[RyanZAG]

Even using bitcoins for legal things leaves you little recourse - this is the whole point of bitcoin. When you avoid government regulation and oversight you also avoid the protections it gives - this should hopefully be obvious to anyone.

[pyalot2]

If by recourse you only mean chargeback, sure. But that's not the whole story.

If you have a legal entity behind something, like say, bitpay or coinbase, you can take legal steps if they screw you over. You can take them to small-claims etc.

And if you don't trust some entity, you can use escrow with bitcoins, it's possible to setup a transaction where the escrow provider has no way to get at the funds, but can just release to either of two addresses (back to you or forward to the merchant). But of course, the escrow provider would also be a legal entity, otherwise you'd have no recourse against them if you feel they unfairly resolved a dispute against you.

Bottom line is, if you engage in legal business, with legal entities, and take appropriate precautions, you are no less protected than using national currency and chargebacks. If you don't, well, you've got nobody else to blame but yourself.

[RyanZAG]

You can do a perfectly seeming legal transactions with an entity that ends up being smoke and mirrors. In the case of real currency, the amount would need to be transferred through banks which can be investigated for crimes by authorities. In the case of BTC, once you send off that payment there is nothing law enforcement can do to help you if the entity who appeared legal was not so legal after all.

Feel free to talk to any fraud investigator and ask them just how common this kind of thing is. They spend their whole work day tracking these down, after all.

[waterlesscloud]

Because there's nothing law enforcement can do when you give cash to someone who scams you.

[pyalot2]

@RyanZAG

Please look into what escrow means. Of course you can do business with an entity you're not sure is legit. The assumption is that you trust the escrow provider, and the Escrow provider is trusted by the merchant. So, the critera of trust for the escrow provider, is quite a bit higher than a random online store.

If carefully select the escrow provider, check their business registration, make sure there's a legitimate entity behind them, this makes dealing with possibly fraudulent entities as safe as with fiat.

[RyanZAG]

You're going to use escrow for all of your transactions? There is no way the general public is going to do that. I think even those who are more paranoid would give up the attempt after using escrow to do transactions after a few months and just use regular money. Or more likely, just stop using escrow and use bitcoins anyway, and then complain when they get stolen.

[pyalot2]

You're using escrow already when you use a bank account, CC processor, paypal, google wallet etc.

You don't really get a choice, and you carry the mandatory cost because merchants roll the cost of chargeback fraud, CC fees and banking fees over into your purchase price, no matter if you think you'll need the added service or not.

[sp332]

Why not? People use credit cards now.

[ptrinh]

I think Bitcoin can be serve as a money transport protocol and Escrow services can be built on top of it. Think about buiding HTTPS on top of HTTP protocol.

[pyalot2]

There different ways to implement escrow with bitcoin.

1) You could ignore all technicalities and simply send the coins to a third party which releases it back to you or forward to the merchant. That's probably the least recommendable way, but is the easiest to explain.

2) A smarter way to do it is to use bitcoins transaction script that can process multi signature transactions, which can work in a way that if A wants to send B money, he can setup an address that can only withdraw coins from if C also signs the transaction. This method is supported by Electrum and by the Blockchain.info wallet.

[aestra]

Bitcoin works like cash right? Legally speaking you get a contract perhaps, a bill, then a receipt of payment. If something doesn't go right, you bring those documents to court with you and state your claim just like if you used cash. Am I wrong here?