Bitrated Offers Consumer Protection For Bitcoin Transactions
Feb. 26, 2015
One of the things merchants like about bitcoin is there are no chargebacks—all transactions are final and irreversible. To consumers, however, that’s a big fat bug, not a feature. A bitcoin startup based in Israel, however, has developed a “reputation system” that sits on top of multisignature technology creating a chargeback-like process that offers a measure of consumer protection for bitcoin payments.
After spending more than a year in stealth mode, the company this month released version two of its platform. The two parties to a transaction use Bitrated to find a “trust agent.” The buyer, seller and trust agent then enter into a 2-of-3 multisignature contract which is locked until two of the parties agree to release it. It acts like escrow but without the trust agent controlling the funds. In the case of a dispute, the mutually-agreed-upon trust agent decides which one of them will receive the funds.
Currently, it is free to use Bitrated, although the trust agent may charge a fee. In the future, the company said on its website, it will consider charging fees “both as a way to sustain the platform and as a protection mechanism against sybil attacks.”