Escrow and why it is useful

[nick_bogdan]

In this article, I am going to explain what is  escrow service and why it is useful.
The main disadvantage of the Bitcoin network is the inability to cancel the transaction.  Such innovative tool as multisig allows eliminating all problems arising during the transactions confirmation.

If the user of the network decides to purchase the product or pay for the service, but he does not trust the seller, it is best to use escrow services, which keeps the funds until both parties reach a consensus. In this case, each party provides a public key to create a new address. To confirm the transaction, it is necessary that both parties put their electronic signatures.

After making an order, the user must transfer the required sum to the seller's account. But to ensure the maximum safety of money transfers, money from the buyer does not go directly to the seller's account but passes through a special transit account. After notification of receipt of funds, the seller sends the goods ordered by the buyer and generates the transfer of the sent sum from the transit address to his account. The sum of the transfer is frozen for a while until the buyer or escrow puts its electronic signature. If the parties can not come to an agreement, escrow enters into the game. For example,  if the goods were not provided or delivered to the wrong address, the buyer generates a transfer of funds from the transit account back to his wallet.

As you can see, escrow is a very convenient tool for protecting transactions by involving a third party, which acts as a guarantor of the return of funds to your wallet, in case you are not satisfied with the goods or service.
 

[shahzadafzal]

I don't think what you explained is Multisignature, escrow yes but not Multisignature.

Code:

Multisignature (multisig) refers to requiring more than one key to authorize a Bitcoin transaction. It is generally used to divide up responsibility for possession of bitcoins.

By the way we don't beg for merits here.

[bob123]

The main disadvantage of the Bitcoin network is the inability to cancel the transaction.  Such innovative tool as multisig allows eliminating all problems arising during the transactions confirmation.

This is not a 'disadvantage'. It is a feature.
Multisig does not help to 'eliminate' any 'problems' at all 'during the transactions confirmation'.

As you can see, multi-signature is a very convenient tool for protecting transactions by attracting a third party, which acts as a guarantor of the return of funds to your wallet, in case you are not satisfied with the goods or service.

What you are describing is an escrow service utilizing multi signature.
The problem is that you still have to trust the escrow. And if you do trust the escrow, you don't necessarly need multisignature.

The same could easily be accomplished by sending the full amount to an address fully in control by the escrow.
Then, after consensus between buyer and seller has been reached, the escrow could simply forward the amount paid.
While this pose another risk (escrow stealing funds; which is not possible with multisig escrow), you still need to rely on the escrow to release the funds in case of a dispute when using multisignature.

Multisignature does increase the safety in a trade with an escrow. But it is not a 'tool'.

Using an escrow with multisignature is just one utilization of multisig. There are a lot more. [1]

Please send a merit if you find this article useful.

You might receive merits if your posts would be contentual accurate.
This is not the case. You seem to misunderstand the concept of multisignature (and maybe even bitcoin itself).



[1] Additional applications for multisig: https://en.bitcoin.it/wiki/Multisignature#Multisignature_Applications

[HCP]

Also, this thread probably belongs in "Beginners and Help" section... or possibly the "Marketplace" section. It is hardly relevant to Bitcoin "Development & Technical Discussion"

[HabBear]

In this article, I am going to explain what is  escrow service and why it is useful.

As you can see, escrow is a very convenient tool for protecting transactions by involving a third party, which acts as a guarantor of the return of funds to your wallet, in case you are not satisfied with the goods or service.

Escrow serves a great purpose! There are a few people on this forum that offer escrow services, however if you want to enter into that market proceed with caution. Any new entrants to the escrow market will be threatened and given negative trust by the current parties offering such services. It's a corrupt industry on this forum, unfortunately.

Such innovative tool as multisig allows eliminating all problems arising during the transactions confirmation.

Multisig is different from escrow.

Escrow requires that the third party be independent from both the participants in the transaction - the sender and the receiver. A multisig wallet would require the third party to be associated, have power over the wallet of the receiver.

Anyone using escrow should not consider the use of a multisig wallet a means to provide safety or security with your transaction.

[tamara86]

Does escrow work with paypal?

[shahzadafzal]

Does escrow work with paypal?

Escrow.com has PayPal as part of their premier payment options.

A Buyer can send funds from their PayPal account by choosing the PayPal option on the transaction screen. This offers the convenience of PayPal with the protection of Escrow.com. Either the Buyer or Seller must have completed a transaction before and the transaction amount must be less than $5000 USD in order to use the PayPal option. The transaction must also be in US Dollars and, where applicable, online trackable shipping must be used to track delivery of the goods.

[Talk merit]

I looked at any 2 from 3 as a form of escrow using multi-sig. You need a trusted third party to make it work though.

[MintDice]

Escrow is a good idea when exchanging funds with another person--going through a trusted third party gives you peace of mind that both of your assists are protected.