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Comment by ForHackernews | Hacker News Reader

I thought the whole point of bitcoin was that it was peer-to-peer with no chargebacks or centralized middlemen?

The bitcoin model alone doesn't fit buying drugs online. The purpose of escrow is a mutually agreeable middleman to facilitate a transaction, especially when parties that do not trust each-other can not exchange goods and payment in person.

I still don't understand how this helps though - couldn't the person still get their shipment and claim they never received it in order to trick the middleman to return their funds?

How does the middleman have any ability to investigate or know who to believe?

In one model of escrow, the middleman receives both the goods and cash before distributing them to the other parties. Potentially doing some inspection of goods at the time too.

In another model, more common on the internet, the middleman holds the money from the buyer while the seller ships the goods to the seller. They can't guarantee the buyer does not lie to the middleman, but it changes the incentive structure around fraud. Especially so when the middleman runs or has connections to the marketplace.

A side benefit, but I wouldn't say the whole point. There are some cases where middlemen are necessary - the difference being that they're a lot more avoidable with BTC than they are in meatspace. (Credit cards, authorities who rob people carrying large amounts of cash, and so on.)

I'm not positive that bitcoins offer much more protection from robbery than cash, given the situation here.

They offered protection, though didn't they? Evolution had multiescrow, they wouldn't have gotten those funds would they have?

I'd much rather have someone charge up fraudulent charges on my credit card than Bitcoin, I would much more likely be getting that money back and letting the CC fraud department deal with it. That guarantee is a major selling point of why so many people use credit cards in the first place.

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