I had 3 new business ideas recently, all related to escrow services. They are not anything I would want to launch myself right now, since I already am busy enough with my existing businesses, so I thought I would put them out there in case anybody else is interested in starting them:
Idea #1. Kickstarter Escrow – The biggest complaint about crowdfunding sites like Kickstarter.com and Indiogogo.com is that many times people put up their hard earned money to pre-order a new product, but the item never gets manufactured and delivered. There is almost no accountability at all on these types of sites, so if they want to, the person or company raising the money can pretty much just walk away from the deal and keep the money without delivering the product they advertised. Either it starts out as fraud by a person who
is just out to scam the public, or delay after delay causes the buyer to wish they had never invested. Examples of this include
the Confederate Express video game, which recently made national news because the owners of the company developing it are alleged Airbnb squatters, so their Kickstarter campaigns are now in doubt also. Other well known problem Kickstarter projects include Healbe, Ritot, Kobe Red, and TellSpec, and there is even a site at KickScammed.com dedicated to exposing Kickstarter fraud.
A possible solution to this would be for an escrow type company to either:
A) Hold the crowdfunded money in escrow and pay it directly to the suppliers, just like how a construction loan is handled in real estate. This would not guarantee the product would get launched, because the company could still fail, but at least it would eliminate people who raise money in bad faith and never plan to deliver the product.
B) Put the crowdfunded money in escrow until the product actually starts shipping, and instead loan money to company based on all the pre-orders (and guaranteed payments) they received via the crowdfunding site, plus maybe some other collateral. If the product never gets delivered, the buyers would get all their money back (from being held in escrow) and the escrow/finance company would take the loss.
It would greatly benefit a Kickstarter.com/Indiogogo.com product to use either of these 2 types of escrow, because it would get a much much higher response rate for fundraising due to investors not having to worry as much about losing their investment.
Idea #2. E-Book Escrow – In the recent TechCrunch.com article How To Save Books by Jon Evans,
he proposed a business model where readers pay nothing for e-books up front, and instead pay only after they read them (basically, they only pay for books they liked). In a comment to this article, Jeremy Lee James suggested that the reader could “buy” the e-book from Amazon.com by depositing the purchase price into an escrow type account controlled by Amazon, and then download the e-book. The author would only receive the payment from Amazon if the reader gets to the end of the book (Amazon already monitors what page the reader has read). If the book is not finished after a certain length of time, it would be deleted from their e-reader, and their money would be returned to them.
I am not sure if Amazon will ever do this, but it would not be hard to setup a 3rd party escrow service for this purpose, that self-publishing authors could use to sell their e-books online. Or, you could setup your own e-bookstore site with built-in escrow, and signup authors sell their books in it.
Idea #3. Bitcoin Escrow – Unlike when paying with a credit card or by Paypal, there is no way to dispute a bitcoin (or any other type of cryptocurrency) transaction. This is why I’ve heard people enjoy buying it from websites similar to bitcoin.com.au. So, if you pay somebody $100 in bitcoin online for a used Xbox and they never send it to you, there is almost nothing you can do about it, although there are reputable companies that are starting to accept bitcoin payments, you can have a look at a list of some of them here at Coinsspent.com, so you know you’re bitcoins will be safely spent at selected places. There are several bitcoin escrow services you can use to protect yourself such as:
btcrow.com
i>bitcoin-escrow.netbitrated.com
but all of these are relatively new sites and none are established escrow services, like how eCop.com and escrow.com already handle domain escrow. If a more well known escrow service started offering escrow for bitcoin transactions, they might be able to obtain significant market share. The problem with anything cryptocurrency related is that there is a lot of fraud and very little trust, so people have no reason to trust these escrow services since they don’t have much of a history. This is why there are now companies involved within the cryptocurrency markets offering private key management for more secure transactions, hopefully solidifying future mas out there.
first & second are definitely interesting, however, it would take only one wise move by either Kickstarter, Indiegogo or Amazon to kill your product and leave you stranded with nothing with these business models IMO 🙂
Agreed.com accepts Bitcoin, Litecoin and Dogecoin as payment methods.
