[bisq-network/proposals] Arbitration free trading (#84)
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Sun May 12 22:15:43 UTC 2019
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I propose a simplified and optional trading protocol which eliminates the need for arbitrators and mediators. Similar ideas have been commented on before: https://github.com/bisq-network/bisq/issues/2805, https://bisq.community/t/pr-for-face-to-face-trade/5821/22
The present proposal is far simpler to implement than previous proposals for a new trading protocol (https://github.com/bisq-network/proposals/issues/52) and is conceptually easy to understand for users. It will also allow F2F-trades to settle correctly with much higher certainty than is presently the case. My motivation for this proposal is simplicity. A chat system is better but harder to implement.
I propose that:
* There is a new account-type which contain an email.
* Offers using such accounts should be marked with a special symbol such that the taker knows he can communicate with the maker. The taker can have a non-email account type.
* The default security deposits should be high and if they are set high it should be visible in the offers.
* There should be an option for the buyer to do a payout to the seller, in case he cannot pay. Maybe his bankaccount has been blocked. If this is difficult to implement it can be skipped. People usually find some way to pay and the contract is signed.
* The trade window time is made very long for these accounts. The traders can still open a dispute in case they need to. There may be situations where there are no arbitrators and the traders need time to finish the trade.
* Traders should be able to make and take email-enabled offers even if there are no arbitrators available.
The present system with a few "trusted" arbitrators will not work in the long run. They can scam, they can be(come) incompetent and they can (rage) quit. They are an attack surface for the state and should thus to be fully anonymous, which conflicts with being trusted. There are ways to solve this, (https://github.com/bisq-network/proposals/issues/52), but it is complicated to implement. A simple arbitrationless trading option has a certain appeal to me and will make Bisq immune to failure of the arbitration system.
**I am convinced that if the arbitration-problem is not solved Bisq will disappear.** This would be sad indeed for such a powerful project and a tremendous waste of intellectual effort. A worst case solution is to have a mandatory email field on all accounts which can be implemented in less than a day.
* Arbitrators are not needed.
* There will be little incentive for blackmail since the blackmailer risks his deposit. There is an asymmetry in loss for a non-settled trade but both traders lose.
* There is no cost associated, except the very minor cost of interest on the security deposit.
* Full anonymity for anonymous payment methods can be achieved using anonymous email.
* Future trading is not profitable if the security deposit is high.
* In comparison with the off-chain trading protocol (https://github.com/bisq-network/proposals/issues/52) this proposal is fairly easy to implement.
* In the future it might be possible to make the security deposits using Lightning Network and a 2of2 multisig: https://tinyurl.com/y3wuxega. This will require quite some work though and arbitration will be impossible. But it does have the advantage of protecting Bisq against high on-chain fees.
* People can use the communication channel for social engineering. However a contract with clear terms has been entered and the traders have little to argue about. In case they do start to argue about e. g. late payment it will still be in their best interest to complete the trade. They can then block each other from future trades.
* People can use Bisq to meet and then do off-Bisq trading. I doubt they will do this much since they lose the protection of a security deposit. There are already other venues to meet for OTC-trading.
* A high security deposit might be discouraging, in particular for new users. However there is little cost associated with a high deposit and I think the benefits outweigh the disadvantages. It is anyhow optional to use email-enabled accounts and people who dislike high security deposits don't have to use them.
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