Escrow services are more important than ever before in the cryptocurrency world. Up to this point, using escrow meant trusting a third-party service provider with a human agent. In the world of decentralized cryptocurrencies, adding a middleman to the equation is not a great solution. EscrowMyEther is an interesting escrow-related project that offers a glimpse of how future escrow services may look.
Decentralized applications are one of the main selling points of Ethereum. With dozens of such projects in development at any given time, the ecosystem is thriving as a whole. However, there has not been a proper DApp relating to escrow services in cryptocurrency up to this point. That is all changing thanks to a DApp called EscrowMyEther, which aims to provide a safe and secure escrow solution for all parties involved.
Although this DApp is only deployed on the Ropsten test network for the time being, it certainly has a lot of potential moving forward. EscrowMyEther allows two transaction parties to select their choice of escrow agent. Most people looking for reliable escrow service providers in cryptocurrency will have a difficult time doing so. Indeed, most users simply conduct trades in “good faith,” with no repercussions if either party fails to come through on their initial promises.
The Bitcointalk forum has a section where one can easily find reputable escrow agents. However, it is still a bit of a cumbersome experience. Buyers send funds to the escrow, and when they receive the goods, the money is passed on to sellers. The escrow takes a cut for its services, although a lot of people operate on a 0% fee structure as well. Unfortunately, no part of this process is recorded on the blockchain to provide irrefutable proof of the transaction having taken place.
With EscrowMyEther, that situation changes completely. Funds are held on the blockchain. Buyers can release funds after receiving the goods or services they initially purchased. If the seller runs into an issue or the deal falls through, he or she can easily issue a refund to the buyer. There will still be an escrow agent to oversee the transaction, who can either refund the buyer or release funds to the seller. However, there will be clear proof of what is happening on the blockchain in real-time.
With this approach, the escrow agent will never have access to the money directly. If the agent goes missing or is kept offline for some unknown reason, the buyer and seller can still conclude the transaction on their own in a safe and secure environment. It makes perfect sense to use the blockchain for escrow-based transactions rather than trust a complete stranger with your money. Even if that escrow agent has a solid reputation, there is no guarantee they will behave in an honest manner for the duration of your transaction.
Escrow agents will retain the option to charge fees with EscrowMyEther. There is also a 0.25% developer fee to take into account; this decentralized app has to be monetized somehow. It is free to use for buyers and escrow agents, which means sellers will bear full responsibility for all fees. Whether or not this business model will attract a lot of people remains to be seen. Sellers will not willingly give up part of their profits as long as they can go through Bitcointalk and spend nothing on fees.
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