Mitigation of Seller and Buyer's Dilemma with Transaction History and Escrow.

In this paper, to estimate the risk of economic loss incurred by both parties in production order transactions, we propose a scheme that enables escrow and confirmation of the results without relying on a third party. In such transactions, both parties risk incurring economic losses if the other party behaves dishonestly. Generally, the risk can be reduced with an escrow service provided by a trusted third party. However, there is a risk of fraud by the third party; in some cases, the third party may not be available for the buyer or seller. Several existing schemes utilize fair exchange and blockchain to disburse the deposited payment upon the delivery of specific data. However, in production order transactions, some cases cannot be handled only by completion of delivery, such as disputes that arise when the data does not meet the quality expected by the buyer. In such cases, before the transaction starts, a party would confirm the counterparty’s behavior in past transactions to estimate the risk of a dispute occurring. In this paper, we propose a scheme that records the history of past transaction processes while utilizing blockchain-based escrow and allows future counterparties to confirm the history as a reference for estimating risk. By the opportunity loss that a history of dishonest behavior causes and applying blockchain-based escrow, the scheme motivates sellers and buyers to behave in good faith. We implemented a prototype system on top of Ethereum and verified its feasibility. By expanding the scope of transactions, we expect that it will be possible to determine whether transactions between individuals over the Internet are feasible without relying on a specific escrow service.