Understanding Escrow
The foundation of safe P2P trading
What is Escrow?
Escrow is a financial arrangement where a third party holds and regulates payment of funds required for two parties involved in a given transaction. It helps make transactions more secure by keeping the payment in a secure account which is only released when all of the terms of an agreement are met.
How Does it Work in P2P Trading?
Seller Deposits Crypto
The seller locks their cryptocurrency in the smart contract escrow
Buyer Sends Payment
The buyer transfers fiat money (EUR, USD, etc.) via traditional payment methods
Seller Confirms Receipt
Once the seller confirms receiving payment, they release the crypto
Smart Contract Releases Funds
The escrow automatically transfers crypto to the buyer's wallet
Benefits of Escrow
Why escrow makes P2P trading safer
Protection
Both buyers and sellers are protected. Crypto can't be stolen and payments can't disappear.
Trust
No need to trust the other party. The smart contract ensures fair execution.
Speed
Automated releases mean instant transfers once both parties fulfill their obligations.