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What is it and how it works?

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One of the systems that has certainly made Bitcoin payments safe for customers and merchants is what is known as Bitcoin escrow, a kind of filter of security for parties that use it to avoid falling for online scams.

Therefore, an escrow is a tool that acts as a link between two or more parties for a payment, in this case in Bitcoin, allowing them to block or freeze funds until the conditions of the sale are met and both parties are satisfied.

A practical example of Bitcoin escrow

Suppose, for example, that a user wants to buy a good or service from an online seller and accepts Bitcoin. The amount in BTC sent to purchase a product will be blocked until the seller provides the merchandise to the buyer and the buyer is satisfied.

This is a great method, especially if you buy a service online, for example from a freelancer, or if the seller or buyer is someone you don't know.

They may not finish the job, get it wrong, or ship no product. Thus, Escrow provides additional security.

Using an escrow, which can also be called guarantee deposit, the buyer does not send the bitcoin directly to the seller, but to an escrow address, which allows the seller to verify it, but keeps the funds locked until the buyer is satisfied.

Obviously, this is only one of the uses of this system. In the event of disputes, the system provides an arbitrator who will decide whether to refund the buyer or proceed with payment to the seller.

This escrow system with Bitcoin is actually the same mechanism found when used PayPal. Nothing new has been invented, simply escrow has also been applied in the world of cryptocurrencies.

The system is used on various cryptocurrency platforms, such as LocalBitcoins, which has an escrow system to make transfers safe.

It is also often used on the dark web, to avoid problems like those that occurred a long time ago with Empire Market, for example.



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