Seems like a plausible idea, Chris. I especially like the idea of
burning the coins rather than turning them over to someone else in order
to prevent foul play from other parties. Reminds me of the idea to
insure currencies on top of Open Transactions with bitcoins.

The only downside I could see right away is the possible increased costs
for becoming a vendor. I suppose it wouldn't be a problem for some
vendors as bitcoin is meant to be a deflationary currency. Their bond
should theoretically grow in real value over time. There is also the
issue of some trust still in the hands of the bond service. Awesome idea
overall.

-@kyletorpey <http://twitter.com/kyletorpey>

On 05/07/2014 11:02 AM, Chris Pacia wrote:
>
> I am not thoroughly versed in the inner workings of dark market so if
> you guys have already implemented/discussed this, the feel free to
> disregard this email.
>
> It seems to me that posting a bond can be a great way for a new vendor
> with no reputation to demonstrate he's a serious seller.
>
> This could work similar to the arbitration service. In fact it could
> even be run by the same arbitrators.
>
> The bond service posts its public key for everyone to see. The vendor
> uses the public key bip32 style to generate a child key.
>
> He uses the child key and his own public key in a 2of2 multisig
> transaction.
>
> The vendor picks whatever amount of Bitcoins to post as a bond.
> Presumably the larger the bond the more he can be trusted. Vendor
> makes a transaction posting the bond and includes in it his vendor ID
> and the name of the marketplace.
>
> To prove he's a trusted seller he can just publish the txid. Buyers
> can look at the transaction, see that a bond is posted/amount, see
> that it was this vendor who posted the bond not someone else, and
> verify that the public key in the scriptpubkey can be derived from the
> bond service's public key proving that the vendor didn't just send
> coins to himself.
>
> If the vendor turns out to be a scammer, the service can refuse to
> release the bond, burn the coins, and can post a small tx with the
> word "scammer" in it so the vendor can't keep using that txid.
>
> If the vendor wants to withdrawal his bond (maybe he's built up a
> strong enough reputation) it needs to be done in a way that doesn't
> allow him to scam people with outstanding orders.
>
> The vendor can sign two txs. One sending coins to himself but with a
> locktime of, say, 10 days. The other back into the bond address. The
> service can sign both and publish the locktime tx. If there are any
> disputes in that time period he can publish the second tx and lock the
> coins back up.
>
> So great idea, terrible idea, not needed? What say you.
>
> -Chris
>
>
>
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