<p>Escrow solutions are essentially used in Bitcoin as M of N multi signature schemes.</p>
<p>A simple 2 of 3 signature scheme is the closest that is available to regular escrow with the Buyer, Holder and Escrow service each holding a key to make the secondary payment on completion of contract.</p>
<p>The escrow requires to take no part in the transaction if both buyer and seller are content with the deal.</p>
<p>There are a few third party services that facilitate this, or you can set it up yourself with some wallets.</p>
<p><a href="https://www.bitrated.com/" rel="nofollow noreferrer">https://www.bitrated.com/</a> I have used with success.</p>

CC BY-SA 4.0
2022-11-16T17:21:23.857Z
2022-11-16T17:21:23.857Z
MaxSan
<blockquote>
<p><strong>What is the correct way to make crypto payments [...]</strong></p>
</blockquote>
<p>I'm not convinced there is only one correct way to do things in Bitcoin or that anyone has the authority or right to proclaim that one way is correct and others incorrect.</p>
<p>I would say the correct way to use Bitcoin is simply to comply with the network protocols and consensus rules.</p>
<blockquote>
<p><strong>[...] except the escrow intermediate?</strong></p>
</blockquote>
<p>In 2008 Satoshi Nakamoto wrote</p>
<blockquote>
<p>What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party. Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers</p>
</blockquote>
<p>Clearly, Nakamoto believed that escrow was the solution for situations where the first party to a transaction (the payer) did not sufficiently trust the second party (payee) to hand over the purchased goods or provide the purchased services.</p>
<p>Nakamoto also <a href="https://satoshi.nakamotoinstitute.org/posts/bitcointalk/threads/169/" rel="nofollow noreferrer">discussed escrow implementation in 2010</a>
but it is certainly arguable that these arrangementss would not constitute a popular solution to the underlying issue. So far as I know, Nakamoto's ideas were never implemented in their reference implementation or explicitly provided for in the network protocols.</p>
<p>So far as I know, it is also true that no fiat cash currency really offers a buyer protection against non-delivery that is intrinsic to the currency.</p>
<p>The non-cash account-based electronic payment systems all rely on a trusted intermediary.</p>
<p>For most small purchases, buyers seem willing to rely on the incentive of damage to the reputation of  defaulting suppliers or marketplaces. As you note, many people will regard this as insufficient for large purchases with remote or semi-anonymous suppliers.</p>
<p>In reality, in my locale, the majority of people purchasing houses using fiat currencies use a form of escrow. In my locale this takes the form of making payments through solicitors who must, by law, be licensed by a government mandated regulatory body to perform those services. Some people instead use commercial escrow agents such as conveyancers. Obviously, Bitcoin's founders did not wish to replicate any sort of de-jure arrangement for important reasons that could be categorised as philosophical, political or idealogical.</p>
<p>The result is that, so far as I know, there is no existing widely used non-escrow peer-to-peer algorithmic solution in Bitcoin to the problem of buyer protection against non-delivery.</p>

CC BY-SA 4.0
2022-11-16T15:37:45.487Z
2022-11-16T15:37:45.487Z
RedGrittyBrick
<p>For small payments, bitcoin does not require any way to guarantee the exchange of coins for goods. But how do you make a big purchase (such as houses), especially when buyer and seller do not meet in person, and considering crypto transactions are irreversible?</p>

CC BY-SA 4.0
2022-11-15T23:31:13.357Z
Is there a reason for ruling out the obvious solution which has been used for centuries for this exact problem?
RedGrittyBrick
CC BY-SA 4.0
2022-11-16T13:39:00.180Z
@RedGrittyBrick if you are mentioning the escrow, it is somewhat a problem cause crypto was designed right from the start to require NO intermediaries, or trust institutions
ivan866
CC BY-SA 4.0
2022-11-16T14:35:21.763Z
Not quite. Bitcoin was designed to avoid any need for a trusted **THIRD** party. It wasn't originally designed for situations where you don't trust the **SECOND** party (to fulfil their part of the underlying agreement). See Nakamoto 2008.
RedGrittyBrick
<security><payment><escrow>
What is the correct way to make crypto payments except the escrow intermediate?
ivan866
# What is the correct way to make crypto payments except the escrow intermediate?

(Asked by: username_0 on 2022-11-15)

For small payments, bitcoin does not require any way to guarantee the exchange of coins for goods. But how do you make a big purchase (such as houses), especially when buyer and seller do not meet in person, and considering crypto transactions are irreversible?

**Tags:** security, payment, escrow

> **Comments:**
> **username_1**: Is there a reason for ruling out the obvious solution which has been used for centuries for this exact problem?  
> **username_0**: @username_1 if you are mentioning the escrow, it is somewhat a problem cause crypto was designed right from the start to require NO intermediaries, or trust institutions  
> **username_1**: Not quite. Bitcoin was designed to avoid any need for a trusted **THIRD** party. It wasn't originally designed for situations where you don't trust the **SECOND** party (to fulfil their part of the underlying agreement). See Nakamoto 2008.  

---

## 2 answers

### Answer by username_2 on 2022-11-16. Score: 2 | Accepted answer

Escrow solutions are essentially used in Bitcoin as M of N multi signature schemes.

A simple 2 of 3 signature scheme is the closest that is available to regular escrow with the Buyer, Holder and Escrow service each holding a key to make the secondary payment on completion of contract.

The escrow requires to take no part in the transaction if both buyer and seller are content with the deal.

There are a few third party services that facilitate this, or you can set it up yourself with some wallets.

<https://www.bitrated.com/> I have used with success.


---

### Answer by username_1 on 2022-11-16. Score: 3

> **What is the correct way to make crypto payments [...]**

I'm not convinced there is only one correct way to do things in Bitcoin or that anyone has the authority or right to proclaim that one way is correct and others incorrect.

I would say the correct way to use Bitcoin is simply to comply with the network protocols and consensus rules.

> **[...] except the escrow intermediate?**

In 2008 Satoshi Nakamoto wrote

> What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party. Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers

Clearly, Nakamoto believed that escrow was the solution for situations where the first party to a transaction (the payer) did not sufficiently trust the second party (payee) to hand over the purchased goods or provide the purchased services.

Nakamoto also [discussed escrow implementation in 2010](https://satoshi.nakamotoinstitute.org/posts/bitcointalk/threads/169/)
but it is certainly arguable that these arrangementss would not constitute a popular solution to the underlying issue. So far as I know, Nakamoto's ideas were never implemented in their reference implementation or explicitly provided for in the network protocols.

So far as I know, it is also true that no fiat cash currency really offers a buyer protection against non-delivery that is intrinsic to the currency.

The non-cash account-based electronic payment systems all rely on a trusted intermediary.

For most small purchases, buyers seem willing to rely on the incentive of damage to the reputation of defaulting suppliers or marketplaces. As you note, many people will regard this as insufficient for large purchases with remote or semi-anonymous suppliers.

In reality, in my locale, the majority of people purchasing houses using fiat currencies use a form of escrow. In my locale this takes the form of making payments through solicitors who must, by law, be licensed by a government mandated regulatory body to perform those services. Some people instead use commercial escrow agents such as conveyancers. Obviously, Bitcoin's founders did not wish to replicate any sort of de-jure arrangement for important reasons that could be categorised as philosophical, political or idealogical.

The result is that, so far as I know, there is no existing widely used non-escrow peer-to-peer algorithmic solution in Bitcoin to the problem of buyer protection against non-delivery.


---

