2

I've read this article: What are "routine escrow mechanisms"?

But I don't understand the bitcoin escrow system.

Can anyone explain me how this escrow system doesn't need a third party ?

Edit : How is solving problems the third party solve in online exchange ?

Community
  • 1
Sebastien FERRAND
  • 193
  • 1
  • 7

2 Answers2

2

Bitcoin escrow schemes that don't require a third party typically don't require a third party because that is one of their design requirements. It's obviously much easier to design an escrow system that does require a third party, so typically you would only design one that didn't if you had no choice.

David Schwartz
  • 51,308
  • 6
  • 106
  • 177
  • Makes sense to me. But now what is the point of bitcoin money in an exchange if it doesn't solve the problems the third party solve ? I mean I get why the bitcoin want to get rid of the third party, but if it doesn't solve the problems the third party solve, what is the point ? – Sebastien FERRAND Apr 23 '13 at 04:35
  • @SebastienFERRAND: The point is to provide some of the advantages of escrow without needing a third party. For example, it can ensure the buyer has the funds, ensure the buyer keeps the funds until the time of purchase, impose a cost on the buyer for not releasing the funds, prevent the seller from getting paid before delivering, and so on. – David Schwartz Apr 23 '13 at 04:36
  • "impose a cost on the buyer for not releasing the funds, prevent the seller from getting paid before delivering, and so on" - How bitcoin is providing these services ? As a bitcoin user, all I see is a possibility to instantly send money to someone else in the world. How is it imposing a cost on the buyer if he doesn't release the fund ? and how is it preventing the seller from getting paid before delivering ? Sorry if it looks really silly to you ... – Sebastien FERRAND Apr 23 '13 at 04:55
  • I think I got it. We're talking about hand-to-hand sale, not online sale. Bitcoin alows to do a numeric payment in a real world deal, for example I pay my friend alex for the video game he just put in my hand, and he can check it quickly without a third party. What bitcoin system doesn't do is providing a safe third party free system for online sale, like buying a video to a japanese guy while I'm in France for example. – Sebastien FERRAND Apr 23 '13 at 07:51
0
  • Escrow is not a feature of Bitcoin.
  • You don't need escrow for the Bitcoin part. You could need escrow for the USD part if you buy Bitcoins for USD, but not for the Bitcoin part.
Stephen Ostermiller
  • 115
  • 5
neofutur
  • 1,495
  • 10
  • 17
  • 2
    `escrow is not a feature of bitcoin` [Uhh, yes it is.](https://en.bitcoin.it/wiki/Contracts#Example_2:_Escrow_and_dispute_mediation) – Nick ODell Apr 23 '13 at 03:26
  • Yeah ok but let's say I know nothing about it; I read bitcoin is a solution to remove the third party from online exchange : How does it solve the problem of proving that the seller sent the merchandise before he gets the money ? I kinda need a new be explanation, as I'm doing my firsts steps on the subject. – Sebastien FERRAND Apr 23 '13 at 03:54
  • See [the example](https://en.bitcoin.it/wiki/Contracts#Example_2:_Escrow_and_dispute_mediation). (If you want to do it without a third party, the rule could be that the first party gets the funds if time runs out or it could be that the funds are trapped in escrow forever.) – David Schwartz Apr 23 '13 at 04:58
  • What is "USD"? US Dollar? – yaobin Nov 11 '18 at 20:25