What is a Dispute Reserve?

A Dispute Reserve is a quantity of gold held in a special sub-account to cover arbitration fees, and/or provide a refund to a customer in case of a legitimate dispute.  At iGolder, once a transaction has been completed, the transfer of gold ownership is final.  Since there is no such thing as a chargeback or a payment reversal, a seller may set aside a small reserve of gold as a proof of his willingness to refund his customers (in case of a dispute).  Without a Dispute Reserve, a buyer has no direct recourse to get a refund once a transaction has been closed.  iGolder will never revert a payment, even in the case the seller is found "guilty" by arbitration.  iGolder can only take gold from the Dispute Reserve to refund a buyer.  By the way, if a seller refuses providing a refund after losing a dispute, then his reputation status is downgraded to Unreliable.  There are stiff penalties associated with the Unreliable status, thus putting pressure to the seller to refund his customer, however iGolder will not interfere by reverting the payment.

 

If a seller whishes to provide a refund policy to his customers, then he is welcome to set aside a small reserve of gold on behalf of his customers.  Aside of providing goodwill your customers, the Dispute Reserve also gives you a discount on all transaction fees.  The higher the amount you set aside for your Dispute Reserve, the lower are your transfer fees.  Your maximum discount is 0.4% - which is almost half a percent for every transaction.  If you make a lot of trades, you should consider a dispute reserve for the stake of reducing your transfer fees.

 

Dispute Reserve Transfer Fee Reduction Bonus
Less than 3 grams of gold None
Between 3 grams and 10 grams of gold 0.1%
Between 10 grams and 100 grams of gold 0.2%
Between 100 grams and 1,000 grams of gold 0.3%
1,000 grams of gold or more 0.4%

 

The amount of gold in your Dispute Reserve is always disclosed in your public profile, next to your Karma score.  After all, the idea of having a Dispute Reserve is showing to your customers how much you are willing to refund them in case of a legitimate dispute.

 

To participate in certain activities, such as selling ATM Debit Cards, iGolder requires that you maintain a minimum Dispute Reserve in your account to secure the performance of your payment obligations.  You are welcome to sell ATM Debit Cards without any Dispute Reserve, however you will have to do it from your own website, without being listed as a "certified" Debit Card provider.  In the end, it is up to the buyer to decide if he wants doing business with a seller without any Dispute Reserve.  The buyer must assume the risk of doing business with a seller without a dispute reserve.

 

Lifespan of the Dispute Reserve

A buyer has 6 months to update his feedback rating and feedback comment, or initiate a dispute regarding a transaction.  A transaction is automatically closed 180 days after the completion date of the transfer - provided of course no dispute was initiated.

 

To secure a refund to the buyer, iGolder must therefore maintain the Dispute Reserve to a lifespan of 180 days.  If you wish to reduce or take out your Dispute Reserve, then you have to wait 180 days from your last transaction.  If your dispute reserve was larger than the sum of all payments you received during the past 180 days, then the extra reserve is instantly available to you for spending, otherwise the amount is frozen until the closing of all pending transactions.

 

Rationale of the Dispute Reserve

People with nothing to lose are more likely to behave dishonestly, so giving credit to a well earned reputation makes a seller (or buyer) bound to its reputation.  Because a great reputation takes a lifetime to build and seconds to lose, there is an economic benefit for honesty; each new customer brings marginal profits compared to massive losses associated with having a bad reputation and losing many customers.

 

Is a Dispute Reserve Safe?

If a dispute is initiated against a member, his dispute reserve is automatically lowered according to the dispute amount.  Therefore, the amount available in the Dispute Reserve is the amount available for dispute resolutions.  This amount is available a first-come first-serve basis when filing a dispute.  The combination of the Safetransit™ tool and the Dispute Reserve provides a powerful incentive to keep the seller honest - even if the Dispute Reserve is rather small compared to the total volume of transactions.

 

Why?  Because an entire transaction may be conducted safely with Safetransit without any Dispute Reserve.  If a dispute arises within Safetransit, the refund will be taken directly from the gold available in Safetransit.  If the seller does not want to chip-in for the arbitration fees, then the dispute award will automatically default towards the plaintiff and will result in a Demerit Point to the seller.  Therefore, the amount in Safetransit is usually enough to take cover the entire cost of a dispute, including the arbitration fees (if any) and/or provide a full refund to the buyer.

 

Cancellation Provision

iGolder offers another tool to secure the performance obligations of the parties.  The buyer and seller may negotiate a Cancellation Provision in case one party decides to cancel the trade.

 

Since August 1st, 2013 iGolder is no longer accepting new accounts and balances can only be redeemed. During the past years, we have been recommending Bitcoin more than our own payment system. We believe in physical gold ownership, and developed iGolder as a mechanism for people to acquire physical gold by trading with one another.

Since iGolder has a central point of failure (our server may be raided by thugs wearing some kind of uniform), we feet it is safer for us to cease operations. The iGolder experiment has been personally rewarding as we met many gold enthusiasts and also learned about Bitcoin in the process. For those who have no idea what Bitcoin is, we recommend doing your own research. Bitcoin is far superior to iGolder in every way, both in privacy and security as our server is always vulnerable to confiscation. Bitcoin is a communication protocol with a built-in "escrow service" capable of protecting both the buyer and the seller, rendering our Safetransit completely redundant. To learn more about the Bitcoin protocol and its feature, please watch "http://www.youtube.com/watch?v=mD4L7xDNCmA (Bitcoin 2012 London: Mike Hearn).

For those having gold in their iGolder account, we will ship the physical metal to anyone having more than 1 ounce of gold, assuming the owner is willing to assume the shipping costs. For smaller quantities, we offer to settle in Bitcoin, however we will also settle with any other reasonable payment system. We will give everyone at least two full years (until 2016) to contact us to claim their gold. After that period, any unclaimed gold will go to fund an economic development project in Honduras helping local people to become entrepreneurs.

We sincerely wish you the best in life and hope to keep in contact with you.

Yours in liberty,
The iGolder Team.


Update 2014: Since we announced we no longer accept gold transfers, we have received countless emails asking to keep the free gold charts and the PGP encryption tools. We plan to keep running the domain iGolder.com for both the gold charts and the encryption tools. Better, we are developing state of the art open-source software for a secure decentralized social network with a built-in wallet. We will announce when we have a product ready for use. Stay tuned!