When the blockchain technology was created, it ushered in the first and most valuable digital currency in the world, the Bitcoin. Since the inception of the blockchain technology, it like the internet has also paved the way for the creation of so many blockchain-based programs and applications, as it was discovered that the blockchain technology could do more than just be an underlying technology for cryptocurrencies.
Currently, developers are working and discovering more use cases of the blockchain technology that apply to our everyday lives, including enhancing our productivity.
With the advent of cryptocurrencies, even if it has not gone mainstream yet despite speculations that it will, has already begun to enjoy attention from people and businesses in different parts of the world, the reasons are dependent on the fact cryptocurrencies come with amazing features that make them very good alternatives to fiat currencies and traditional banking systems.
Furthermore, many businesses and people are beginning to adopt the use of cryptocurrencies because they make transactions much easier than transacting via traditional banking. Cryptocurrencies have low transaction fees, quick transactions including cross-border transactions, are transparent, do not require the involvement of third parties, etc. We talked about this in the how to integrate blockchain into a business project.
Cryptocurrencies like Bitcoin, whose value keeps experiencing growth exponentially, is good for escrow services.
In the business world, an escrow is a form of financial agreement that involves a third party who is in control of holding and regulating the fund’s payment that is required for the participants involved in a transaction.
By so doing, the transactions are secured, because the funds for payment get stored in an escrow account that is secured, and the funds only get released by the escrow company when each party meets every term on the agreement. Escrow services have begun to play very important roles in the blockchain community, and the blockchain networks have gone about their tasks in a different way.
The Escrow’s duties are to function as a representative of the account involved, it is a third party and brings neutrality to transactions, and no funds or assets can be released unless every condition has been met by the parties involved in the agreement.
In the case of blockchain based escrow, holding and transferring of funds is dependent on the exchange of private and public keys.
When transacting with cryptocurrencies like Bitcoins, the use of third-party escrow services for payments involving Bitcoins is a good idea and is very useful when carrying out transactions with a party that is not trusted. Sellers are protected by Escrow services from buyers with fraudulent intentions, and the requirement involves having an upfront Bitcoin deposit.
Also, there is protection for the buyers, just in case, the seller is not who they say they are and do not do the delivery of the goods.
Peradventure, there is a dispute, the escrow service will function as an arbitrator and will ensure that the correct person receives the funds.
There are various Bitcoin marketplaces that have been created with built-in escrow services, and some of them have been effective in their services, such that they have built their reputation and have garnered trust from various members of the Bitcoin community.
Escrow services and Bitcoin escrow services function the same way, the only difference being that one operates with Bitcoins rather than fiat currencies. Other than that, they both function the same way and reduce the risks of fraud.
Bitcoin escrows come in as a very useful means of carrying out transactions that involve large amounts of funds, in contrast to traditional banking systems that make it difficult to access escrow services because of the legalities involved, the use of Bitcoin escrows eliminates the need for lawyers and their interference, which will, in turn, eliminate the cost of hiring them.
Bitcoin escrow because it is blockchain-based is a cost-effective way of running a reliable escrow service, as the transaction fees are reasonably low compared to traditional escrow services. Furthermore, with the Bitcoin escrow service, transactions can be made across the border at no extra cost.
Starting a Bitcoin escrow service is one that can get lucrative, however, there are certain principles the creator of the service needs to know, and there needs to be known about how cryptocurrency based escrow services function. Here’s how a Bitcoin escrow service works:
• Seller and Buyer Agree to Terms: For a transaction to begin, both parties need to be registered on the Bitcoin escrow service site, after which all the parties come to an agreement to the transaction terms drawn up using multi-signature.
• Buyer pays Bitcoin Escrow Service: After agreeing to the terms and conditions of the agreement, the buyer then makes the Bitcoin payments, in order to secure the account, then after verification of the Bitcoin payment, a notification is sent to the seller indicating that there has been a securing of funds in the Bitcoin escrow account.
• Buyer Receives Merchandise/Service from Seller: Depending on what is being exchanged, and the terms contained in the agreement, after there has been a verification of payments, the seller gets the authorization to send services/products or whatever is being exchanged.
• Acceptance of Service/Merchandise: According to their agreement, after the buyer has gotten what was paid for, an authorization for payment to the seller takes place.
• Bitcoin Escrow makes Payment: After every term and condition has been met, the Bitcoin escrow service makes the required payment to the payer with the funds originally deposited.
It is important to note that if any party defaults from the terms and conditions, the Bitcoin escrow service reserves the right to decide what action should be taken. There are different types of cryptocurrency based escrow service on the internet, each offering one form of escrow service or the other based on their cryptocurrencies and the requests of their users.
Bitcoin and cryptocurrencies are gaining popularity as a very reliable method of transferring payments, however, at some point in time, news about a Bitcoin getting scammed hits the crypto community, and these scams are usually perpetrated by anonymous individuals who come in the guise of requesting payments for a service or product that never gets delivered.
Bitcoin is decentralized, and transactions that take place on the Bitcoin blockchain cannot be reversed, as the transaction gets recorded permanently on the blockchain. This is why Bitcoin escrows are created.
One way of creating a Bitcoin escrow service is by using a special platform that uses a special wallet for Bitcoins called a multi-signature wallet. A multi-signature wallet is basically a Bitcoin wallet created specially and will require the private keys of all the parties involved for transactions to get signed, another and most effective method is by creating a platform that can handle multiple escrow requests simultaneously.
