Last updated on October 14th, 2017 at 02:16 pm
One of the biggest advantages of digital currencies such as bitcoin is the inability of any party to reverse the course of a transaction once initiated. While this can be seen as a great asset by some, consumers who are accustomed to the workings of traditional payments systems like credit cards may not be so accepting.
Bitrated, a startup based in Israel, is attempting to bring a little more trust into the bitcoin economy with its unique trust-based platform. Bitrated has created a marketplace where bitcoin consumers and merchants can interact in a secure environment.
Each user in the Bitrated system is assigned a reputation score, a measurement that takes into account the previous dealings of each user, their relationships to other users, and third party social media metrics (e.g. Twitter, LinkedIn). As users participate in the Bitrated platform, their reputation scores become more refined and accurate, and thus more significant in relation to other users. The primary objective behind the reputation system designed by the Bitrated development team is to construct a bitcoin marketplace platform that can not be gamed by malicious entities.
The integrity of the Bitrated ecosystem is further protected by the “Web of Trust”, a type of relationship-tracker, which looks at the levels of interconnection between all users in the network. The Web of Trust functions on the principle of association; if users A trusts B, and B trusts C, then it can be assumed to some degree that user A can trust user C.
In the Bitrated system all users can vouch for each other. However, every user must be very careful about who they vouch for, as any negative ratings on vouched users will reflect negatively on their sponsors. In this way, Bitrated creates a dynamic marketplace that can accurately reflect the reputation of each user and their peers.
Bitrated also allows new users to establish their reputations very quickly with the information gathered from external social networks. A particular user may be new to Bitrated, but may have a very established Twitter, Reddit or LinkedIn accounts, which can be leveraged to acquire a “trusted” status.
Users of Bitrated are given the ability to create reversible transactions, something not possible with ordinary bitcoin wallets. The process works by using multi-sig smart contracts that involve a third-party arbiter. When a transaction is initiated on the Bitrated platform, buyer and seller have the option of selecting a trusted arbiter to oversee the deal from start-to-finish. The arbiter does not have access to the funds in the multi-sig wallet or the goods in question. Arbiters can only cancel/approve transaction, and are subject to extensive ratings and reviews by the Bitrated community. Arbiters are compensating by arbitration fee that is collected upon successful completion of a deal, which gives a great incentive for arbiters to build reputable and trustworthy profiles.
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