What would be the ideal way to use a sidechain or fork of Ethereum/Bitcoin to establish a trustless 2-of-2 escrow system?
The major problem with 2-of-2 escrow for non-cryptocurrency transactions is that there is no way on-chain to verify the transaction validity without the use of a centralized oracle system or other means.
2-of-2 escrow then allows an attack by which they "reject" delivery, receiving a refund but have actually received the product. This is very inconvenient for anyone trying to set up a decentralized type marketplace.
My potential solution is to issue (via ethereum smart contract or other means) a token for X coins to the smart contract (giving them some amount of value) and establishing a secondary market for them (any major crypto exchange works fine here, more is better).
A Seller (Alice) could then require a given TX require a given amount of collateral tokens per the smart contract.
A Buyer (Bob) would be responsible for "putting up" or "staking" the contract in addition to the crypto used for payment.
In the event of a seller-accept buyer-reject "scam" - the buyer would still be refunded his coins, but the reputation token would be "burned" into the void for malicious behavior. This occurs whether the seller shipped the item or not - creating a disincentive both to initiate a false dispute, and to initiate a dispute, generally. The problem that I see is the value of the collateral token must be strictly controlled such that X is a high enough value to incentivize accepting delivery it would be within standards, but not so high as to make a defection staggering in the event of a scam. Potentially you could write the contract such that the seller chooses the amount of collateral tokens required for the transaction based on the value, and the buyer chooses whether to accept this risk or not.