Solving the Buyer and Seller’s Dilemma: A Dual-Deposit Escrow Smart Contract for Provably Cheat-Proof Delivery and Payment for a Digital Good without a Trusted Mediator

Abstract

A fundamental problem for electronic commerce is the buying and selling of digital goods between individuals that may not know or trust each other. Traditionally, this problem has been addressed by the use of trusted third-parties such as credit-card companies, mediated escrows, legal adjudication, or reputation systems. Despite the rise of blockchain protocols as a way to send payments without trusted third parties, the important problem of exchanging a digital good for payment without trusted third parties has been paid much less attention. We refer to this problem as the Buyer and Seller's Dilemma and present for it a dual-deposit escrow trade protocol which uses double-sided payment deposits in conjunction with simple cryptographic primitives, and that can be implemented using a blockchain-based smart contract. We analyze our protocol as an extensive-form game and prove that the Sub-game Perfect Nash Equilibrium for this game is for both the buyer and seller to cooperate and behave honestly. We address this problem under the assumption that the digital good being traded is known and verifiable, with a fixed price known to both parties.

Multi-Sessions Mechanism for Decentralized Cash on Delivery System

“…Anonymously purchase of a buyer is a big concern so that the Lelantos system has built based on Blockchain to detect and cancel the anonymous purchases which affect on the trading process. Discussing trading on a digital platform with the trust of the participants, Asgaonkar and Krishnamachari [11] have issued a deposit protocol for trading by the participants. They applied the trust of the Blockchain system to make payment by participants without a trusted third party.…”

“…When the situation happens, the shipper will receive the package and delivery fee. It is done at line 1 in the algorithm (5) to trigger the transfer money method. Trigger ReUnfundSellerFail function 4: EndIf…”

“…The tracking system seems to ineffectively track this issue. Consequently, a mechanism is missing in the buyer and seller's dilemma [5]. Addition to the current seven core components, e.g.…”

Mechanism Design with Blockchain Enforcement

“…Taking advantage of this commitment power, untrusted parties may reach a viable agreement without relying on legal enforcement. Previous studies have already proposed various smart contracts for specific applications, e.g., auctions (Galal and Youssef 2019), bilateral trading (Asgaonkar and Krishnamachari 2019), sharing apps (Bogner, Chanson, and Meeuw 2016), and boardroom voting (McCorry, Shahandashti, and Hao 2017). In contrast to them, we study self-enforcement of general abstract mechanisms by designing a smart contract that performs as a court.…”

Optimal Smart Contracts with Costly Verification

“…Our mechanism two is somewhat similar to their mechanism in respect of getting information from both parties. Depositing money from both the seller and the buyer in the file exchange setting, and its gametheoretical analysis is a topic of recent paper by Asgaonkar and Krishnamachari (2019). Hartline and Roughgarden (2008) study optimal mechanism design under money burning and show that in certain settings it improves the objective function.…”