P2P without middleman - Using PSBT + 2 - of - 3 Multisig escrow for Naija BTC tr

[Son $f Grace]

I notice that a lot of our P2P traders do mostly depends on Binance or Bybit escrow, no doubt it do work but it has create some problems, this exchange can freeze up account and CBN are also watching.

Generally Bitcoin is built in a way run escrow without any third party with the aid of  PSBT plus 2 of 3 Multisig.
You will be wondering how right ? Stay with me as I carry us all along  😊

1. Setting up multisig address       
in this very aspect there is one key. Sellers, buyers and optional arbitrator each of this people have one key. This address needs 2 of 3 of signatures in other to spend. Create for free with Sparrow or Electrum.

2. Lock the funds with PSBT
 Buyers do create transaction to send BTC to multisig address and then sign with one key. Then sent out the PSBT file to the seller. This PSBT is not a private key but just a transaction file. Seller now add  signature key 2 plus broadcast. Then now BTC is locked.

3. Release or refund .                   
in this very case if seller send out product and then buyer confirm it, buyer need to sign again in other to release out BTC to sellers address. If in any way dispute occur. Arbitrator will join and sign with the correct party.

Why is this useful, especially for us in Nigerian facing P2P/CBN restrictions

1. This won’t let any exchange account be restricted
2. This won’t allow anyone being it buyer or seller to run alone with the money
3. Arbitrator is will be needed only when there be a problem not for all trade transactions.

Downside
This not just one click. One needs a wallet that support PSBT, wallets like Electrum, BlueWallet and Sparrow. Let do well to test with small money first.

Question
Has anybody here try out multisig escrow  for P2P trade ? What the comparison to exchange escrow in term of trust and also speed ? If u haven’t tried what stopping u to. Let talk about the technical part not price 

In all am here to learn should be corrected if mistaken

[Antidote47k]

This is a really solid breakdown! Honestly, seeing people talk about true, non-custodial P2P using 2-of-3 multisig is awesome, I’m actually quite new around here, but I've been digging into the technical side of this lately and wanted to add a tiny bit of context to what you wrote so anyone trying it doesn't get confused:

Just a quick nerd detail on PSBT : The escrow logic itself is actually handled by the Bitcoin blockchain (via Bitcoin Script). PSBT (Partially Signed Bitcoin Transaction) is just the handy file format we use to safely pass those half-signed transactions back and forth between wallets like Sparrow or Electrum without exposing any private keys.

The role of the Arbitrator : Like you mentioned, they are the tie-breaker! In a smooth trade, they don't even need to be online. It’s just buyer and seller signing. Keeping the arbitrator strictly in the background is key, otherwise, we accidentally end up trusting a third party just like we do with Binance.