What is Escrow and why do all markets use it?

What is Escrow?

Escrow is a concept designed to protect buyers from scams, or bad transactions. It works by having a 3rd party posses the funds until the buyer marks the transaction as complete, or the escrow time period passes. This method of insuring buyers funds has been highly adopted in the dark web world, and is used on most markets.

How does it work?

When a traditional transaction takes place, the funds are sent directly to the seller. This means that if a buyer is scammed, and never received any products, the seller can get away with the funds. When using escrow, the buyers funds are deposited to a 3rd party wallet where they remain until the transaction is marked as completed.

Intermediary escrow wallets are usually handled by the markets, or 3rd parties associated with them. An escrow agent releases the funds once the buyer marks the order as complete, or when the escrow period expires.

What happens when buyer is scammed?

If a seller manages to scam a buyer, or a shipment is lost, the buyer has to open a dispute. Once a dispute is started, the money is placed on hold until it is closed. The seller usually has a short time period to respond. If the issue is not resolved between the buyer and seller, moderators step in and review the case. Funds are then released accordingly.

To prevent buyers from scamming, most reputable sellers send tracked shipments. Tracking data can usually be used as proof by sellers in any disputes.