A trust arrangement where a neutral party holds funds until agreed conditions are met; in crypto, often implemented with multi-signature or time-locked contracts.
Crypto escrow reduces counterparty risk by requiring multiple approvals or specific conditions before releasing funds. It can be centralized (custodial service) or decentralized (on-chain scripts or smart contracts).
A 2-of-3 multisig holds funds for a trade: buyer, seller, and arbiter keys. Two signatures are required to release coins, preventing unilateral theft.
Common patterns include n-of-m multisig, HTLCs for conditional swaps, and timelocks for dispute resolution windows.
In a cross-chain trade, an HTLC ensures both parties can claim funds only when they reveal the same preimage, or refund after timeout if the swap fails.
All terms and definitions may update as the Cryptionary improves.