Delay BTC release for Fiat trades

ManfredKarrer · April 25, 2019, 2:46am

As we cannot be sure that the stolen bank accout scammer is trying to extend to other reagions and payment methods I would suggest any BTC seller (Fiat) to delay the release of the BTC (confirmation of receipt). That will likely trigger disputes but the arbitrators will tolerate that in the current situation and a delay for the BTC payout can be decided on the the trade circumstances (account age of BTC buyer, trade price,…). We saw a few trades with suspicious high prices and that alerted us that the scammer might still be around and the currently blocked payment methods and regions might not be enough. As said we are working on protection tools but they require a bit more time for deployment. Until that please take extra care with tradeing Fiat on Bisq.

christoph · April 25, 2019, 5:43pm

Thanks for the heads-up Manfred! Just to clarify I think you meant BTC seller (Fiat) should not release the BTC not the BTC buyer as the buyer sends the fiat payment.

ManfredKarrer · April 25, 2019, 11:32pm

Yes, will correct it…

ManfredKarrer · April 25, 2019, 11:33pm

We saw further suspicious trade behaviour. So seems the scammer is still around… Might be false positives but better to be careful!

super-e · April 26, 2019, 9:09am

Maybe it’s just a newbie’s proposal but would a parallel 100% BTC deposit from buyer side with 2 of 3 multi-sig and long (few weeks) timelock be effective? This would allow to avoid BTC release delay in the fiat trade but still guarantee the seller against chargeback.
Actually can even avoid the multi-sig: can be a single-sig for Bisq without time constraints and timelocked single-sig for the buyer.
-E-

Homard · April 26, 2019, 9:26am

@super-e
see Manfred’s last proposal which goes in this direction

github.com/bisq-network/proposals

Off-chain trade protocol based on symmetric security deposits in BTC

opened 12:57AM - 04 Apr 19 UTC

closed 09:36AM - 14 Aug 20 UTC

ManfredKarrer

was:stalled an:idea

> _This is a Bisq Network proposal. Please familiarize yourself with the [submis…sion and review process](https://docs.bisq.network/proposals.html)._ ## Off-chain trade protocol based on symmetric security deposits in BTC ### Overview Similar to the idea of the [off-chain trade protocol based on BSQ bonds](https://github.com/bisq-network/proposals/issues/32) I propose an alternative idea to use the 2of3 MultiSig with an equally sized security deposit for an off-chain transfer of Bitcoin-independent assets. The benefit is that the transfer of the assets is completely independent of Bitcoin or any blockchain. The downside is the requirement to secure the trade with a higher amount as the trade amount. ### Description Assume 2 traders want to exchange Monero with USD. They both lock up a BTC amount into a MultiSig address. This amount is higher than the trade amount. As soon the deposit tx is confirmed both have to make their transfer to the other party and confirm when they have received the funds from the peer. Once both have confirmed receipt they will sign the payout tx. The locked up amount contains a bit more than the BTC equivalent of the exchanged assets to create an additional incentive so that the traders follow the trade protocol (same function as security deposit in current trade protocol). There are 2 variants possible. One is similar to the current trade protocol where a trade fee tx is used to prepare the exact input amount. Another option is to avoid those extra transactions and add change outputs to the deposit tx. It needs further investigation to see which model is better here, both have their pro and cons. In the following model we assume that the correct input amounts have been already be prepared (e.g. via the trade fee tx). ### Example Lets assume 1 BTC = 5000 USD and 1 XMR = 50 USD, so 5000 USD = 100 XMR. Alice and Bob make a trade of 5000 USD to 100 XMR. Lets say the extra security deposit is 10% of the trade amount (0.1 BTC) for both. For the miner fee we use 0.0001 BTC. Alice wants to sell 100 XMR and Bob want so buy it. Alice makes an offer and publishes it to the network. She reserves 1.1 BTC in her wallet for a potential taker. Bob takes her offer and both create the deposit tx with following structure: Deposit tx: Input 1 Alice: 1.1001 BTC Input 1 Bob: 1.1001 BTC Output 1: 2.2001 BTC in 2of3 MultiSig (arbitrator as 3rd key holder) Miner fee: 0.0001 BTC Order of inputs can be randomized. After the deposit tx is confirmed both need to start their payment. The XMR sender need to use a Monero wallet which is capable to provide a tx payment proof. Alice sends 100 XMR to Bob and provides the payment proof to Bob. As soon Bob has received it he confirms receipt and sends Alice his half signed payout tx. Bob sends 5000 USD to Alice bank account. As soon Alice has received the funds she takes Bobs half signed payout tx and adds her signature and publishes the payout tx which looks like following: Payout tx: Input from deposit tx: 2.2001 BTC Output 1 Alice: 1.1 BTC Output 2 Bob: 1.1 BTC Miner fee: 0.0001 BTC The output order can be randomized. So that was the happy path... The protocol works the same way if Alice is the XMR buyer or the taker. Lets look into a case where one party is malicious. Both start the trade as descibed above. Lets assume Bob is malicious. After Alice has sent the XMR to Bob he does not start the payment of the USD to Alice and also does not confirm the receipt. After the trade period is over Alice opens a dispute. She can proof to the arbitrator with her payment proof that she sent the XMR. If Bob cannot provide a proof that he has sent the USD to her the arbitrator will make the full payout to Alice side so she gets reimbursed for her lost XMR with Bobs locked BTC as well gets his security deposit as reimbursement for the lost time and trade opportunity. In fact she has traded XMR for BTC in that case. On the Fiat side the proof is not as strong as it is on crypto currency side but that problematic is the same with the current trade protocol and in reality all disputes can be resolved. For instance if Bob claims he has sent the USD but he does not want or cannot provide a [PageSigned document](https://tlsnotary.org/pagesigner.html) to proof his side but Alice provides a Pagesigned document of her banking webpage which shows that she has not received the funds, the arbitrator will close in Alice's favor. As said there is no perfect solution for the Fiat side but in 3 years history of Bisq all disputes have been resolved. Scammers don't have a good position here... If Alice is malicious and never sends the XMR it is much easier to resolve as it is her responsibility to provide such a tx proof. If she does not or cannot she will lose the case. If the trading pair is not including Fiat it is also much easier as any altcoin transfer can be looked up at a block explorer. One problem might arise that there is an incentive to wait until one has received the funds from the peer before sending his own funds. In the current trade protocol it is clear that the BTC buyer needs to do that transfer as the BTC transfer is done in the payout. To mitigate that problem both need to indicate when they have started to send the funds and if they lie about that (clicking too early) and it can be proofen in a dispute that in reality the transfer was delayed a penalty can be applied in a dispute. The XMR or altcoin transfer can be checked with the block time. On the fiat side the payment statement usually contains also a time stamp. Maybe an additional arbitration fee could be used to avoid that traders speculate on late payments. If trade period exceeds the late payer risks a penalty. #### CoinJoin like properties? As the input and output amounts are symmetric for both traders we might gain CoinJoin like properties. If that is really the case or if some aspects (fee, change,...) will leak the information which input leads to which output requires more investigation. Tx graphs and coin merge might make a CoinJoin like obfuscation ineffective. It will also depend if there are already prepared inputs or if we avoid the fee tx and use change outputs. I think to really get solid CoinJoin it will require much more work on the wallet management to avoid coin merges which would leak information. Beside the compelexity of such management it will come with usability constraints as a user cannot spend certain combinations of utxos without leaking information which would render the CoinJoin ineffective. And worse if your peer leaks that it will affect you as well and you even don't know about that.... #### Relation to new trade protocol This concept should not be in conflict with the [proposal for the new trade protocol](https://github.com/bisq-network/proposals/issues/52). But it would be wise to take requirements of both into account once more concrete work starts on that.

