I also had one question about the escrow mechanics: what happens if a buyer ends up in jail and can't affirm the shipment arrived? Does the seller still get paid? Sorry if I missed the documentation.
What about when a seller just doesn't respond?
So here's how it works currently:
1. buyer places and order
2. funds held in escrow
3a. seller confirms shipment
3b. seller never responds, buyer's funds are returned
4a. buyer confirms delivery and seller's funds are released
4b. buyer claims that the order never came. Buyer and seller have a few days to come to a resolution. If no resolution is made, a silk road admin will review the case and make a judgement, which is usually to split the funds in escrow 50/50 (to date, only one order has come to this and is currently in the resolution process)
4c. buyer never responds, funds are released to seller
The details of how long each phase takes will be different once the automated payment processor and shopping cart features are launched, so I won't publish them here to avoid confusion down the road. For now, though, when you place an order, it is all spelled out.
Questions for silkroad:
1. Do you truecrypt your server's hard drives ?
2. Do your sellers support GPS GeoCaching ?
EDIT:
And finally:
How do you know that one of the sellers is not a FBI/CIA/Interpol/MiB/Whatever agent ?
Do you verify these people yourself ?
In response to #1, I am reluctant to reveal any details about the server until I think through how it might be a security threat. Please rest assured that security for silk road admin and all of the users is the top priority.
GPS GeoCaching is not currently supported, though I really like the idea. I don't think the userbase is big enough to support it right now because buyer and seller would need to be near each other geographically.
The truth is, we don't know the identities of any user on Silk Road. Sellers have very little chance of detection if a buyer is really a government agent, and the best defense for a buyer is to deny ordering anything (anyone can send anyone else anything through the mail). We have a guide on the site and a forum topic dedicated to the best way to protect ones self when receiving an order. Authorities typically won't investigate customers either, they are after the producers, brokers, and dealers.