[bisq-network/proposals] Enable face to face (F2F) trade in Bisq (#24)

Sat Jun 2 21:11:57 UTC 2018

Face to face (F2F) trade like offered at LocalBitcoins is an often requested feature but has not been considered to be added because Bisq has a different security model compared to LocalBitcoins and with our model we cannot provide sufficient security to make F2F trades safe. E.g. LocalBitcoins uses ID verification and reputation. Bisq uses the security deposit and the arbitrator as security protection which both would not help much in the context of a F2F trade.

Though there might be an interesting idea to allow us to support F2F trades.

##Overview
It is based on the game theoretical idea of [mutual assured destruction](https://en.wikipedia.org/wiki/Mutual_assured_destruction) which is basically just the idea that if both traders do not come to a cooperative result both will lose all what they have put in the trade (e.g. trade amount and security deposits).

That model was actually the very first concept of Bisq and is used in some other projects like BitMarkets and BitHalo/Nightrader. 
The reason why we went away from that model was because [Adam Gibson](https://twitter.com/waxwing__?lang=en) found a severe risk for a blackmail scenario. 
In short, there is always an asymmetry of the max. loss of each trader due to the fact of the non-atomic exchange on the fiat side. That enables that one trader could blackmail the other who has more to lose to agree to a different payout result as it was originally agreed on. An economic rational trader getting blackmailed in that way would agree to the changed payout to have less financial loss than if he would stick to the original contract and risks that his funds will be locked up forever.
This risk is specially serious in an anonymous global online market.

### Assumption
With a F2F trade context though we have a different scenario. People are meeting physically and due that fact there is a different risk exposure compared to the anonymous online market situation. E.g. a scammer would risk physical violence if he tries to scam a person who has physical access to him. We can assume that the risk of a blackmail is much lower in such a context. If that assumption holds we could use that model as basic protection for F2F trades.

###Payment method
The payment method will contain an email and/or mobile number field which will be used by the traders to exchange the details for arranging the meeting place.
Beside that there will be the location data (Country, City, maybe coordinates). In a first version it should be a basic feature but could later be improved by implementing a map to set the position and of the trader. Though exact positions of the traders address have to be avoided for security reasons.

### Offerbook
At the offerbook offers for F2F trades will present additionally the location. In a first version that can be added to the payment method info. A filter option to search for traders by country and city would be good as well. In a later version we could implement a map to look up nearby traders.

###Trade process
Once an offer gets taken both traders get in touch by email or mobile and arrange a meeting place.
Both traders bring their laptops with them to use Bisq to do the confirmations of sending the Fiat funds and confirming the receipt in Bisq. 
That might be inconvenient for some users to carry their laptops but as long we don't have a mobile version there is no good way around that. But ideas which would not require that are welcome.

###Arbitrators role
The arbitrator cannot help much as in most cases there will be testimony against testimony and he cannot get a reliable proof about the transaction. So the standard resolution of any F2F trade disputes will be that both traders will got frozen their funds forever. Though they have the option at any time in the future to still come to an agreement and then tell the arbitrator to do the payout according to the result both have agreed on. 
The arbitrator can also choose to make whatever payout he thinks is fair according to the testimonies of both traders. This option makes blackmail even less likely as there is no guarantee that the funds wil be kept frozen. Also the blackmailing person will have likely higher risk to lose the case and the arbitrator decides in favor of the other peer. ID verification can be required as well from the arbitrator - a request scammers usually don't want to follow. 

One problem is for sure that the dispute resolution adds much higher pressure on the arbitrator as he will not have a tamper proof evidence. But as said to not do the payout at all is a valid default option for the arbitrator.

###Security deposit
The security deposit should be set higher for F2F trades to add pressure on both to find a cooperative result. 

###Risks and warnings
The risks and different rules for dispute resolution have to be very clearly presented and accepted by both traders. 

##Test run
We could add that payment method as experimental for a test run to see how it works in reality and see how much demand exists for it. Before that it would be good to make a poll to see how much demand is really there for F2F trade. The still limited volume on Bisq will be an even bigger issue when it adds a location limitation as well. 

##Implementation effort
The implementation effort should not be very high. It is mostly UI work and does not require any deeper changes for a fist version. For map integration though the effort will be higher but that should be left for later after a test run has shown how much demand for that payment method exists.  

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https://github.com/bisq-network/proposals/issues/24
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