Silk Road forums

Discussion => Security => Topic started by: Hungry ghost on May 20, 2012, 09:12 am

Title: Escrow question
Post by: Hungry ghost on May 20, 2012, 09:12 am
Hi, I'm new here, looking to make my first purchase this week. Can someone explain to me briefly exactly how the escrow system works, and also finalising early (as it seems I may have to do!). I mean I know roughly how it works but if someone could break it down with approx time scales for each stage, so I know how long it'll take to get my stuff!
Title: Re: Escrow question
Post by: deadkndys420 on May 20, 2012, 09:50 am
When you make a purchase your bitcoins go into escrow basically escrow is a way to insure your coins are safe in case something goes wrong. Finalizing is releasing your coins to the vendor and should be done once you receive your package .Once you press finalize it is irreversible which is why finalizing early is not recommend (releasing your coins to the vendor before you get your package).

You can not press finalize until 3 days after the vendor marks the item as "in transit".

Also a time estimate is kind of difficult  to give as each vendor is different and works at a different speed per se.
Title: Re: Escrow question
Post by: TreyWingo104 on May 20, 2012, 10:05 am
Okay escrow first:
    Silk Road gives vendors the options of using the Escrow system.  Actually now they have to use the escrow system for at least three days unless I am mistaken.  Escrow is essentially a system that uses a third party to make payouts once a certain transaction is completed between two parties, (obvisouly in this case once you have received your goods from a vendor and indicate that have you have them using the finalize link....SR then releases the funds from escrow and the vendor gets paid.
 

Vendors also have the option tp chose whether or not not they want the escrow to be "hedged".  As a buyer, when you add an item to your shopping cart, you can see at the far left of the line item either (Hedged) or (Unhedged).  Here's a quick breakdown of the two

(Hedged):  Lets say a bitcoin is worth 5 bucks when you make your purchase and that you have purchased a gram of bud for exactly 5 bitcoins and free shipping.  So once you have gone ahead and placed the order.  Three days later you get your gram and finalize, leave feedback etc., and head to MTGOX  (Best site to check current value of BTC to USD  Bitcoin to Euro , etc.....Oh shit, now that bitcoin is worth 7 bucks. Luckily for you, because the transaction was hedged, SR will make sure you pay only 3.57142.....Bitcoins (As the coins have raised in value, had you paid the 5 coins you would have lost 10 dollars of bitcoins.   (3 days after ordering a coin is now worth 7 dollars). 

(Unhedged):  This allows the vendor to take a risk on the value of the bitcoin.  Using the example above, you would still have to pay 5 bitcoins because there is no hedge against the bitcoins' fluctuation in value.  **It works both ways though....Lets say when you payed the 5 bitcoins that originally were valued at 5$ each, they depreciated to a value of 2 dollars when you received the order and finalized.  Now the vendor (still using unhedged  on escrow)  will only get 10 dollars for that gram, and you dont end up paying the 10.5 bitcoins it would cost to (remember they're now only worth 2$ each) to cover the price of your 25$ gram.

I'm fairly confident this is how the system works.

On finalizing.  As a new buyer, (a rough estimate of)  60% of the big vendors will require you to finalize early.  Many highly rated vendors still will not require this.  REMEMBER, if you FINALIZE EARLY and DO NOT receive your goods, there is no way you can get your bitcoins back.  Thats not to say that when using certain vendors its a bad thing to finalize early, but that it just my opinion and plenty of people will tell you otherwise.  Search the forum for ToyotaMan and you will find plenty of sour people who lost a hefty amount of bitcoins when they finalized early and ToyotaMan jumped ship, cashed out, and fucked the majority of his customers over during the 4/20 sale...

Since then...

SR has implemented a policy where you have to wait 3 days to finalize, period.  I think it only applies to vendors who have under a certain amount of transactions and/or below a certain rating.  That is my understanding anyways.

Hopefully some more experienced users/vendors can chime in here and correct whatever is wrong with what I said.

