Decentralized escrow service: What is it and How does it work?

A decentralized escrow service is a smart contract running on a blockchain protocol that allows users to secure their cryptocurrency peer to peer transactions in non-fungible token trade.

If you want to understand more about this decentralized finance service concept, go to the end of the article. [1]

How does a decentralized escrow service work?

Step 0: Before you start

Before using a decentralized escrow service, you should have your digital wallet. Some of the best known wallets is the NEAR Protocol wallet. You can create your own wallet by entering the following NEAR Protocol link.

Step 1: Start a transaction

Once you have created your digital wallet, the first step is to create a transaction. This transaction can be created by any of the users (buyer or seller).

Step 2: Make the payment

Once the transaction has been created, it is confirmed by accepting the conditions of the digital service.

Then, the payment of the cryptocurrencies or the non-fungible token (NFT) is made to the smart contract, respectively depending on whether it is a buying or selling user.

Remember that to carry out this step, it is important that you have already activated your digital wallet on the platform.

Step 3: Notify the counterparty

At the end of the creation of the transaction with the sending of the token, the user notifies the other party that the transaction has started and that it has already been paid.

The other party (buyer or seller as the case may be) reviews the conditions of the transaction.

If you agree, you accept the transaction by transferring the token to the smart contract. If you disagree, you can cancel the transaction.

Step 4: Withdraw your virtual assets

Once the smart contract receives the cryptocurrencies and the non-fungible token (NFT), the virtual assets are released so that they can be withdrawn by their new owners. And this is how the transaction is completed successfully.

[1] To better understand the definition, we explain some concepts in detail.

• Blockchain protocol

  A blockchain protocol, or better known as "Blockchain", is a distributed data registry that allows, among other things, to store, process and transfer fungible tokens such as cryptocurrencies, as well as non-fungible tokens such as virtual assets. To review an example of a layer one blockchain protocol, you can go to the following link from our strategic alliance with NEAR Protocol.

• Smart contract

  An intelligent contract, or better known as a "Smart Contract", is a computer program that executes itself without the intervention of third parties within a chain of blocks. Some of these computer programs are written in programming languages ​​such as "Rust" or "Solidity". To review an example of a smart contract written with the Rust programming language, you can access the following link from our GitHub repository.

• Cryptocurrencies

  Cryptocurrencies are a type of digital asset that uses cryptographic encryption to guarantee ownership, ensure the integrity of transactions, and control the creation of additional units. These digital assets do not exist in physical form, but are stored in a digital wallet. To review an example of a digital wallet to store your cryptocurrencies, you can create your own NEAR Protocol wallet.

• Non-fungible token

  The non-fungible token, or better known as "NFT", is a type of digital asset that represents real-world objects such as art, music, superheroes in video games, property rights to houses, apartments and cars, among other objects. from the real world. To review some examples, you can check out these examples from NFT from the NEAR Protocol.