One of the systems that have certainly made Bitcoin payments secure for customers and merchants is what is known as Bitcoin escrow, a kind of security filter for parties who use it so that they avoid falling into online scams.
An escrow is therefore 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 that they accept Bitcoin. The amount in BTC sent to buy a product will be blocked until the seller provides the goods to the buyer and the buyer is satisfied.
This is a great method, especially if buying a service online, for example from a freelancer or if the seller or buyer is someone unknown.
They may fail to finish the job, do it poorly or not send any products. In this way, the escrow provides an extra guarantee.
Using an escrow, which can also be called an escrow deposit, the buyer does not send the bitcoin directly to the seller, but to an escrow address, allowing the seller to check it, but keeping the funds blocked until the buyer is satisfied.
This is obviously just one of the uses of this system. In case of disputes, the system provides an arbitrator who will decide whether to refund the buyer or proceed with the payment to the seller.
This escrow system with Bitcoin is actually the same mechanism that is found when using PayPal. Nothing new has been invented, simply the escrow has been applied in the crypto world as well.
The system is used on several crypto platforms, like LocalBitcoin which has an escrow system to make transfers secure.
It is also often used on the dark web, to avoid problems such as those that occurred long ago with Empire Market, for example.