That is not the same thing as cryptocurrency escrow. Agreed.com only does that for digital goods (mainly domains/websites). Cryptocurrency escrow is if I want to buy your old iPhone for $100 and pay with bitcoin. You would not want to mail it to me and then have me pay afterwards, and I would not want to prepay you. So, we would use a bitcoin escrow service.
Diego FYI, eCOP.com was the first escrow service to accept bitcoins for domains transactions and I can tell you the demand is still extremelly low compared with dollars.
But crypto currencies are gaining importance so this should change.
Keep an eye on Bitkoin.com to be aware of the latest news and views about the crypto currency industry.
The demand for accepting bitcoin as a payment method for domain escrow (at sites like agreed.com or ecop.com) is not really related to the demand for a bitcoin escrow service. Domains are just one of the thousands of items a bitcoin escrow service offers escrow for. It mostly offers escrow for physical goods, and there is a huge demand for that (think eBay type transactions).
I like to see your thinking, Eric. It’s cogent and refreshing.
However, I dislike to see it lost in the regular regurgitation of other blogs you sometimes publish on. I think your thoughts should be collected on your site and your site only so that I can go back and read related posts, or go back chronologically and read your posts.
Keep posting, Eric. You are a great person to learn from.
Thanks. The only other blog I have ever published on is Elliot’s Blog at http://www.domaininvesting.com, and that only started a month ago and has only been 3 articles. Two of these articles were rewrites of very old articles I had published already on my blog, but I changed them significantly and also added some new info and perspective.
Hi Eric,
I prefer to read your articles ON your own site, not from somebody’s else blog. Keep your identity. You have good stuff.
If you decide to do the Escrow for Cryptocurrencies, I have a name that would fit:
SameDayEscrow.com
Eric, don’t you think with how volatile Bitcoin is escrow might be an issue with the delays in processing the shipment of a product, let’s say it takes 5 days and during that period Mt Gox gets hacked into 😉 And the value plummets..obviously this is an extreme scenario but again the currency is a bit erratic at the moment..
That is true, but there is just as much a chance bitcoin price would go up. It does add additional risk to the transaction though.
Any “escrow” company that is not licensed, not bonded (lodge say $500,000 with some body, not audited, not registered with any reputable responsible regulatory body is NOT proper escrow.
Unlike most domainers (ie. you naive idiots selling $500 domains), most savvy business people would NEVER trust any escrow company that is not not licensed, not bonded (lodge say $500,000, not audited, not registered
Starting a proper escrow is not cheap or easy. Lots of form filling, know your customer etc.
Ask Agreed.com, escrowhill.com
If it was so easy why ain’t Schilling, Namemedia, Marchex setting up their own escrow cos – instead of using escrow.com?
In short, what’s stopping someone working out of his bedroom (eg ecop.com) from scamming the public!?
If & when the shit hits the fan, there’s no accountability
Borgos, I expect more from you. You’re a middle aged dude – not some 15 yr old with no knowledge of bsuiness…
Yes, that is why I posted these ideas for other people to do, not me. And, a company like eCop.com could easily do these ideas since it is already an escrow company.
As as far as I know, none of the existing companies that offer bitcoin escrow (not for domains, but for real world items) are licensed or bonded. That is the whole point of my idea, which is that there is a need in the market for a more reputable bitcoin escrow service that people will trust. Aside from that though, licensing and bonding is not something that is a legal requirement in all countries. Many escrow services are not US based. I agree that makes them much less trustworthy, but that does not mean people won’t use them.
As many readers of my blog know, I am very interested in doing almost any sort of business idea, but I specifically published these 3 escrow ideas because they are not something I want to do myself due to all the costs and hassles of starting an escrow service. If it were easy to do, I would be doing it, not just talking about it.
Shame on you Eric for exploring thought provoking ideas and shame on the filthy unsavory and unsavvy domainers reading this, now allow me to use this blog to vent my frustrations and rain on everyone’s parade 😀