An escrow is a third-party service that acts as an intermediary to increase the security of transactions.
For example, an escrow can be used when buying and selling goods.
When the buyer has paid for the item, the escrow service will deposit the purchase amount and inform the seller to deliver the item to the buyer.
Once it has been confirmed that the buyer has received the goods, the escrow service then sends the purchase amount to the seller.
If the goods are inadequate, the buyer can send them to the escrow service to get their money back. Since the escrow service acts as an intermediary, the buyer does not need to negotiate the return with the seller.
Escrow services for Bitcoin and other cryptocurrencies
When making purchases in virtual currency, multi-signature technology (multisig) involves three parties: the sender, the recipient, and an escrow. in order to prevent the risk of someone absconding with the money sent.
*Not all escrow services operate systems as described above