A lot of Bitcoin escrow services for a particular transaction usually involves the participation of three parties – the escrow agent, the receiver of the payment, and the person sending the payment. It is designed such that each of the participants gets one private key each, and for any transaction to get sent, there has to be the use of two private keys at least.
Normally, escrow agents are holders of the Bitcoin currency who have high repute and are trusted in the Bitcoin community, or the escrow agents can also be registered arbitrators whose duty it is to judge any disputes that may occur in a transaction.
By so doing, the buyer enjoys protection if it turns out that the seller is a fraud, the seller is also certain that payment will be made whether the buyer wants to pay or not.
Creating a Bitcoin Escrow Service like Local Bitcoins
For anyone with the intentions of creating escrow services for bitcoins, it is very possible to create and own a local bitcoin exchange for this, and you can build one without being very tech savvy, without paying so much for necessary infrastructure and software necessary for creating the escrow service.
There are different software packages that available, that will assist when creating a bitcoin escrow service, and one of such software is Merehead, which offers users a white label service that is fully branded, customizable, and manageable. Local bitcoins exchange and escrow services can be set up and operational within 45 days.
When creating local bitcoins, there are two solutions offered- Liquidity solution and white label solution, each functioning in its way to enhance the exchange and increase productivity. Merehead is the ideal solution for any business that wants to offer an escrow service to its target consumers.
The platform helps you in limiting your costs to the barest minimum, as you do not have to invest in any coder to create your own custom platform neither do you need heavy liquid investment to create the necessary Bitcoin liquidity to get your business going.
The Merehead will especially work for you because it comes tailor-made for your own language and has seamless integration to be paired with any currency of your choice. The app comes ready and branded in your own name or that of your business so that gives your business the credibility it needs to attract newer customers within your niche.
Creating a Bitcoin Escrow Service like Remitano
Remitano is a bitcoin wallet that was created to provide a peer-to-peer bitcoin escrow service, where people can make bitcoin exchange through the bitcoin exchange businesses. One of the prominent features of the service is its security, as it is the most secure platform to carry out bitcoin trading.
Remitano has a reputation for being able to offer escrow services for bitcoin and fiat transactions.
The Remitano platform like other escrow service comes with amazing components that make it a good platform for escrow services, and these components include:
• Security: The platform has different security protocols in place to ensure the safety and security of transactions taking place on the platform.
• Service Availability: The service is available to different countries around the world including the US, Australia, Tanzania, UK, Nigeria, Cambodia, Ghana, Sweden, Taiwan, Malaysia, China, Vietnam, and India. However, plans are underway to ensure that more countries are reached soon
• Payment Method: Buying or selling bitcoin is a function of the availability of a local bank account.
• Fees: Unlike other platforms, Remitano charges are much lower, a nominal fee of 0.5% is charged.
• Processing Time: The processing time is dependent on the sellers and buyers, but transactions involving the transfer of funds through bank accounts take few minutes to get confirmed and completed.
Creating a bitcoin escrow service using the Remitano system is possible, as you can either contact the developers or hire them to come up with something similar, as their bitcoin escrow platform developers are well vast in knowledge and know just what to do. Another option is to get the Remitano clone script, which gives you an editable version of the Remitano platform, thereby giving you the exact features of the platform.
What to Consider When Starting a Bitcoin Escrow Service
The first important thing that needs to be done before venturing into the creation of a bitcoin escrow service platform is to get a team of like-minded members, who are skilled in different areas. You will need the services of the following:
• Public Relations and Publicity;
Assuming you have two members in each group, you would be looking at an average of 12 people on your team, they could be more.
Over the years, Bitcoin has encountered a lot of criticisms and resistance, and that is as a result of the way it has continued to enjoy exponential growth, despite the fact that speculators said it was just a bubble that could burst anytime, despite the odds and resistance, bitcoin has continued to grow in value and popularity, and this has led to more people and businesses adopting bitcoin for various purposes, which in turn brings the issue of being able to exchange assets on a trustless level.
This is why bitcoin escrow service is the best solution to creating an exchange service that is trustless, hence the creation of bitcoin escrow services, to facilitate the exchange of funds and assets on a trustless basis with the use of a neutral third party whose job it is to ensure that no funds or assets are given out unless both parties have fulfilled every term contained in the agreement.
Furthermore, by using bitcoin escrow services, traders are assured of really cheaper costs, cryptographically secure and fast transactions, compared to traditional means of doing business with escrow services.
The blockchain technology which is the underlying force for Bitcoin has paved the way for the creation of several other cryptocurrencies with unique features. A Bitcoin escrow service is one of the most secure ways of dealing with Bitcoin-based transactions where trust is an issue, as the escrow system is set up such that the party that errs forfeits the money in the escrow account to the other party.
However, the escrow agent has the decision to make when an issue arises where both parties err. It is however important that as a participant, you do not fall into the hands of shady escrow agents, as that singular action can lead to a loss of funds.
Many opt for escrow systems because it gives the participants some control over what happens to the funds. There has to be an authorization from at least two passkey holders of the escrow wallet before any transaction can take place.
Using a Bitcoin escrow account eliminates many unnecessary costs compared to using traditional escrow services.
We live in a world where trust is very important in business because whether you are a buyer or seller, each party wants to trust the other party to deliver.