Possible future offline trades


#1

In the light of the recent chargeback scams it shows us again that the banks or fintech companies/payment processors are the weakest link when it comes to Bitcoin to Fiat trades. Due their irresponsible chargeback policies they make secure trading very hard or impossible.

But there is light at the end of the tunnel: The Bisq DAO

With the Bisq DAO there will be a new feature available to secure the important roles in the DAO (like arbitration) by bonding a high amount of BSQ. In case the role owners would severely violate their duties that bond can be confiscated by voting of the stakeholders (requires 80% agreement of stakeholders). The bonding is a simple BSQ transaction with a special OP-RETURN flag marking a tx as a lock-in tx and later for unlocking the bond the user creates another tx with another OP_RETURN flag. The BSQ is sent always to himself. The unlocking will have a time delay to give the DAO stakeholders the opportunity to react in case of last minute scams.
The benefit over a normal bonding (lock up of a security deposit) by using MultiSig is that there is no other key holder required, so there are no centralized elements. Only the DAO stakeholders (80% or more) have the power to get control over the bond and they only can burn (destroy) it but cannot take it for themselves.
The trust model is here that you trust the super majority of Bisq DAO stakeholders that they are not acting incorrect. Unfairly acting DAO stakeholders would provoke a fork and they risk to damage their stake and investment.

That planned feature could be extended for 2 new use cases:

  1. Buying reputation by bonding BSQ
  2. Off-chain trade where both traders provide security by BSQ bonds

The first use case could be an extension for the current trade protocol. Any user could lock up a certain amount of BSQ in a bond and that get locked away with a very long unlock time (e.g. 6 months, so a chargeback becomes highly unlikely to succeed). If you trade with a user who has locked up 10 000 BSQ (assume that is about 10 000 USD if 1 BSQ = 1 USD) you can use a high-risk payment method like Paypal or Venmo or even credit cards because if the user would make a chargeback after the trade has been completed the BSQ stakeholders would likely vote for confiscating his locked up BSQ. The scammer would then lose much more than he would win with the trade amount.
Of course there are plenty of details to handle like the price volatility of BSQ and accumulated and parallel trades. A good task for a DAO proposal if anyone is interested…

The second use case is even more interesting as it will solve another mid/long-term problem:
That the mining fees will become very high at some point and then a on-chain trade protocol will be not feasible anymore. Lightning might be an option for off-chain trade but it is unclear if the Multisig based security model will work and/or if it is feasible.
Another alternative will be to use the BSQ bonding for securing the trade process.
If both traders have more BSQ value locked up in bonds as they are using in the trade it will be sufficiently secure to avoid scams. That would not even require a crypto currency on any side and you can trade anything against anything (e.g. USD to EUR). There will be only a contract and a signed agreement for the selected dispute resolution (e.g. private arbitrator, public arbitrator,…). That will be very flexible and gives much more privacy as the current models.

That idea is very fresh and need more time and thought to be worked out in detail but I think that will be a very powerful and flexible alternative to the current model and will allow us to use high-risk payment methods without risking chargeback scams.


#2

The recent scams may me also cogitate.

Concerning liquidity and volume traded on bisq, maybe some simple things can be done, without even requiring coding.
There are honest traders (yes believe me :slight_smile: ) who may use a tool like bisq as a professionnal tool, ie help to provide liquidity. For those regular traders, it might be interesting to exhibit, voluntarily, their (good) reputation.
As far as I understand, this could for example be achieved simply by exhibing a same public key + pseudo + onion adress. No registration, no central verification. Just providing information on a voluntarily basis.
This would not be a direct measure againts scammers, but in a indirect way, by promoting good reputation traders it could help to contrast with less well reputed traders (“one-scammers”).

I don’t know if a good-practice doc already exists ?

I’m absolutely not sure such a practice would really interest pro traders ? But maybe ?