I am not sure what you're asking when you say "how would this help?". Do you not see any usefulness at all in people being able to sell domain names to each other trustlessly without needing to involve a third party?
I do see the usefulness of that approach, but I also see an amount of risk. A disaster waiting to happen.
Let's say, for instance childpornhere.eth goes live, someone pays and receives mail with pictures of a kidnapped child. Havethisguykilled.eth. Sponsorkillingblacks.eth. tipISISnottoattackyourkids.eth. And so on and so forth.
The bitcoin "hostage" situations that we see now. Famously the encryption viruses, but the same is happening with cloud credentials (e.g. gmail or hotmail accounts used for businesses. Passwords get changed, last mail is "if you want them back pay $1k to <bitcoin address>")
Second, securities fraud. If anything was learned from bitcoin in finance, it's that we cannot live without exchange laws, which bitcoin exchanges did not have. Tradehill, Mt. Gox, Bitcoin central, Bitstake, BitSpark, all and many have gone bankrupt, stealing large investments in the process through outright fraud (TradeHill, incidentally the guy who committed that fraud has a new bitcoin exchange), or through incompetence and getting hacked (which of course could always be just straight up fraud, I mean does anyone buy the Mt. Gox story, for instance ?)
Second, addendum: outright general securities fraud. E.g. sudden changes in liquidity that I'm sure in most cases are mere accidents (well, 2 years ago in most cases, today, I'm not so sure), but cause short-term very quick value changes that even in the accidental cases most people find themselves victims to. More generally, the sale and trade of bitcoin derivatives and the practice of the issuers of said products to invest heavily for short term price changes. Or, causing an artificial and massive drop in liquidity through ddossing an exchange (hell, I've worked for actual financial exchanges and seen people pull this one off, but in bitcoin it's commonplace and unpunished)
Thirdly, tax evasion. People use bitcoin, and eth, to avoid paying 0.2% or so commission to banks. We are to trust that these same (very rich) people have no issues paying 30% or so in tax. Riiiiiiiiiiiiiiiiiiiiiiiight.
Do you really want to allow that ? This is (mostly) what is enabled here.
In many (most) parts of the world the legal system for enforcing contracts isn't all that reliable and trustworthy.
An Etheruem-based contract is a big improvement over a traditional contract enforceable only by a slow, corrupt court.
Pretty much all technology increases the surface area for fraud. However, the benefits usually outweigh that increase. Blockchains are no different. But the benefit is likely to accrue more to people in less developed countries.
Okay ... let me put it this way. 4 years back I transferred a number of bitcoin, in the low 3 digits, to tradehill, in order to explore this whole finance thing and trading.
We all know how tradehill, and mt. Gox, and ... ended, so can you explain to me how this works better without the option to go to a court ?
Using a regular old currency you could end up being ripped off by some fraudster, take them to court and lose the case. The non-cryptocurrency world isn't 100% safe and guaranteed to be protect you from fraud either.
It would be foolish to suggest that there will never be any fraud in the blockchain world. The risks are just different. For some people in some places the risks are probably a lot higher than the fiat currency status quo.
But there are also plenty of people in places where enforcing a contract by code could be a lot less risky and a lot more appealing.
Also, I should add, just to clarify, I think we're watching the very early days of blockchains. Things are still pretty rough. I'm not especially optimistic about any one of the current crop of cryptocurrencies. But I am optimistic about the underlying ideas over the next, say, five to twenty years.
Neither TradeHill nor Mt. Gox were considered shady exchanges, at any point when they were used. But you do realize that the standards for this are somewhat low.
E.g. both the owner of bloomberg.com and the owner of businessinsider.com are convicted of securities fraud (in fact businessinsider.com was extremely likely started exactly because Henry Blodget was convicted of fraud). At the time, the owner of Tradehill was not convicted of fraud, and while he is now, and yet he's still running a bitcoin exchange.
However, the people defrauded by both of these individuals in "fiat-world" saw 80%+ (Blodget) or 100% (Bloomberg) of their money back. As far as I know, nobody saw their Tradehill money back.
> It would be foolish to suggest that there will never be any fraud in the blockchain world.
Are you seriously naive or misinformed enough to believe this ? Fraud, law breaking and tax evasion are the main, almost the only, reason bitcoin is being used at all. You have heard of Silk Road, right ?
I've seen numbers suggesting that Silk Road was responsible for 70%+ of all bitcoin transaction at one time, and this isn't even counting the many other kinds of fraud and crime, like data ransoms, actual ransoms, money laundering (esp. out of China, in fact most miners are money laundering operations according to many sources)
