Cryptocurrency transactions are new territory for many people. The smartest ways to use cryptocurrency, and safest ways to buy or sell with it, are all unfamiliar to most. But escrow is a solution that solves the risks of this tricky currency.
Bitcoin and other cryptocurrencies are not legal US tender. Although they have value and are welcome in many places, you have no legal obligation to accept payment in cryptocurrency. It’s up to you whether you’ll accept this kind of payment. Choosing to embrace the cryptocurrency option creates more potential buyers or sellers for you.
How Does Cryptocurrency Work?
Explaining cryptocurrency transactions is no easier than explaining other currency systems (do you know how the US dollar bill’s value is created and why it fluctuates?). The basics are explained well here: Bitcoin Explained So That a Five Year Old Would Understand.
How Does It Fit Into Your Transaction?
Whether you’re hoping to buy with cryptocurrency, or accept crypto payment, be sure that you understand how the process works. Be aware of your options for converting to or from other currencies if that’s your plan.
There is a unique problem that comes with this kind of transaction: should be the buyer trust the seller and pay before receiving the business or should the seller trust the buyer and turn over the business before receiving payment? The solution is using a third party escrow service.
What Could Go Wrong Without Escrow?
Cryptocurrency exchanges are not reversible. This is a built-in feature of cryptocurrency transactions, and it also means that if you participate in a transaction where bitcoin or another cryptocurrency is bought, sold, or changes hands, it is irreversible. Escrow makes transactions safe by being a third party, ensuring goods and payment both are received before the transaction completes.
For help navigating your cryptocurrency transaction, contact Bay Area Escrow today.