Merchants and traders who want to be bonded create a 2 of 3 multisig address with the other two parties being a bond company and an escrow company and publicly advertise this balance.

In the event of a dispute, the customer can take their case to the bond company and escrow company who then can release damages paid from the bond balance.

Merchants who want to build up a good reputation have to start small, and should be advised to invest some percentage of their gross into the bond so that customers will be willing to trust them with increasingly larger amounts. When they are ready to cash out they can have the funds released after a pre-negotiated waiting period so that existing customers have time to move their business before the bond protection runs out.

Smart customers will never risk more in a trade than the bond is worth, or else will negotiate for better terms for high risk transactions.