Bitmarkets: Peer-to-Peer Party Escrow and Open Source Marketplace

Online marketplaces openly advertising their semi-anonymity have gotten a bad reputation over the years. Whenever everyday consumers hear “anonymous marketplace,” they immediately think of illegal products and services, and how Bitcoin facilitates these actions. Nothing could be further from the truth where Bitmarkets is concerned though, as this platform-to-be is putting a different spin on things.

Also read: The First Russian Language Bitcoin Documentary

Bitmarkets: Anonymous, Decentralized, Two-Party Escrow

Bitcoin.com_BitmarketsThere is a major difference between running a centralized online marketplace, and a business model that openly embraces peer-to-peer technology and ideology. Centralized marketplaces require middle men to operate as intermediaries for every transaction, which means every business deal is subject to fees that are used to cover the cost of the middleman.

Furthermore, traditional online marketplaces are closed-source, meaning that individual users with an interest in the project can’t help make the platform. Imagine what would happen if eBay was an open-source marketplace project, and how much it could be improved by the very people who helped made this project into a household name.

The major problem with centralized marketplaces is the lack of user privacy, combined with the rather high fees for every transaction. Even though users can mask their identities behind usernames, most of the personal information becomes clear as day when a payment is being made. This is something that most people wouldn’t have an issue with, but the system can be refined a bit further.

That being said, a standard peer-to-peer order book, combined with peer-to-peer payments, is not the best solution either. Users will have complete privacy, and there are no fees attached to using the platform. Both of these factors are of great importance, but such platforms could be improved upon even further.

This is what brings us to Bitmarkets, as this open source project is all about bringing the peer-to-peer aspect back to online marketplaces. But they also taking things to the next level by introducing another peer-to-peer layer on top of the infrastructure. A peer-to-peer party escrow system will not only help buyer funds secure, but it will also require a small deposit from the seller.

Doing so would provide the ultimate level of security between two parties conducting a deal over the internet. Both buyer and seller are invested in the escrow service, making it impossible for one party to profitably defraud the other. Buyers or sellers who engage in this type of behavior for longer periods of time will ultimately be banned from Bitmarkets.

The concept of Bitmarkets has been kicked around since 2013, and a working demo of the project was unveiled at the Bitcoin 2014 conference in Amsterdam. Later that year, the OS X version of the platform was released to users worldwide. A client for both Windows and Linux users is expected to be made available later this year.

Removing The Need for Human Escrow Agents

Bitcoin.com_Peer-to-peerPeer-to-peer party escrow services remove the need for intermediary escrow agents from the equation. Whenever an escrow agent is involved, business deals gone wrong are always a matter of “buyer’s word versus seller’s word,” making it incredibly difficult to fairly resolve any disputes. Plus, this type of escrow system ensures there is no corruptible element, as both parties stand to lose from attempting to defraud the other.

To put his system into a bit more detail, peer-to-peer party escrow works as follows. The buyer puts up 2x the item price, once for the actual payment, and once as a deposit for the escrow service. In turn, the seller must put up a deposit equal to the item price as well. With these boundaries in place, both parties can feel safer knowing the other party can pay for the item, or has actual funds to prove he is a legitimate seller.

Both parties will then have to sign the transaction together, each sending their part of the money to an escrow wallet address. Assuming the deal has gone through correctly, both parties sign off on the payment, and the escrow releases the additional deposits to their respective owners. In the event of a refund, both parties would have to agree on refunding the item, and sign the transaction.

Should there not be an agreement between both parties, funds will remain locked until an agreement is reached. While this is an annoying situation for both parties involved, it also reduces the Bitcoin supply in circulation, transferring purchasing power to all other Bitcoin holders in the world.

Quite Different From OpenBazaarBitcoin.com_OpenBazaar

When it comes to online peer-to-peer marketplaces, people will automatically compare Bitmarkets to OpenBazaar. That being said, there are quite a few major differences between both platforms, as OpenBazaar suffers from a gameable reputation system, the association with the Tor network, providing completely anonymous marketplaces, and the human element involved in escrow protection.

Bitmarkets, on the other hand, offer none of those services and removes any negative connotations associated with online peer-to-peer marketplaces. Furthermore, its party escrow system makes fraud unprofitable, and there is no association with Tor. Furthermore, Bitmarkets has no intention to offer anonymity, as it positions itself as a legitimate peer-to-peer online marketplace solution.

More details on Bitmarkets can be found in these slides, and in the whitepaper.

What are your thoughts on the Bitmarkets project? What do you like or dislike about it? Let us know in the comments below!


 

Source: Bitmarkets Slides

Images courtesy of Bitmarkets, OpenBazaar, Voluntary.net, Shutterstock