Bisq, a decentralized bitcoin exchange and peer-to-peer (P2P) network with a cross-platform application, announced today a new upgrade that has updated the trade arbitration dispute process.
The new trade protocol implemented moves to 2-of-2 multisig escrow from 2-of-3. The third key for arbitrators has been removed.
In addition to sending funds to the multisig escrow, traders now sign a time-locked transaction that pays out all multisig escrow funds to a “donation” address. Either trader can publish this transaction after 10 days (altcoin trades) or 20 days (fiat trades).
This time-locked transaction is required for the new arbitration process and results in a different dispute resolution system. Dispute resolution now takes place in three layers shown below:
- Trader Chat – Introduced in v1.1.6, traders can communicate privately over end-to-end encrypted chat right in Bisq to work out minor issues.
- Mediation – If traders cannot solve issues through direct chat, they can request mediation. Mediators are bonded contributors who examine the situation and suggest a payout. If both traders agree with the suggested payout, the payout takes place and the trade is closed.
- Arbitration – If one or both traders remains dissatisfied with the mediator’s suggestion, they can request arbitration after publishing the time-locked transaction. Arbitrators will re-examine the situation, and if they determine the trader requesting arbitration deserves a payout, they will personally reimburse funds to the trader and request reimbursement from the Bisq DAO.
The new system reduces trust required to use Bisq
Until this upgrade, users have had to trust that Bisq’s anonymous arbitrators would make a fair decision when resolving disputes as they could sign funds to users at their discretion. Now, no one aside from the two traders retains a key in the multisig escrow transaction.
This also achieves more privacy for dispute resolution, since many issues are resolvable through direct communication with the trading peer, and do not need third party intervention.
Going forward, with arbitrators power having been diminished by losing the third key in the multisig escrow, the Bisq network can now more easily recruit resolution agents as it grows around the world.
Account Signing Update
Currently, a new account on Bisq is limited to buying 0.01 BTC (sell limits are not limited to 0.01 BTC) until a signing takes place by another trusted user, which only happens when the untrusted peer proves their intention to trade honestly.
In the v1.2 release, users with unsigned payment accounts must buy bitcoin from users with signed payment accounts. If there are no issues (i.e. chargebacks) in the 30 days after the trade was completed, the buyer’s account is signed and the 0.01 BTC limit is lifted.
Account signing is not required for accounts that do not have chargeback risk (i.e., face-to-face trading, cash deposits, or money orders). Further, account signing is not required for any payment accounts used outside of major national currency markets on Bisq (USD, EUR, CAD, GBP, AUD, BRL).
More information on how this works can be found in Bisq’s documentation.
