Thank you, I asked your sibling comment this followup would be interested in your response as well:
So I'm still confused here. What new kind of contracts could I build using the blockchain? What existing contracts are made easier because of the blockchain?
An example from my understanding: I want to buy something off an online merchant. I send them the payment, but I make it a multisig payment that needs to be authorised by their signature plus the signature of the delivery company. I expect the delivery company only to authorise the payment with their signature once they have confirmed successful delivery.
This way I can authorise payment without entrusting the funds to a third party. If the delivery company doesn't authorise the payment, the money is still immediately available to me.
No, but it does help the more common "whoops, we didn't actually ship your order. Are you sure you actually bought something from us? Prove that you did / our systems are perfect."
Then you send them the receipt from when you purchased something or if you paid with a credit card you tell them you're going to submit a charge back.
This doesn't solve a real problem which is the problem with a lot of things bitcoin tries to solve. They are things that aren't real problems or they are things that are already solved just as well.
Actually I disagree. Why should I be forced to do the footwork, taking valuable time away from my family, to dig up receipts so I can convince a vendor (who may or may not respond) to give me my money back? Or the bank?
This kind of issue almost always requires a third party reputation broken to step in, and today it is one of the reasons I like shopping on Amazon. Complain to them, or file a rating with 1 star, and you certainly get a vendor's attention. Commerce just shouldn't be this difficult. Buying products online should be as easy and as trustworthy as buying products over the counter. I see Bitcoin as that mechanism. We aren't going to all trust Amazon for ever.
>Why should I be forced to do the footwork, taking valuable time away from my family, to dig up receipts so I can convince a vendor (who may or may not respond) to give me my money back? Or the bank?
Because you're the one making the claim. Making a charge back takes roughly 2 seconds. And if you've bought something online you should have an email receipt you can find just as quickly.
You've spent more time away from your family replying to me telling me how important your time with them is than you would spend making a chargeback.
>This kind of issue almost always requires a third party reputation broken to step in
Right and they already exist so bitcoin doesn't actually improve the process it just reimplements it.
>Buying products online should be as easy and as trustworthy as buying products over the counter. I see Bitcoin as that mechanism.
But bitcoin actually makes it worse for consumers. Credit cards have really strong consumer protection methods. Bitcoin has none unless you toss on 3rd party escrow in which case it is just trying to patch over an inherit problem. Bitcoin is digital cash. The reason cash works well is because almost every time you use it you are in person with the merchant and can verify delivery immediately. Once you remove that it is near worthless.
By what process that you have ever done does a chargeback take 2 seconds, or anything less than 60 seconds? At best it would be:
* Meticulously file your receipt for purchase.
* Log on to bank/credit card web site
* Find the correct process for a chargeback
* File the required form, uploading the receipt in the process.
This is at least 60 seconds. At best. And normally, much longer, especially if you add up the time you spend meticulously filing all receipts.
I don't think it is asking too much that a third party (like FedEx) engage in transaction assurance for Internet purchases. They can get a slice of the pie (they do anyway.)
No new contracts just new variations on old contracts. I don't really see much value ad myself but I'm generally on the skeptical side of the bitcoin discussion anyhow so don't just take my word on it.
Lawyers and escrow agents and other human intermediaries take fees on transactions, usually proportional to the downside risk of a "bad" transaction (completed, but one party desires recourse for something).
If the risk is that well defined, then the cost of escrow seems wasteful if you could just automate the upside/downside in the Blockchain (not necessarily well defined yet). I don't think the package delivery service is even close to an interesting example, so I don't know why anyone would choose it. Packages need to be delivered. Automated contracts can only eliminate insurance middle-men, not physical logistics.
BTC advocates should focus on useful ways to simplify existing contracts (while paying very close attention to the profit structure of underwriting).
>If the risk is that well defined, then the cost of escrow seems wasteful if you could just automate the upside/downside in the Blockchain
You don't pay for them to calculate the risk though you pay for them to resolve the issue when there is a dispute. So using bitcoin wouldn't actually lower that cost/allow you to automate away any of that.
>Automated contracts can only eliminate insurance middle-men
The middle-men in most contracts are there for assurance. Bitcoin doesn't provide that even with m-of-n.
The big value is not having to completely trust the person holding the money. As of right now if you do escrow you transfer money to a third party, who has the option of taking it and running.
With a correctly setup transaction, bitcoins can be held in escrow that require 2 of 3 people to approve moving it. This means that you/seller, you/escrow, or seller/escrow are the only 3 combos to get the bitcoins out. There's no way for the escrow agent to steal the money.
So I'm still confused here. What new kind of contracts could I build using the blockchain? What existing contracts are made easier because of the blockchain?