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This paper: (Link to paper) introduces a blockchain based platform entitled PriWatt claiming (in Section 2.5 MultiSignatures, page 3):

"PriWatt provides the means to form agreements or contracts without trusting other party via blockchain."

It continues:

"This is achieved through multi-signature transaction where minimum m of n keys must sign a transaction before tokens can be spend."

(Similar to what we have in Bitcoin n-of-m transactions.)

However, my question is how to remove totally the trust when one party is payer and another party is payee?

I mean multi-signature transactions can be helpful when all of parties are payer. Assume for example a wallet in which a pay out transaction needs minimum m of n signatures. In this case that works.

But, if we consider the example of the paper (same section 2.5) as follows:

"For example, assume that a customer Alice wants to buy a product from a merchant Bob. They make a contract where Bob will not get paid until Alice gets a product. Similarly, Alice cannot get a product and keep her payment."

However, in this scenario, merchant (Bob) signs 2-of-2 transaction, where it has not been signed yet by customer (Alice). At this point:

(1): If customer (Alice) before receiving the product, signs 2-of-2 transaction, then transaction is payable for merchant (Bob), but what happens if merchant (Bob) does not send the product to customer (Alice)?

Or

(2): What happens if customer (Alice) denies to sign 2-of-2 transaction before receiving the product, and after receiving the product also does not sign the transaction?

Does Multi_Signature transactions can fix this problem? Or merchant and customer need to trust each other?

Edit: In my opinion, a Multi_Signature transaction can remove the trust, IF AND ONLY IF : all exchanged values between parties are internal (for example coin or any other parameter or token etc defined in the code as a variable.) Otherwise if one of values that is exchanged between parties would be an external asset (for example: a product or service like energy in the paper) then parties need to either trust each other or use a trusted arbitrator (trusted Chuck).

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In the paper, it mentions a third party, Chuck, who will resolve disputes.

(1): If customer (Alice) before receiving the product, signs 2-of-2 transaction, then transaction is payable for merchant (Bob), but what happens if merchant (Bob) does not send the product to customer (Alice)?

Assuming Bob only cared about getting paid, he would always sign a transaction which paid himself, so it does little good to require his signature. If alice signed a transaction which did not pay her, it would show good faith, if there was another party involved, Chuck. Chuck would require that the product be sent to Alice before the funds would be fully released to Bob. In this case it would be a 2-of-2 multisig script requiring Alice and Chuck, and requiring Alice to sign before Bob ships the package, for example.

(2): What happens if customer (Alice) denies to sign 2-of-2 transaction before receiving the product, and after receiving the product also does not sign the transaction?

Assuming this is a 2-of-2 requiring Alice and Chuck from above, then Bob would require Alice's signature before sending the product, that way the arbiter, Chuck would be responsible. Note that using a multisig script on blockchain to trace an external physical action would require trust (from both parties) in the arbiter, Chuck, and is not completely trustless.

  • Thank you, So we can conclude that transaction is not trust-less as it is claimed in the paper: "PriWatt provides the means to form agreements or contracts without trusting other party via blockchain." They also mention use of Chuck as an optional entity: "Alice and Bob can include Chuck as an arbitrator who can resolve disputes." That means parties either have to trust each other or trust a Chuck as a trusted arbitrator. Do you agree? Thanks – Questioner Feb 4 at 13:45
  • I also edited my question and mentioned my point of view on how multi-signature transactions can completely remove the trust between parties without using a trusted Chuck as a trusted arbitrator. – Questioner Feb 4 at 14:15
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    I would agree, the paper does not suggest any other methods to address those problems. – JBaczuk Feb 4 at 14:23

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