[liberationtech] A decentralized anonymous marketplace

[Rune Kjær Svendsen]

Interesting project. I believe solving the part about reputation is the
hardest part. I posted my thoughts on this on a Hacker News thread
regarding this, and I thought I'd share them here, on the list, as well:

As far as I can see, the essential problem with decentralized anonymous
marketplaces is that reviews need to cost money. Plain and simple. Good
reviews have great value, so they need to have a non-zero price. A vendor's
review history is the indicator by which a potential customer will assess
whether a vendor is trustworthy or not, and a vendor should have to pay to
achieve a trustworthy reputation - if good reviews are free, and you can
make money from good reviews, they would have little value.

This is the reason spam emails are so frequent: you can make money from
something that costs very little. If reviews were near-free, good reviews
would be as plentiful as spam emails.

Free reviews means vendors can make sock-puppet accounts, fake a
transaction, and leave a five-star review to themselves. With Silk Road,
they take x% of the value of each transaction (or if not, that's at least
how it should be), so if a vendor seeks to inflate their review score, they
will pay a price for it.

In fact, a good overall review score for a vendor - as far as I can tell -
is the sum of all the review "values" (1 to five stars) multiplied by the
value of the transaction in question. So a vendor with 10 five-star reviews
on 10 orders of a value of 1 BTC each, would have the same score as a
vendor with a single five-star review on a single transaction with a value
of 10 BTC. Both these vendors would have paid the same amount of money to
get this, equal, review score.

I've thought a bit about this, and I don't see how this can be solved in a
decentralized market, with no middleman to tax transactions, and make sure
that vendors can't get free reviews.

***After having written the above thoughts, user "hendzen" on Hacker News,
suggested we use a form of proof-of-sacrifice to make sure reviews have a
cost for vendors. This led to the following rough sketch of how such a
system could look. Again, I haven't exactly thought about the next part for
long, but I don't - on the top of my head - see why this can't work.***

(in reply to hendzen):

Without having thought about it further, this might work:

All we would need to do would be to "burn" a certain percentage of the
transaction, eg. by sending it to an provably unspendable address (a
hash160 of all zeros, for example).

So the transaction from the customer to the vendor, paying for the goods,
would be a 2-of-3 multi-signature transaction (of which the customer, the
vendor and the escrow agent each hold a copy), with an output (let's call
it output1) to the vendor (paying them for the product), and an OP_RETURN
output which specifies a review value (for example, 1 to 5). output1 will
then have to be redeemed in a new transaction (created by the vendor), and
this transaction will include an output that burns x% of the amount
redeemed from output1, and an OP_RETURN output that specifies the vendor's
public key.

To calculate the aforementioned total review score for a vendor, all you do
is check every transaction that contains the vendor's public key in the
OP_RETURN output, and take the sum of the review value multiplied by the
amount of bitcoins burned for each of these transactions.
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.stanford.edu/pipermail/liberationtech/attachments/20140325/a2035add/attachment.html>