Vaduz, Liechtenstein, June 13, 2023 (GLOBE NEWSWIRE) -- In its ongoing mission to enhance peer-to-peer (P2P) and decentralized transactions, Obyte is excited to announce the introduction of smart contracts with arbitration. These contracts offer secure decentralized escrow protection for two-party agreements, eliminating the need for mutual trust. They can work for individuals as well as businesses, but they’re particularly well-suited for international trade —a market valued at a staggering $32 trillion.
Traditional contracts have been the foundation of business transactions for thousands of years. However, the parties involved typically require a level of trust before engaging in any business relationship. This trust requirement poses risks for at least one party involved, buyer or seller. By using contracts with arbitration, that risk is eliminated from the beginning, thanks to decentralized escrow and inclusion of a mutually trusted arbiter.
How do contracts with arbitration work?
In this kind of contract, it’s assumed that one side is the payer (buyer), while the other is offering a product or service (seller) in return for payment. Let’s say Alice is selling some goods to Bob, who’s on the other side of the world.
1. Alice and Bob need to download and back up the Obyte wallet. Alice sends a pairing invitation to Bob (Chat tab – Add a new device) and he needs to accept it from his own wallet.
2. Alice and Bob can discuss the contract details in the chat, as well as the selection of an arbiter from the Obyte ArbStore. Then, Alice writes the contract text.
3. Bob shares his Obyte address with Alice via encrypted chat in the same wallet. Alice clicks it, and selects the option “Offer contract with arbitration.”
4. She fills in all the spaces, including the amount, the selected arbiter address, title, the text of the contract, and personal contact methods. Then, she clicks “Offer Contract”, and Bob needs to accept it and pay to the contract from his wallet.
5. From this point, the funds involved (in USDC, GBYTEs, GBB, or any other token) are locked in decentralized escrow until the contract’s conditions are met. The escrow is provided by a smart contract that allows only a few specific ways of releasing funds from the escrow. The most common way is that Bob releases the funds to Alice after successfully receiving the goods. Another possibility is that Alice refunds the money to Bob if she is unable to ship the merchandise.
If Alice or Bob break the terms of the contract, either of them can open a dispute. That’s where the arbiter gets involved.
Arbiters and Arbstore (Hiring!)
In case of a dispute, the arbiter will be the one to decide who keeps the money. An arbiter is a trusted and verified (human) third party registered in the ArbStore. They’re experts in their area (legal, IT, business, real estate, etc.) that are paid for dispute resolution services.
The ArbStore lists the currently active arbiters with information about their professional backgrounds, pricing, and data about their activity, such as the number of contracts that chose them as arbiters and the number of disputes resolved. The services of arbiters are paid, and they have to be paid only in case a dispute arises. Most contracts are expected to end without a dispute, and their parties won’t have to pay anything to arbiters.
Beyond those experts, if one of the parties finds the arbiter decision unfair for any reason, they can report it to the ArbStore moderators. They won’t be able to make a complete refund, but if they find that the decision wasn’t right, the arbiter will rank lower on the ArbStore and can even be delisted.
By using smart contracts with arbitration, it’s possible to even build any kind of marketplace (exchanges, jobs, used stuff, NFTs, etc.) that automatically protects both parties by locking the funds involved. It’s possible to trade any amount, any product, from anywhere to anywhere, at any time. Trust and reputation are issues no more.
Obyte is now welcoming more arbiters in the ArbStore. The best ones would be experts with experience in the relevant or adjacent fields. To apply, contact Enrique Aznar at aznar@arbstore.org
