service, nonetheless.
They explain in the FAQ: http://nashx.com/FAQ
They create a special address (hash of a public key) which would take thousands of years to generate from some private key. So by seeing that funds moved to such address, people can be sure the money is destroyed and not moved to a "long-term retirement fund". Their example: "1nashx1username11username22Wd4keb"
That kind of completely bogus address is actually even better. If one wants to retain anonymity, it even encourages to use one-off ("not used anywhere else, not trackable across web forums") account names for the service.
Let's call Alice's risk deposit Ad and Bob's risk Deposit Bd. Let's call Alice's good Ag and Bob's good Bg. Alice's Detonator is Da and Bob's Detonator is Db.
In the box are Ad and 2Bd. Alice has in her physical possession Bg with a value of 1d. Bob has Ag with a value of 1d. Bob destroys Db. Alice now has Da and Bg giving her control over Ad and 2Bd. She can say to Bob: "Hey Bob, y'know, I feel like I'd like more for this, why don't you give me another 1d or I'll destroy your 2Bd and my Ad."
I'm just saying that in the scenario presented, it seems like you have to ensure that Alice destroys her detonator first for the scenario to work correctly. Once Bob holds the only detonator, it's harder for him to justify ransoming Alice's single Ad since more of his value is at stake.
The service is supposed to destroy only Bd, not 2Bd. And not separately, but both deposits at once when the deal is timed out, or both parties commit that they disagree with each other.
Also I don't see the difference compared to the "real" market...
1. It would require them to hire experts in all markets they wish to support.
2. And since mediation has a human factor, there will always be scammers with some success rate of fooling experts around. Considering the mediator has no power to fight back at anonymous/remote scammers, the cost of attack is very-very low.
By requiring both parties to risk their funds up-front, the cost of attack on a mediator becomes irrelevant. Scammers would have to either convince their victims that the good is delivered and get payment; or try to hack nashx website to hijack people's funds when they are being transferred back and forth.
Another funny part: no payment method except Bitcoin allows provable destruction without everyone gathering in the same room.