What is Escrow? How does it work?
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Simple Definition and Meaning of Escrow
When you want to make a high volume purchase, such as a house, a car, jewelry, etc., it is possible that you may not completely trust the other party with whom you want to enter into a trade. On the other hand, in such trades, it is also understandable that the other party might not be fully sure about your making the payment as required. Therefore, doubt is an ever present concept in trades between two parties, especially when a large amount of money is involved. How to remedy the situation? Enter, escrow services.
Basically, escrow is a financial arrangement between the two parties of a trade in which a third party, known as the escrow agent, will oversee the proper and full completion of the deal. In any trade, either party commits to fulfilling some terms, whether delivering a certain product or service, or making the payment. With the help of this mechanism, two parties can enter into a deal with minimized risks while at the same time being assured that terms of the deal will be fulfilled.
There are many companies that offer escrow services. Some of them offer such services only in one area, such as real estate. Additionally, there are different platforms and infrastructures used by different companies that offer this service. In this article, we will focus on Counos Escrow, an online escrow company that offers services for all types of goods and services. What’s special about this company is that in addition to being fully comprehensive, it operates based on the Blockchain technology. But, before delving into the service offered by Counos, let us have a more in-depth look into what escrow exactly is.
The Concept
Escrow is a legal concept wherein a financial instrument or an asset is stored by a third party rather than two main parties of transaction; in other words, when the user works with this system, the third party plays the role of a formal guarantee and promisor. The funds or the assets are kept by the Escrow agency. This agency controls all the trade and transaction process and ensures that the required commitments will have been made thoroughly. Therefore, no one can use his/her money without the agreement of the other participants. In some Escrow companies, especially the ones based on the Blockchain technology, cryptocurrencies are used as the main method of payment. One of the main features of cryptocurrencies is guaranteeing people’s privacy and payments being made.
Escrow has been designed following the aforementioned purpose. Through this service you can invite transaction parties, make a contract and safely pay the charges by the methods provided by the Blockchain technology.
Additionally, buyer, seller, and Escrow service provider, create a new shared wallet with their own private key. This new wallet, known as a MultiSig wallet, will only allow the withdrawal of the balance when at least two out of three of its creators provide conformation. In fact, in the shared wallet, three signatures have been created, and the entire trade fee will be deposited to this wallet. If the buyer and the seller come to terms about transferring the balance, the cost will be transferred to the seller’s account without the need for the escrow system. The MultiSig wallet will be discussed more thoroughly in the following sections. Now, a deeper explanation of escrow in the context of Counos Escrow shall be presented.
Counos Escrow
Counos Escrow System is a financial crypto service wherein a trusted third party keeps the payment of a transaction made between two parties (Using Multi signatures Wallet technology). Counos Escrow is managed and operated by the exchange company Counos OÜ , which is registered in the country of Estonia and has acquired all the necessary permits and license for operation.
- Providing a virtual currency wallet service License No. FRK000735
- Providing services of exchanging a virtual currency against a fiat currency
Counos Escrow is a very valuable Crypto escrow particularly when dealing with a lot of money. For example, when users want to sell their goods or services but are hesitant to deliver before being sure that the payment is made, and on the other hand, when users want to buy goods or services and are also hesitant to make the payment before making sure of deliverance. Through the Multi Signatures Wallet technology, Counos Escrow and online payment services which are offered by Counos Platform and accepted cryptocurrencies such as Bitcoin, Counos Coin (CCA) , Counos X (CCXX) , … guarantee the safety and security of online trades.
The services offered by Counos Escrow can be used for high volume peer-to-peer cryptocurrency deals, Bitcoin OTC, real estate, and basically any kind of financial deal.
With the help of Counos Escrow transactions can be made in a safe and secure manner with no risk of fraud. You can complete safe and secure payments with your coins (cryptocurrencies) using Counos Payment Gateway . While making the payment, Counos Escrow will not disburse any funds ( held in Multi signatures Wallet ) unless both buyer and seller are fully satisfied.
Crypto escrow is considered the most secure method of payment with no risk of fraud and scam. All the crypto that is transferred with Counos Escrow are kept in a secure Multi signatures Wallet which has 3 private Keyes one for Buyer, one Seller, and one for Escrow Agent. This whole process happens with the help of escrow agents. You can use this service with assurance of safety and security for your commercial trades, use cryptocurrencies supported by Counos Escrow to make complete transaction and payments, and complete your contract overseen by agents.
Counos Escrow Agents
Counos Escrow has individual agents who are responsible for overseeing and observing the accurate completion of a contract. These individual agents are comprised of legal firms and attorneys. One of the escrow agents of this crypto escrow is the Counos Escrow Company itself, having a legal license for exchange and wallet. Among other escrow agents are the official EU registered law firm Gh Legal S.R.O , and Cedric Scmid , official attorney at law in Switzerland.
Don’t forget you can also use Counos Escrow to purchase anything from anywhere in the world and make payments
For example, if you live in Germany and order a carpet from Turkey, you can use Counos Escrow Service and pay with Counos X to purchase what you want. The seller then sees the payment already made and can safely send the carpet to Germany. He can then change the received Counos X to Turkish Lira or Euros or keep the Counos X and benefit from the 5% annual return.
What does it mean when a house is in Escrow?
