As much as we love Bitcoin, there is a problem with it if you are a buyer of goods or services:
All transactions are final and non-refundable.
That’s obviously good for sellers and that’s one of the major drivers of the expansion of Bitcoin. But there should be a solution that guarantees delivery to the buyer, while ensuring that the seller gets his due bitcoins.
Our Solution: Bitcoin Escrow
- A Seller and a Buyer want to use Bitcoin for a transaction.
- The seller wants proof of funds from the Buyer before he delivers the service or product.
- The Buyer deposits the needed Bitcoins and doesn’t release them until to the seller before delivery.
Our Bitcoin Escrow service is the best solution when:
Bitspend’s Escrow service solves all this.
- The buyer deposits the needed Bitcoins with Bitspend.net
- The seller is notified about the deposit
- Seller delivers
- If the buyer accepts delivery, Bitspend releases the funds.
- If there is no agreement about the delivery, Bitspend will try to mediate between the sides to reach an agreement.
- If, after mediation, the parties did not reach an agreement, Bitspend will decide the fate of funds based on proof submitted by both parties.
It didn’t take long after the invention of bitcoin for people to understand that there was an inherent need for some kind of an escrow service to be made available. The anonymous and irreversible nature of bitcoin transactions makes the risk of getting scammed a little higher than using “conventional” payment methods.
Today we are going to talk a little bit about what bitcoin escrow is, why it’s needed, and how it works.
Let’s get started.
What Is Bitcoin Escrow?
For those of you who may not know, an escrow service is essentially a trusted third party in between a buyer and a seller. The principle is exactly the same for both bitcoin-based transactions and traditional currency.
The buyer sends the escrow service their money (instead of sending it directly to the seller). Once the escrow service has received the money, they alert the seller and advise them to deliver whatever product or service is being paid for.
Once the buyer has received whatever the transaction was for, they then tell the escrow service that they are satisfied and the funds are then released to the seller. This provides the buyer with additional security and provides the seller with credibility.
To protect sellers against lazy or unresponsive buyers (which happens from time to time) a time limit is usually placed on a transaction. This is always more than enough time for the buyer to lodge a complaint if something is not as expected. However, if there is no response from the buyer after this time period ends, then the funds are automatically released to the seller.
Why Would I Need A Bitcoin Escrow Service?
Traditional escrow services have been around for decades now and are getting more and more popular as time goes on. However, there are a few bitcoin specific reasons why escrow services are particularly useful for transactions that use the cryptocurrency.
Bitcoin Is Anonymous
While there are ways for government agencies and police forces to work out the owner of a bitcoin account (in most cases), in reality, it’s a lot of hard work. They are unlikely to start a lengthy and complex investigation requiring warrants and court orders because someone got scammed for a $100 purchase. This makes the chances of the scammers getting caught very, very low.
The scam artists of the world know this, and as such bitcoin is, unfortunately, their currency of choice. By using an escrow service buyers can eliminate much of the risk involved with bitcoin transactions by ensuring the seller only gets their money when the buyer is satisfied with the transaction.
Bitcoin Is Irreversible
If you get scammed online using a traditional payment method (like a credit card) you have a fair amount of protection provided to you by your bank. If you pay for something that doesn’t arrive (or is significantly different to how it was described) then you can call your credit card company and get the transaction reversed.
However, due to the nature of the blockchain and the decentralized principles of bitcoin when something goes wrong with a bitcoin transaction – there’s no one to call.
Bitcoin transactions are 100% irreversible. Once the money has left your wallet and ends up in the wallet of the scammer, it’s gone forever. By using an escrow service, the scales are tipped in the buyer’s favor. The fact that bitcoin transactions are irreversible becomes a non-issue because unless you’re satisfied, the recipient won’t get your money.
It Adds Credibility
Bitcoin escrow services offer outstanding levels of protection for the buyer, but they also offer several advantages to sellers too. By advertising the fact that you openly welcome and accept transactions that use an escrow service you’re demonstrating that you’re one of the good guys.
Scammers will want to avoid escrow services at all costs. They know that there’s no getting around the impartial third party who is responsible for the release of their funds.
As such, if you actively offer to use an escrow service, you’re going to immediately be at the top of your potential customer’s shortlist when they’re shopping around. Many people are willing to pay a little bit more for a product or service they can be sure they’re going to be happy with.
By advising the use of an escrow service, you’re basically assuring them that they are going to be satisfied.
Impartial Dispute Resolution
While bitcoin escrow services are great at stopping scammers, they are also great at being an impartial arbiter when a dispute arises around a transaction. It’s a fact of life that sometimes a seller and a buyer will disagree about an aspect of a transaction. This doesn’t make either party a scammer, but it does mean that someone is going to be left unhappy.
By using an escrow service, you gain access to an impartial arbitration procedure where any dispute can be resolved by the third party before funds are released. Disputes are handled professionally and on a case by case basis. They will listen to the buyer’s and seller’s arguments, they will look at what was advertised, and they will inspect what has been delivered.
A final, binding decision is then made by the impartial arbiter and the funds are either refunded or released to the seller.
If a buyer is being too picky (or a seller is “embellishing” their advertising slightly), the escrow service will be the man in the middle to protect against these situations. It’s the fairest and most secure way to buy and sell online.
This is just the tip of the iceberg in the wonderful world of bitcoin escrow services. There are countless other benefits that can be found by using this modern adaptation of a tried and tested system.
We offer some of the most comprehensive, secure, and reliable bitcoin escrow services in the world. Thousands of buyers and sellers have trusted us to be an impartial and fair third party to provide security and credibility.
The best part about our bitcoin escrow services is that they are very competitively priced. For just a fraction of the total transaction cost, buyers can be reassured, and sellers can be seen as credible.
It’s a win/win situation.