One of the world’s oldest issues is that of trust. Since the beginning of society as we know it, people have not been able to trust each other as a whole — whether it be families, friends, neighbors, business associates or corporate partners. Over time, civilization has developed a variety of “solutions” to address this issue of trust, and ensuring each party honors their word. These existing solutions essentially consist of two options:
Third party involvement, or a threat of violence/brute force.
Some could argue that the current legal system is a peaceful method of trust enforcement. However, the agencies that enforce those laws must ultimately utilize the threat of power or violence to effectively uphold them.
These existing trust solutions have worked as the primary methods of enforcing agreements for thousands of years. With the ensured third party escrow solution, both parties still have to trust an arbiter to maintain a purely honest, unbiased and neutral position. As we know, there is nothing to keep that third-party from acting on their own agenda, outside of the agreement, or in collusion with one of the parties. Therefore, during agreement disputes, that third-party must decide who is at fault in order to enforce or retract the original agreement.
Ultimately, only those who created the original agreement can know EXACTLY who is at fault 100% of the time.
The other existing solution, a threat of violence or brute force, also contains significant defects. If one party has the power to force the other into compliance, then it becomes a one-sided agreement. At that point, only the weaker party can be trusted to fulfill their promise, and the stronger party cannot be held accountable.
What if there was a better way to enforce agreements? What if there was a method that could neutrally and peacefully force both parties to honor their word, completely removing trust from the equation?
Due to new technology, a far superior method to this already exists. It’s found within the core mechanism of BitBay, a fully functional and decentralized suite of smart contracting software — free to use and available to EVERYONE. With the era of blockchain, consensus algorithms, and programmable money quickly emerging, we are now able to create solutions to trust that were previously unimaginable.
This core mechanism of BitBay is simply called “Double Deposit Escrow” (DDE). With DDE, both parties place the role of escrow upon themselves, using a cryptographically secure smart contract and its stable cryptocurrency ($BAY) as collateral. Two deposits are neutrally locked by code until each party agrees that the contract is complete. If either side does not uphold their end of the agreement, the contract expires, and both deposits are destroyed. The deposits can be equal amounts, or customized based on the risk level of the agreement.
When each party has a direct financial incentive to be honest, it COMPLETELY changes the dynamic of trust. It becomes an agreement of synergy. Both parties must work together, or lose financially. If the deposits are set appropriately and the stakes are high enough, the deal becomes nearly frictionless to complete. In addition, BitBay also features a built in reputation system, which allows each user to gauge the risk of the other party, and structure the deposits accordingly.
This concept of DDE is truly disruptive to current trust-based systems. For many people the idea is new and unusual. Below are some common questions that arise when learning about this new form of trust-less agreements:
What if one party doesn’t fulfill their side of the agreement?
If either party doesn’t hold up their end of the deal, there are 3 options:
- Both parties can agree to extend the time limit of the contract and work together to come to a new agreement
- Both parties can cancel the agreement mutually, and receive bothdeposits back
- Both parties can allow the contract to expire without completing it, destroying BOTH deposits in the process.
As you can see, option number 1 is ideal.
Option 2 is less than ideal, but allows everyone to go their separate ways without penalty.
…and of course, nobody wants option 3.