How to Build an Escrow Product (opens in new tab)

I don't think this would work for a normal social network (e.g. Facebook); as sibling commenters mention it adds a lot of friction.

However I think this is a great idea to explore for "exclusive" / "high value" forums, say for trade / special-interest groups. I'd be happy to put down a $10 stake to participate in something like Hacker News, for example, if that would help to combat astroturfing and bad behavior. (Honestly for how much I post on HN I'd be prepared to stake more.)

There's been a lot of research done in this area by the Ethereum devs under their migration from "Proof of Work" to "Proof of Stake", including research on the game-theory of "slashing conditions" (i.e. when you lose your stake). You get some cool community-policing possibilities by allowing any member of the community to collect a bounty paid for by claiming part of the forfeited stake, if they can present an example of a member breaching the rules. For something requiring review this would perhaps have less benefits, but could still be useful; rather than moderators having to watch every message go by, they would just look at the "flagged" queue, and users would now have a financial incentive to add something onto the flag queue, perhaps also having to pay a small amount to take that action as well, to disincentivise spamming "flag" entries. I'm sure you could build this all on Ethereum if you were so inclined, with "admin moderation" being a call to an external trusted Oracle service where the moderators live.

Of course there are also substantial risks in turning a system based on community goodwill into a financial game; people behave differently when they are purely optimizing for a financial game vs. when they are not.

You are making multiple assumptions about "legitimate users", which biases against various groups:

1. They have (or are willing to use) an online payment source (credit card, paypal, etc.).

2. They have (or are willing to spend) a disposable income.

3. They trust you to get their money back.

Also, you're going to deal with a huge amount of customer service as every single person argues with you that they didn't violate the terms and deserve their money back - that's going to cost way more than any fees/interest you'd earning from the escrow.

I'm not sure I understand the example you gave:

1. What purpose would escrow serve in this example? The user trusts the social media site, and the amount is small (like $1). So there's no need for a third party to hold/control the funds and determine when they are released to one party or another.

2. A spammer can just wait until day X+1 to start spamming.

From the top of my head, I can mention 2 (local, EU) examples: * https://ebay-kleinanzeigen.de * https://leboncoin.fr

Interestingly, both are platforms for individuals to sell goods to other individuals. And both internalized the feature (no apparent 3rd party involved).

a potential reason your startup didn't take off:

"If such a system were to become commonplace, it would introduce only a minor amount of friction for most legitimate users..."

first, that doesn't sound like minor friction, but more importantly, even seemingly small friction can lead to large abandonment, especially if frictionless alternatives are readily available.

banks love (large) escrow products by the way. super-low risk, low effort, and very reliable fee income for them.

Hey! My name is Elie and I am the CEO of carbon payment ... I used to lead one of the payment team at Uber and I am working something similar... let's chat

The use case I had in mind when I thought about escrow services not long ago is website trading. I assume the big players have something in place for the domain name part, but there's much more to it when you're transferring an entire service (accounts, documentation, etc). If you're going to pay $5k for a website, spending a $100 fee to make sure everything goes smoothly is probably reasonable.

Why haven't crypto smart contracts satisfied this yet? They've been talking about it for years, but I have yet to see substance for it...

I personally do not have must trust for social-media platforms. I would not trust that they would actually give me my money back.

Also, what is stopping me from spamming the site after I get my money back? like I can queue up accounts, wait for them to age up and just start spamming.

The Keybase Wallet that is basically a proxy for Stellar Lumens does this for "trustlines" in order to exchange between currencies and various coins. The only difference is that it's durable for the duration of your use of the trustline.

I feel the type of user who'd buy into this would also be the type of user who'd simply be willing to contribute a small amount monthly to pay towards moderation, etc.

See: something awful forums circa 200....4?

I’ve often wondered about something like this for eBay to make transactions more trustworthy.

Metafilter.com has a $5 one time sign up fee and a waiting period for similar reasons. That discouraged posting useless questions that plagued Yahoo Answers. Used to be a good, useful website a few years back but rarely comes up in results these days, maybe because Quora is free and drives more traffic or better SEO!

I think the trusted 3rd party is essential to these transactions. At least in the UK, the conveyancers aren't just providing escrow or legal services, but also a professional, guiding voice through the transaction as a whole.

> The word derives from the Old French word escroue, meaning a scrap of paper or a scroll of parchment; this indicated the deed that a third party held until a transaction was completed.

https://en.wikipedia.org/wiki/Escrow

"Escroc" in French comes from "Scrocco" in Italian [1]. No relation with escrow.

[1] https://unaparolaalgiorno.it/significato/scroccare

Being french and not knowing the definition of "escrow", I associated it with crook indeed ! Also at the first reading of the title I read "escort product". Thought, "ho woah HN! what is going on?" :)