What is crypto escrow and how does it protect a P2P trade?

Crypto escrow is a mechanism that temporarily locks the seller’s cryptocurrency for a specific P2P order. On Senpero, the escrow operates through a blockchain smart contract rather than a conventional platform-controlled wallet.

A typical escrow-protected trade works as follows:

1. The buyer opens an order from an offer.
2. The seller deposits the required cryptocurrency into the escrow contract.
3. The blockchain confirms that the order is funded.
4. The buyer sends the agreed fiat payment directly to the seller.
5. The seller verifies the payment in the receiving account.
6. The cryptocurrency is released from escrow to the buyer.
7. If the parties disagree, the order may enter the dispute process.

Escrow protects the trade by:

• Showing the buyer that the required cryptocurrency has been committed before fiat is sent.
• Preventing the seller from using the locked asset elsewhere while the order remains active.
• Connecting the deposited cryptocurrency to a specific transaction.
• Creating an on-chain record of the deposit and final movement of funds.
• Allowing the asset to follow the applicable release, cancellation or dispute outcome.

Escrow primarily reduces cryptocurrency delivery risk. It does not automatically verify fiat payments, confirm the payer’s identity, prevent bank-transfer reversals or guarantee that every counterparty will act honestly. Sellers must still verify payments, and buyers must still follow the order terms.

Never send fiat for an order that has not confirmed its escrow funding. Likewise, sellers should never release the escrow before verifying the money directly in the designated receiving account.