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Comment by vacri | Hacker News Reader

This is not 'reversibility'. It's a go/no-go system, basically the same as an escrow. The article is wrong in saying it's not escrow - the justification used is "the independent party might sod off with the money"; that is a downside to current escrow services when they go wrong, not the actual escrow function itself. Multisig offers the same basic function as an escrow: an independent third party signs off on the payment or the cancelling of it.

So, once a payment has been made, how does multisig reverse the payment, as the article title promises?

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> Multisig offers the same basic function as an escrow: an independent third party signs off on the payment or the cancelling of it.

Multisig allows the escrow to do _just_ that, and nothing else with the money (at least, not without the buyer/seller agreeing to it). Regular escrow puts the funds under the full control of the escrow provider, where he _could_ do something else with the money, regardless of the buyer and seller wishes. I find this to be an important distinction.

> So, once a payment has been made, how does multisig reverse the payment, as the article title promises?

The payment is made to the multisig address and not released to the seller until the buyer is satisfied. If there are any problems with the sale, the buyer and the arbitrator could together send the money back from the multisig address to the buyer. You aren't exactly reversing the original transaction, you're creating another transaction that reverses the effect of the original one.

Disclaimer: I'm the creator of Bitrated.

> The payment is made to the multisig address and not released to the seller until the buyer is satisfied. If there are any problems with the sale, the buyer and the arbitrator could together send the money back from the multisig address to the buyer. You aren't exactly reversing the original transaction, you're creating another transaction that reverses the effect of the original one.

So it's just more secure escrow?

It doesn't really fall under the definition of an escrow:

    a bond, deed, or other document kept in the custody
    of a third party and taking effect only when a specified
    condition has been fulfilled.

    [usually as modifier] a deposit or fund held in trust or
    as a security

The arbitrator gets "voting power" in regards to deciding where the funds goes, he doesn't keep it in his custody nor he have full control over it. What Bitcoin allows to do is really unique, and was never possible before. When the money is in a multisig address, it isn't really "owned" by anyone.

Edit: perhaps you could say that its owned collectively by the Bitcoin network, that can decide to allow moving it elsewhere if a transaction that fulfills the Bitcoin rules is received. Under that definition, one could say that the funds are in an escrow controlled by the Bitcoin network as a whole.

If I understand correctly the independent third party is only needed in a dispute. If the buyer and seller are happy then completing the transaction does not require action by anyone else.

This delays payment until 2 of the three parties sign off. From the buyer's point if view that is reversibility. From the sellers point of view this is a delay in getting paid.

People complain that PayPal freezes merchants accounts. But PayPal only does that if the number of unsettled goods is too high. In this particular case it would always happen because parties would not acknowledge a transaction for a long time.

Chargebacks allow a merchant to get the money right away and still give the customer the option to reverse the charge a month (or more later) in case something happens.

Could the money really be considered the merchant's if PayPal can still come later and take it back?

PayPal does not come back later, that's the point of paypal. PayPal hedges against chargebacks and handles them itself. In case thinks you're above the average risk, it will start freezing your account temporarily. But they will never come back after 180 days and want your money.

On the other hand if you sell directly via credit cards, the credit card company can come to you after 180 days and want money back.

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