Escrow is the act of letting a third party hold the money during a transaction until both parties agree that all transaction terms have been successfully completed. With Bitcoin, transactions are irreversible and so requests that funds be held in escrow should be expected. It has been suggested that escrows could become automated with apps built on top of the Bitcoin protocol. Funds would be sent to a particular address and would not be released until certain conditions that could be automatically checked are met.


Malone, J.A (2015). Glossary of Bitcoin Terms and Definitions. United States: Lulu Press, Inc

If two mutually-untrusting entities are engaged in commerce, they may wish to pass funds through a mutually trusted third party and instruct that party to send the funds to the payee only when evidence of product delivery has been shown. This reduces the risk of the payer or payee committing fraud. Both this construction and the third party is called escrow.

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