super-e · April 26, 2019, 9:27am

Seems great minds think alike
-E-

scamedonbisq · April 30, 2019, 7:36am

Seriously?

People can register and do at the same day a trade without Verification and you expect that there won’t be any scammer around. I’ve got scammed on LBTC big amounts. Its really easy to reduce the Scammer by 99%

People need to register, do a small transfer, for example 1 Euro or 5 Euro on a Bank Account of Bisq Arbitrator or somebody in the Community with Reputation. The Receiver confirms that the Money arrive and from there on the Buyer need to wait 14 Days. After 14 Days he get the Limit of 100 Euro and than with every Feedback he get a additional Limit of 50 EUR

NCKoeter · April 30, 2019, 10:38am

then it will take you years to collect a decent amount of BTC. The general idea migh tnot be bad, but needs adjustments for the amounts

CBA · April 30, 2019, 8:13pm

Optional bank account verification is a good idea. Increasing limits with time is also a good idea. And finally, a high security deposit (say 120% of the trade amount) with delayed release is also a good idea.

It’s best to combine all three.

scamedonbisq · April 30, 2019, 9:19pm

I did today a bit research, and I don’t understand how it makes sense to steal Bankaccounts for a few hundred Euro. There is Mobile Tan, or Pushtan and a lot of other safety things. I’ve traded a long time on lbtc and got in contact there with chargebacks, but it NEVER happened to me that there war a 200 Euro Chargeback, just high Amounts like 2000/5000/10000 Euro. There are so many Bitcoin Exchangers where you can exchange with SEPA, Sofortueberweisung or something similar without any verification up to 500 or 1000 Euro and you get the money mostly same day. Even on localbtc are a lot of traders which dont want any verification under 500 Euro.

2 Years ago I’ve “investigated” a chargeback by myself which I had on localbtc. The result at the end was that the Buyer did the chargeback by himself… No stolen Account… People are using the SEPA System because its very very weak…

CBA · May 1, 2019, 12:25pm

Sorry, but that’s complete nonsense. Scammer scam even for 10 Euro. I’m afraid to say that you are not credible at all.

ManfredKarrer · May 3, 2019, 12:39am

We have cases with amounts as low as 87 EUR. How you “investigated” a case to find out that one scammed that way? Sounds very difficult if you are not working at the NSA…

scamedonbisq · May 6, 2019, 9:20pm

because he did the same again and again. And I found a couple trades to which the same happen same Name just other Accounts over a Period for more than a year.

But im happy that you guys on Bisq now everything so much better.

arbitrator1 · May 7, 2019, 3:27am

That sounds very unlikely to me that one can repeatedly call the bank for doing a chargeback. You need to provide proof to the bank (police report) and if you repeat that they will quickly become very suspicious. Also it costs them much time and money and they would quit your account if you do that too often.
Sounds just like another attempt of you to manipulate readers about the real risk situation regarding scammers.