Escrow

Escrow is a financial arrangement where a neutral third party temporarily holds and regulates the transfer of funds between two parties involved in a transaction. This intermediary ensures that both parties fulfill their obligations before the payment is released, providing additional security for both sides. In cryptocurrency, escrow services are often used in peer-to-peer (P2P) transactions to prevent fraud and disputes.

By using escrow, buyers can ensure they receive goods or services before releasing payment, while sellers are assured that the funds are secured until the transaction terms are met. Escrow services are particularly valuable in decentralized transactions, where trust between parties may be limited, and blockchain-based smart contracts can automate the escrow process, reducing the need for traditional intermediaries.