Escrow in the context of peer-to-peer trading on LocalCoinSwap refers to a process where cryptocurrency is secured on a blockchain (either utilizing an escrow smart contract or bitcoin scripts) while a trade is being completed.
So how does this work in a practical sense? It is relatively simple:
- Two users agree to trade with each other. One user is buying cryptocurrency (crypto) from a seller.
- The seller “funds escrow” (locks their crypto into escrow). Please note it's essential to wait until the escrow transaction is fully confirmed before proceeding further as unconfirmed transactions may never complete.
- The seller provides the payment details, and the buyer pays the seller directly. This may be through a variety of payment methods including bank transfer, cash deposit, Western Union, and more.
- Once the seller receives the local currency, they release the crypto from escrow to the buyer.
This process provides a secure way for users to buy and sell with a significantly reduced risk of fraud or scams, provided the escrow is utilized as intended.
Once the seller funds escrow and the transaction is confirmed, they cannot withdraw their crypto. This assures the buyer that they will receive the crypto as long as they make the correct payment.
In case of any issues, such as the buyer failing to make the correct payment or the seller not releasing the crypto after receiving payment, either trader can "raise a dispute." A LocalCoinSwap staff member will then investigate the matter and release the crypto to the appropriate trader after reviewing the situation.
WARNING: It is crucial to ensure that escrow is funded before making any payment. If the escrow is funded, it will always be clearly visible on your side of the trade. Be cautious of any claims made by the other trader, such as "it's funded on my side" or "it will be funded instantly after payment," as these are common scam tactics. In such cases, do not send payment and report the suspicious trader immediately. If you ever find yourself in a situation where you are unsure or have doubts, do not hesitate to contact support. Our team is always ready and happy to assist you.
Comments
16 comments
What if the seller want to crook you from your money or if he or she decide not to send you your coins you want to buy
@liptonmcrain This is why you should only trade with escrow. The seller locks the crypto being sold into escrow and it is held securely there while the buyer makes the payment.
If the seller does not release the crypto from escrow to the buyer once they have received the payment then the buyer can raise a dispute and a LocalCoinSwap dispute resolution manager can release the coins to the buyer manually.
Seller need to open an escrow account or it will processed automatically by this site?
Hi @Mithun,
Neither traders need to open any additional escrow account.
Once 2 users agree to trade, the seller will see a "Fund Escrow" button on the trade page. They click this and the crypto is automatically locked in escrow.
Once the seller receives the payment, they release the crypto from escrow to the buyer.
Please, is it possible for a seller not to see “fund escrow” on a trade page and if yes what conditions can that happen?
Hi @Jonsnow099
Once the trade is accepted the seller will see the "Fund Escrow" button.
They will not see the "Fund Escrow" button at certain stages throughout the stage (as it is not necessary). For example:
How does a buyer get proof of payment for a cash in person transaction?
how does one prove if the seller even receives the payment or a merchant giftcard transaction? example: say im trading my gamestop gift card to the seller for btc, the seller gets the whatever funds in the gamestop card then seller wont release funds because he or she can just say i couldnt get or there wasnt any funds in the gift card (the seller is obviously being untruthful here in this scenario) how does localcoinswap resolve this...? feels like this might be a million dollar question here lol im sure LCS dealt with this example thousands of times since the opening of the site.
Please I need a factual response; Is it possible for seller escrow account marked approved and not marked on the buyer dashboard so as to proceed in paying seller account?
bakers
How can you know that the seller has fund the escrow
What are the guarantees when exchanging USDT with Bitcoin?
500
200
100
Is it possible to fund an escrow from an external wallet?
Please sign in to leave a comment.