Escrow is often used in real estate transactions, so anyone who wants to buy or sell a house has to be quite familiar with this term. When both the buyer and the seller of a house reach a mutual settlement and want to go further and complete a deal, Escrow comes in.
AnEscrow agreement is a financial contract wherein the buyer and the seller make a neutral third party responsible for depositing instructions, related documents, and the exchange of funds. This contract includes certain terms and conditions that have to be fulfilled so that the deal will be closed suitably. Actually, Escrow minimizes risks in the real estate transaction. Escrow guarantees that the seller actually and legally possesses the house and there are no claims from any other party. Also, the seller has to prove his financial ability so that the seller knows that he has the money to buy the house.
In real estate transactions, an Escrow company acts as an intermediary, and the buyer gives the money to them. When an item such as money or property is called "in Escrow", it means that it has been transferred to a trusted third party on behalf of the buyer or the seller. The items held in the Escrow account can't be released unless all the contract conditions are fulfilled. The Escrow account is a legal holding account for valuables such as real estate, money, stocks, etc. In real estate transactions, a house that is in the process of transferring from seller to buyer is considered "in Escrow." So the buyer can't occupy the place unless the Escrow is closed. Basically, when a property requires a transfer of title, it will be held in Escrow, which is a legal procedure.
Escrow procedure in real estate transactions
When the seller of the house and the buyer both come to an agreement, they need to choose a neutral third party referred to as an Escrow agent. The Escrow agent helps them to create a smart contract, specifying all the necessary conditions in it. An Escrow agreement defines the terms and conditions between the buyer and the seller of the house. Both parties will sign the contract and some corresponding documents to confirm that they accept all the terms specified in them. Then the Escrow agent opens an Escrow account so that the funds can be held in there. Here, the Escrow has opened or in other words, the Escrow process begins. It needs to be open for a period of time. This period can be a couple of months or just a few days, depending on the complexity of the transaction. The items held in Escrow are controlled and managed by the Escrow agent. The Escrow agent is typically a lawyer. The Escrow agent makes sure that all the written instructions and conditions outlined in the Escrow contract have been satisfied so that they can transfer the ownership of the house to the buyer and pay the seller. In this way, all parties involved in the transaction will be satisfied.
Until both parties of a real estate transaction, the buyer and the seller, confirm that all of the mentioned terms in the Escrow agreement have been fully met, the items in Escrow will not be released, and the ownership of the house will not be transferred. The main reason for keeping the assets in Escrow is to make sure that both parties will fulfill their obligations towards the agreed-upon terms. Now, it is time to close the Escrow. At this time, all the related files get inspected by an Escrow agent to ensure there are no mistakes and that all the instructions have been followed correctly. If there is no problem with the files, the buyer and the seller will each receive the closing documents. In the meantime, the money is distributed, and the paperwork gets delivered to the correct parties. And as the final step, the seller will receive his money, and the buyer will receive the keys to the purchased house.
How to Work with Counos Escrow?
To give you a proper explanation on how Counos Crypto Escrow works, let us consider that you want to hire a website designer and you intend you pay him in Bitcoin. You cannot just find someone online and transfer the Bitcoin to him without being sure if he is a good website designer or even if he will complete the task that is required. And the other party, the website designer in this case, cannot trust you enough to start the work without being paid anything upfront or in advance, being assured that he will be paid when he delivers the project accurately and completely. This is where a Crypto escrow can be very beneficial. You can use Counos escrow to do this.
First, you go to Counos escrow website and create an account and get your full KYC . After signing in to Counos escrow you can go ahead and create a contract, a smart contract. Then you are able to pick a name for it and set all the terms of the contact. You specify all the things you want the website designer to do. Also, you specify that you want to pay with Bitcoin. For example you want to pay 0.4 Bitcoin for this job. You can create all of that detail and you can also create some instalments known as milestones. Then your contract is completed. After that you take a look at it to make sure everything is exactly as you want them. You enter the email of the other party, in this case the website designer you want to hire and start a contract with. You will also choose an escrow agent who will oversee the proper and legal completion of the contract.
After you approve the contract created, Counos escrow will send an email to the other party, which is the email address that you provided previously. It is okay if they are not a member of Counos Escrow. Because this contract invitation email will also include an invitation for them to create an account and do KYC in Counos Platform . After the other party accepts the invitation and enters the smart contract on Counos escrow, he can see all the details of the contract and the project. After the other party accepts the contract created, then the contract agent to approve and then the contract will get started.
An Agreement
When the contract is approved by all the three parties, the buyer, the seller, and the escrow agent, then for example in this case the website designer who is selling his services will start working because he is assured that he will get paid. You as the buyer, buying the services of a website designer, will also be assured that your project will be done properly. But where does all this reassurance come from?
The assets present in any contract in Counos escrow are held in a wallet known as the multi signature wallet or the MultiSig wallet. The buyer, the seller, and the escrow agent all have a key to this wallet and it cannot be accessed by one person. In order to withdraw from this wallet, two parties need to approve it.
Therefore all sides of a Crypto escrow contract can be sure that they will receive the assets or services they are entitled to . In the example above, the buyer will be sure that his project will be delivered as promised, and the website designer can be sure that when he delivers the project he will be fully paid. All of this process is done with the help of Crypto escrow and the escrow agent. So leave the security of your assets to Counos Escrow!
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