How Escrow Protects a Payment

Escrow is what makes buying from a stranger on a network you cannot call the police in workable. When you place an order, your coins are not paid straight to the seller. They sit in a held state, owned by neither of you, until you confirm the order arrived. Only then are they released. If it does not arrive, or it does not match what was promised, you open a dispute and the held coins stay held while a moderator looks at it. That is the protection, and it is the reason the whole model functions at all.

The part people miss is the boundary. Escrow covers money that is attached to an open order. It does not cover a balance sitting on the platform between orders. Those are two different things and they get conflated constantly, because the balance and the order live on the same screen. The balance is exposed to whatever happens to the platform. The order, while it is open, is not. That distinction is the whole of the risk model, and it is the one most people learn the expensive way.

Early finalization

Many markets let trusted vendors finalize early, which releases the coins before you have confirmed delivery. For a vendor with a long clean record that is a reasonable shortcut, and it is how the fast ones stay fast. For a vendor you have just met, it is you giving up your position in a dispute before the dispute can happen. Read whether a vendor finalizes early before you buy from them, because it changes what you can do if something goes wrong.

The habit that keeps you safe is small and boring. Fund the order when you place it, and move the rest out when it is done. Do not keep a standing balance on a shop the way you would keep cash in a wallet. Every market that ever ended was operating normally the day before, and the people who lost the most were the ones who had left the most sitting there. Uptime and trust are separate questions, and escrow answers the first one only.