[lmm]

You don't need credit-card chargebacks until you do, but then you really need them. (And actually most of the time the threat of chargebacks keeps merchants honest).

Once you get to the point of using a reputable escrow system (which will have to charge a fee), that plus the bitcoin fees (either direct transfer fees or the implicit tax that is mining rewards) are unlikely to be cheaper than the credit card system (which doesn't have to burn immense amounts of processing power for business-as-usual). Having all participants be anonymous and untrusted adds a lot of overhead; in a civilized environment with a reasonable legal system you can shave that off by being willing to trust your counterparties (trust that is made possible by central clearing houses and verified identities).

[DennisP]

One way to do escrow is with 2-of-3 signatures. If both parties to the transaction sign, the escrow agent doesn't have to get involved. On Ethereum it's easy to implement as a smart contract that lets the escrow agent choose who gets the money, and pays the agent a fee for the service (but nothing otherwise).

Participants aren't necessarily anonymous; if you're buying from a known vendor and having something shipped to your house, neither party is all that anonymous. People are working on adding verified identities, for people who want them.

Ethereum hopes to do away with mining by early 2017.

[lmm]

> One way to do escrow is with 2-of-3 signatures. If both parties to the transaction sign, the escrow agent doesn't have to get involved. On Ethereum it's easy to implement as a smart contract that lets the escrow agent choose who gets the money, and pays the agent a fee for the service (but nothing otherwise). > Participants aren't necessarily anonymous; if you're buying from a known vendor and having something shipped to your house, neither party is all that anonymous. People are working on adding verified identities, for people who want them.

At which point why use this instead of a credit card?

> Ethereum hopes to do away with mining by early 2017.

How are they doing byzantine-fault-tolerant consensus without it?

[DennisP]

With the escrow, you can set it up to pay a fee only if you need the judge's services, so if you don't have a problem it's free. Or you can set up whatever other arrangement you like. Either way you're paying only for the arbitration, not for stockholder dividends.

They're switching to proof of stake. Early PoS designs have some issues, like the infamous "nothing at stake" problem, but theirs addresses those. People lock up ether for several months, and bet it on which blocks will be included in the chain. The blocks that get the best odds in the betting are the ones that get included, so basically you're betting on what everybody else will do. You start with low-confidence bets that don't risk much, and as you see other people's bets you progress to high-confidence bets that pay off better, and it converges.

Miners essentially do the same thing: by choosing a block to mine on, they're betting their energy cost on that block being chosen.

[lmm]

> With the escrow, you can set it up to pay a fee only if you need the judge's services, so if you don't have a problem it's free. Or you can set up whatever other arrangement you like.

Sure, but that doesn't really change anything. Their service will cost a certain amount to run, and so you'll end up paying an average of x amount per transaction/per dollar spent, whichever way you slice it.

> Either way you're paying only for the arbitration, not for stockholder dividends.

And yet for-profit companies usually end up being the most effective way to get something done. If I need a tree cut down in my yard I don't try to find some non-profit tree-surgeon collective, I call a professional from a reputable company. (And I would think that anyone who supported cryptocurrencies - which are all about directly transferring money without involving a social layer - to feel this way even more strongly).

> They're switching to proof of stake. Early PoS designs have some issues, like the infamous "nothing at stake" problem, but theirs addresses those. People lock up ether for several months, and bet it on which blocks will be included in the chain. The blocks that get the best odds in the betting are the ones that get included, so basically you're betting on what everybody else will do. You start with low-confidence bets that don't risk much, and as you see other people's bets you progress to high-confidence bets that pay off better, and it converges.

> Miners essentially do the same thing: by choosing a block to mine on, they're betting their energy cost on that block being chosen.

Hmm. Doesn't that mean the reward for fraud is much higher? Can't someone just bet a massive amount that their fork will win, and then their fork wins precisely because they bet a massive amount on it?