Bitrated: Escrow made easy
Bitrated is operating an online reputation management system linked with its multi-signature (multisig) escrow service for bitcoin payments. The combination provides unprecedented consumer protection to Bitcoin users, buyers and sellers alike.
Bitrated‘s bitcoin payment service uses multisig transactions where a trusted third party (trust agent) is nominated by the seller to resolve disputes and reverse payments in case of non-delivery or fraud. Two out of three signatures are required to release a payment: the seller’s, the buyer’s or in case of a dispute, the trust agent’s. If the buyer is happy with the purchased goods or services received, the payment can be released by the buyer and the seller alone, with no intervention required from the trust agent. Otherwise, the trust agent will mediate the dispute for a fee, and eventually take either the side of the seller, in which case the payment will proceed, or the buyer, in which case the escrowed bitcoin will be refunded to the buyer.
With multi-signature, the trust agent is not able to take the money and disappear, because the payment address is fixed and any decision of the trust agent must still be validated by the seller or the buyer. But the details are more complex: a dishonest trust agent could collude with a dishonest seller – or buyer – behind the scenes. The management of Israeli-based Bitrated said the their reputation management system addresses this problem.
“We are confident that Bitrated holds the key to the next wave of Bitcoin consumer adoption,” said Bitrated CEO Nadav Ivgi . “While e-commerce disputes are usually settled in a fairly easy process, Bitcoin transactions still hold a major risk of fraud. Our reputation management system is a major step forward in consumer protection when combined with the secure payment system, and it can help bring Bitcoin one step closer to the massive numbers of users in e-commerce.”
Bitrated created a marketplace for arbitration services where trust agents can compete for clients by providing quality dispute resolution services, utilizing their domain expertise, building a reputation and offering competitive fees.
“Because the trust agents never hold user funds in escrow, we can greatly reduce compliance costs, lower the entry barriers, encourage competition and allow smaller and specialized players to participate in a way that was never possible before.”
To join Bitrated, users need to create a profile and link their social media accounts. Currently, reputation scores are mostly based on the various karma systems and number of friends/followers on social media. Later, it’s to be expected that reputation scores will be based mainly on user reviews, successfully completed transactions and dispute resolutions on the Bitrated system itself.
To create a new trade, buyers need to specify details, of what they are buying (a description of the product or service, delivery method and other agreed upon terms), the price in bitcoin, the user name of the seller (an external email address can also be used, in which case the seller will receive an invitation to join Bitrated), a refund bitcoin address, and the user name of the trust agent. Trust agents, who can be found in the Bitrated user database, can specify their fees: a standard fee (for example 1%) and a dispute resolution fee (for example 2%). Needless to say, if the system catches on, top-rated trust agents whose services are in demand could earn significant fees. Among the top trust agents is Charlie Lee, the founder of Litecoin and Director of Engineering at Coinbase.
No question, Bitrated is a very welcome addition to the Bitcoin ecosystem, and one that meets an important need. Consider it as an open and transparent alternative to the native escrow and reputation systems of specific Bitcoin marketplaces – where often escrow and dispute resolution are provided by the operator itself. Bitrated, which is virtually a public marketplace for arbitration services with a crowd-sourced reputation system, is a good solution to manage trust issues in the digital economy.
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