Happy shopping, and dont forget to hit up the security forum/threads on how to better protect your computer for using SR.
Title: Re: Escrow question
Post by: TreyWingo104 on May 20, 2012, 10:09 am
When you make a purchase your bitcoins go into escrow basically escrow is a way to insure your coins are safe in case something goes wrong. Finalizing is releasing your coins to the vendor and should be done once you receive your package .Once you press finalize it is irreversible which is why finalizing early is not recommend (releasing your coins to the vendor before you get your package).

You can not press finalize until 3 days after the vendor marks the item as "in transit".

Also a time estimate is kind of difficult  to give as each vendor is different and works at a different speed per se.

The three day thing is not always the case.  I have placed orders and had them marked in transit on say Friday, received them on Saturday, and then  was able to finalize on Saturday.  I have also placed express orders, was told by the vendor they shipped, trusted that vendor as they have a great track record with me, and finalized before receving the express item, so there are definitely cases where you can finalize within three days, I'm just not too sure as to where the 30day rule applies and where it does not, or maybe it's, to whom that 3 day rule applies, and to whom it does not. 
Title: Re: Escrow question
Post by: Hungry ghost on May 20, 2012, 10:52 am
Ok thanks everyone for taking the time to answer. That's made it a bit clearer. What I'm thinking about is a vendor could press"in transit" but not actually post my package until I finalise. It's not so much getting ripped off as having to wait ages for my drugs that concerns me. If I find a uk vendor I trust I'll be happy to finalise early as long as he posts me stuff at the earliest opportunity!
As far as security goes i have Tor bundle and gpg4usb on a truecrypt hidden volume on a thumb drive. Truecrypt portable is also on my thumb drive so I don't think I'm leaving any trace on laptop. I'm gonna buy my BC for cash in the mail to an instawallet I will only access through Tor. I think this is good enough for the small scale personal purchases I'll be making.
Title: Re: Escrow question
Post by: TreyWingo104 on May 20, 2012, 11:46 am
Ok thanks everyone for taking the time to answer. That's made it a bit clearer. What I'm thinking about is a vendor could press"in transit" but not actually post my package until I finalise. It's not so much getting ripped off as having to wait ages for my drugs that concerns me. If I find a uk vendor I trust I'll be happy to finalise early as long as he posts me stuff at the earliest opportunity!
As far as security goes i have Tor bundle and gpg4usb on a truecrypt hidden volume on a thumb drive. Truecrypt portable is also on my thumb drive so I don't think I'm leaving any trace on laptop. I'm gonna buy my BC for cash in the mail to an instawallet I will only access through Tor. I think this is good enough for the small scale personal purchases I'll be making.

Yup sounds like a better setup than some users on here who have already been purchasing for a while without using a thumb drive or while using facebook on another browser etc.  9shakes head). Ok thats not to say you NEED a USB bootable  distro like Linux  Lib but you're doing yourself a huge favor by getting this shit worked out beforehand.  And if I could I would give you karma for it, but isntead BIG UPS!  cause I cant.  What i would do in your situation (sounds like you;re in UK) is just message the vendor and get the details worked out...there seem t be a lot of great vendors in the UK that will be helpful....If your generous and can afford it, and its worth the fast service, offer them a coin to make it move quickly,but your best bet it to read through reviews on their page and look for ones tha say stuff like new buyer 5/5 got it fast and was really ehlpful, that kind of stuff.  And Im sure plenty of the solid UK vendors wont make you FE as long as your username isnt something really sketchy or you dont message them something sketchy.  PGP is crucial too, mae sure you use it for your address.  If your a irst time buyer and dont PGP your address a lot of vendors will just let the order sit there for 4 days until it automatically gets cancelled, then you have wait twice as long becaause your coins are sitting in escrow.   Best of luck man, enjoy the road, you'll be just fine, and even though I only operate within the US, PM me if you want any more help with stuff or have a quick question you need answered, Ive read a shit ton of stuff on all the boards and like to help people out just like people have done for me.

cheers