What's the protection against double spending given that the transaction isn't yet broadcast? Imagine that I am the buyer and as soon as I receive the goods I double spend what was on my key. If the third party signs the transaction, wont it fail because the funds will already be spent?
I haven't heard about m-of-n transactions until now, but the way I understood it is that you do broadcast a transaction transferring the money to an account controlled by 2-of-3 people. So no one can then spend the money until two of the three people - the buyer, the seller, and the arbitrator - agree on what to do with it.
Does that create another way for money to just disappear? What happens if 2 people disagree and the other takes a flight to Conventry for whatever reason?
Yeah, it's important to have an arbitrator whom both parties trust to fulfill their obligation (such as a major bank, to borrow the article's example). Otherwise, the arbitrator could also just offer to split the money with one of the parties if the deal goes sour.
You do broadcast a special transaction to put the coins in escrow. Once they are in escrow they're no longer in your direct control; you need the cooperation of either the merchant or the arbitrator to move them anywhere.
That's because protection was added (about a year ago I think) to rapidly broadcast detected double-spends through the network. Before the canary function, it actually used to be pretty easy to get a double-spend accepted into the network within 5 minutes of the first spend.
The Humble Bundle uses Coinbase to accept bitcoin, so they'd be completely insulated from actually dealing with bitcoin. I did notice that I got the payment confirmation & game link email when the transaction I sent had 1 confirmation though.
