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by repeek 2030 days ago
In your example, that middle-person verifies that what you are purporting to sell, TSLA stock, is in fact TSLA stock. They provide value by way of quality assurance and recourse if fraud is involved.

How can I be sure what you're selling me is in fact what you say it is? And if it's not, what recourse do I have?

If I buy something directly from another person on Facebook Marketplace or Craigslist, I'm not going to pay full retail price, even if the item is unused, because I'm giving up any form of recourse if the item is defective that I would have received had I purchased directly from the manufacturer.

1 comments

  How can I be sure what you're selling me is in fact what you say it is? And if it's not, what recourse do I have?
A fundamental design in cryptocurrencies is that it's mathematically impossible to create "fake" tokens without some sort of quantum computer. What this means is that the DEcentralized Exchange (DEX) that you're performing the trade on will have liquidity for the pair of assets and as you click the right button to select TSLA for USD, you're getting TSLA. There is no mathematical way to get scammed.

For your example of FB marketplace/Craigslist, you want an Escrow service with a way to have you or a 3rd party validate you're not getting ripped off. That type of service exists via cryptographic primitives in both Bitcoin and Ethereum allowing a transaction to be blocked if there is something fraudulent.