
Nashx allows trading using Nash equilibrium and mutually-assured destruction - oleganza
http://nashx.com/HowItWorks
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moocowduckquack
This isn't mutually assured destruction unless they both put everything they
have into the risked funds pot.

Say Alice is a squillionaire and Bob is pretty skint, then under this scheme
Alice might deliberately screw the deal to burn the funds on purpose, as for
Alice it is a small loss, but for Bob it is devastating.

~~~
oleganza
It's mutually assured destruction within a specific deal, not within their
biological lives (like in case of a military doctrine). This allows
maintaining an equilibrium. Regardless of our wealth, we both put in 1 BTC
before trading something worth 1 BTC.

Maybe the name is not perfect, but it's quite close to what NashX provides.

~~~
moocowduckquack
It isn't in equilibrium though unless each party knows how much that 1BTC is
worth to the other party. Knowledge of the other person's wealth is vital in
this, otherwise it is just an abuse of terminology.

Just as in the case that MAD is not in equilibrium unless both parties have
extensive and reliable knowledge about the nuclear capabilities and procedures
of the other, so this is not in equilibrium if there is any doubt about either
what the financial capabilities of the other party are, or if there are doubts
about what your item is worth to them personally.

Also, the whole thing is a bit odd anyway as it is using a currency to
facilitate a direct barter. I am trying to think of situations where someone
would want to do a direct swap and use something like this to insure it.

Bob's worst scenario is no item and no money, with Alice getting both items
and no money and Bob has no idea beyond Alice's say-so whether Alice values
both items more than the money.

So for low value items, this would seem silly as it would be better to just
risk the item rather than the item plus some money, but the higher the value
of the item, the higher the risk of miscalculating the funds required to
secure the transaction.

~~~
oleganza
> It isn't in equilibrium though unless each party knows how much that 1BTC is
> worth to the other party.

Strictly speaking, one can never possibly know other person's "real"
valuation. People can always lie to themselves and change their mind. The only
way we can know how much 1 BTC is worth is by seeing a successful 1 BTC
transaction.

> Also, the whole thing is a bit odd anyway as it is using a currency to
> facilitate a direct barter.

There's nothing odd. If I want to exchange my bike for an iPhone, I have to be
very lucky to find someone who wants my bike and does not want his iPhone.
That's why we all use money, it's the most marketable product — you can sell
it to anyone.

> Bob's worst scenario is no item and no money, with Alice getting both items
> and no money and Bob has no idea beyond Alice's say-so whether Alice values
> both items more than the money.

This is fixed easily by having insurance deposit 1.5x or higher that of the
price. So Alice is motivated to pay the bill to release higher amount.

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bostik
This story finally pushed me to creating an account.

As far as I understand, the approach outlined in the exchange's MAD option
requires the exchange to _prove_ that they have destroyed the funds.

I assume that the exchange creates a new bitcoin address for each transaction.
If the transaction ever reaches an unresolved dispute, it would be possible
for the site owners to simply move that single address to their "long-term
retirement fund^W^W backup system", instead of simply deleting it. At that
point, if the system ever shuts down, the owners can then simply move (in
reality: shuffle) all the supposedly destroyed funds to their own accounts.

Apparently one can send bitcoins to any address, and an existing address
becomes public only when it is used in a transaction. So the fund destruction
can't just be a transaction to a so far unknown address - that would, again,
allow the site owners to use their own addresses for the purpose.

After thinking this through a bit, it seems to me that the only way to really
prove that the funds are destroyed would be to send them to an all-zero
address. While thinking about this, a friend came up with the idea of spending
the destroyed funds exclusively on transaction fees. I don't know why, but I
have a weird feeling that could still be subject to gaming the system somehow.

A fascinating idea for a service, nonetheless.

~~~
oleganza
> As far as I understand, the approach outlined in the exchange's MAD option
> requires the exchange to prove that they have destroyed the funds.

They explain in the FAQ: [http://nashx.com/FAQ](http://nashx.com/FAQ)

They create a special address (hash of a public key) which would take
thousands of years to generate from some private key. So by seeing that funds
moved to such address, people can be sure the money is destroyed and not moved
to a "long-term retirement fund". Their example:
"1nashx1username11username22Wd4keb"

~~~
bostik
Thank you, I had somehow missed the FAQ.

That kind of completely bogus address is actually even better. If one wants to
retain anonymity, it even encourages to use one-off ("not used anywhere else,
not trackable across web forums") account names for the service.

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phreeza
What I love most about bitcoin (I don't own any) are all these creative ways
people are using it. Like this or say Satoshi Dice. The rate at which these
ideas are emerging makes me wonder if the real bitcoin killer app has yet to
be discovered.

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brilee
How is this different from an escrow service?..

~~~
manmal
It's not. Have you heard of any other escrow service for bitcoins?

~~~
kall
Yes, there are a few quite prominent ones operating on tor.

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terhechte
How are non-bitcoin/litcoin assets being destroyed? Somebody is selling a
wiimote controller on there right now, is it being destroyed-destroyed, or
simply being taken away by the Nashx guys?

~~~
oleganza
Only BTC/LTC are accepted in the pot. If you want to sell Wii controller for
0.1 BTC, you have to put at least 0.1 BTC in the pot.

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DannoHung
What's to stop Alice from ransoming the risked bitcoins for up to twice the
cash selling price once she receives the payment for the transaction?
Reptuation loss?

~~~
oleganza
Alice receives payment only _after_ sending some good to Bob.

~~~
DannoHung
Yeah.

Let's call Alice's risk deposit Ad and Bob's risk Deposit Bd. Let's call
Alice's good Ag and Bob's good Bg. Alice's Detonator is Da and Bob's Detonator
is Db.

In the box are Ad and 2Bd. Alice has in her physical possession Bg with a
value of 1d. Bob has Ag with a value of 1d. Bob destroys Db. Alice now has Da
and Bg giving her control over Ad and 2Bd. She can say to Bob: "Hey Bob,
y'know, I feel like I'd like more for this, why don't you give me another 1d
or I'll destroy your 2Bd and my Ad."

I'm just saying that in the scenario presented, it seems like you _have_ to
ensure that Alice destroys her detonator first for the scenario to work
correctly. Once Bob holds the only detonator, it's harder for him to justify
ransoming Alice's single Ad since more of his value is at stake.

~~~
oleganza
"In the box are Ad and 2Bd."

The service is supposed to destroy only Bd, not 2Bd. And not separately, but
both deposits at once when the deal is timed out, or _both_ parties commit
that they disagree with each other.

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aussetme
Why not correlated equilibrium in that case as nashx can play the mediator?

Also I don't see the difference compared to the "real" market...

~~~
oleganza
If Nashx was a mediator:

1\. It would require them to hire experts in all markets they wish to support.

2\. And since mediation has a human factor, there will always be scammers with
some success rate of fooling experts around. Considering the mediator has no
power to fight back at anonymous/remote scammers, the cost of attack is very-
very low.

By requiring both parties to risk their funds up-front, the cost of attack on
a mediator becomes irrelevant. Scammers would have to either convince their
victims that the good is delivered and get payment; or try to hack nashx
website to hijack people's funds when they are being transferred back and
forth.

Another funny part: no payment method except Bitcoin allows provable
destruction without everyone gathering in the same room.

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amalag
Very nice way to avoid mediation.

