So now we've experienced both sides of the bitcoin spike I've got a question: should a buyer be able to control the amount of btc released from escrow depending on the bitcoin market price? Say I bought $100 worth of stuff from a vendor, put $100 worth of coins in escrow, got it a week later without any problems, but the price of coins has gone up to $130. Should I be able to just release $100 worth and take back the remaining $30 worth? On the other hand, if the price tanks would the vendor be right in asking for more funds to cover it? The answer is pretty obvious to me, but I can't find any authority that says it in black and white. Are there any markets with policies about this? Should there be? Anyone ever win or lose a dispute over it? Opinions, please!
Yeah you cant have all upside. With this sort of policy as you are suggesting, the buyer would need to cover BTC losses as well. Too difficult. This is just a difficult thing to enforce. Keep in mind many vendors don't cash out right away. Smaller vendors might but most big ones will cash out over a period of time so a single days volatility isn't usually a killer. The main requirement is the vendor be bullish on BTC overall. If they aren't then using BTC is problematic.
Ideally the hedging shoukd hapoen outside of the actual transaction - neither Vendor nor buyer should be responsible for dips and such after a purchase. A buyer buys at essentially the spot price of BTC. In an ideal world, the vendor could buy something akin to a currency swap or future. If they have say 10BTC of sales where BTC spot price was say $500, ideally the vendor would go to a third party and buy a BTC swap that say executed in 30 days. The swap would be for 10BTC at $500 or whatever price. A premium is paid to the counterparty or perhaps the swap has the premium built in. So in 39 days they take their receivables from escrow and execute the swap at the guarantees exchange rate. This is basically how a FX swap works. Businesses who transact in other currencies use swaps to hedge their currency exchange rate risk.
Basically what I'm saying is that hedging against volatility should be a separate transaction that the vendor does if he wants to insulate against exchange rate fluctuations. This is an extremely common issue in international trade.