The latest Bisq release is a big one with two significant updates: a new trade protocol and account signing.
First we start with update requirements because they are especially important. If you’re downloading Bisq for the first time, you can skip this section and head straight to the download page.
Otherwise, please make sure to do the following before updating to v1.2:
- complete all trades
- complete all disputes
- disable open offers (not delete, just disable)
Updating to v1.2 with unfinished trades and disputes will require an arbitrator to intervene and manually make payouts. Downgrading back to v1.1.7 to rectify the situation will not be possible, so please double-check before updating.
Disabling open offers prevents the chance that one of your offers is taken before you close the Bisq program and update, which could inadvertantly cause one of the scenarios above.
New Trade Protocol
Bisq’s new trade protocol moves to 2-of-2 multisig escrow from 2-of-3. The third key for arbitrators was removed.
In addition to sending funds to the multisig escrow, traders sign a time-locked transaction that pays out all multisig escrow funds to a “donation” address. Either trader can publish this transaction after 10 days (altcoin trades) or 20 days (fiat trades). This transaction is required for the new arbitration process (see step 3 below).
This results in a dispute resolution mechanism that is quite different from before. Dispute resolution now takes place in 3 layers.
Trader chat. Introduced in v1.1.6, traders can communicate privately over end-to-end encrypted chat right in Bisq to work out minor issues. Users must follow strict rules to keep chats friendly and productive (e.g., no hyperlinks allowed).
Mediation. If traders cannot solve issues through direct chat, they can request mediation. Mediators are bonded contributors who examine the situation and suggest a payout. If both traders agree with the suggested payout, the payout takes place and the trade is closed.
Arbitration. If one or both traders remains dissatisfied with the mediator’s suggestion, they can request arbitration after publishing the time-locked transaction. Arbitrators will re-examine the situation, and if they determine the trader requesting arbitration deserves a payout, they will personally reimburse funds to the trader and request reimbursement from the Bisq DAO.
Note that arbitration with the new trade protocol is vastly different from arbitration from before, and that it is now meant to be exceedingly rare.
Please see documentation for more details on how this all works.
Reduces trust required to use Bisq. Until now, users have had to trust that Bisq’s anonymous arbitrators would make fair and responsible decisions when resolving disputes, as they could sign funds to users at their discretion. Now that no one aside from the 2 traders retains a key in the multisig escrow transaction, this is no longer the case. This also results in the network significantly reducing its ostensible legal liabilities since it no longer has any element of control over user funds.
More private dispute resolution. Many disputes on Bisq are resolvable through direct communication with the trading peer, and don’t need intervention from a third party.
More scalable dispute resolution. Because arbitrators held the third key of Bisq’s multisig escrows, they had a high degree of power and responsibility: the roles required high availability, high risk, and high stakes (if they made a payout incorrectly, they were on the hook for making it right). Historically, the roles have only been held only by people who consistently put significant effort into the project over long periods of time to warrant holding such an important responsibility (this also made them uniquely capable of posting the high BSQ bond for the role). But these high requirements made the roles relatively expensive and not scalable (e.g., it’s difficult to find many such highly-trusted people).
Now that arbitrators have lost the third key in the multisig escrow, their power is greatly reduced, required bond is greatly reduced, and the network can more easily recruit dispute resolution agents (mediators and arbitrators) as it grows around the world.
In the recent past, any Bisq user could buy 0.0625 BTC with a higher-risk payment account as soon as they created it, and that payment account would start to age immediately, resulting in 0.125 BTC limits 30 days later and maximum 0.25 BTC limits 60 days later.
A handful of stolen bank account scams earlier this year caused Bisq to impose a 0.01 BTC restriction on fiat trades and carefully reevaluate these account aging conventions for allowing higher trading limits.
The goal has been to devise a method to determine a user’s integrity without compromising the user’s (or network’s) privacy or security.
The solution is account signing. Essentially, account aging for payment accounts that require account signing does not kick in until a user’s payment account has been signed by another trusted user, which only happens when the the untrusted peer proves their intention to trade honestly. Until this signing takes place, the payment account is limited to buying 0.01 BTC (sell limits are not limited to 0.01 BTC and instead follow the traditional account aging convention).
The means to make this determination will vary. The first approach included in the v1.2 release is basic. Users with unsigned payment accounts must buy bitcoin from users with signed payment accounts. If there are no issues (i.e., chargebacks) in the 30 days after the trade was completed, the buyer’s account is signed and the 0.01 BTC limit is lifted.
Please note exceptions:
- account signing is not required for payment accounts that do not have chargeback risk (i.e., face-to-face trading, cash deposits, or money orders)
- account signing is not required for any payment accounts used outside of major national currency markets on Bisq (USD, EUR, CAD, GBP, AUD, BRL)
See more details on how this works in documentation.