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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 ?

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  • Escrow has several uses, not just having a third party arbiter in a sale.
    – CodesInChaos
    Apr 23, 2013 at 10:36

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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.

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  • 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, 2013 at 4:35
  • @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, 2013 at 4:36
  • "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, 2013 at 4:55
  • 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, 2013 at 7:51
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  • 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.
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    escrow is not a feature of bitcoin Uhh, yes it is.
    – Nick ODell
    Apr 23, 2013 at 3:26
  • 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, 2013 at 3:54
  • See the example. (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, 2013 at 4:58
  • What is "USD"? US Dollar?
    – yaobin
    Nov 11, 2018 at 20:25

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