Payment Protection

Escrow & Multisig
Explained

Escrow systems are fundamental to safe darknet market transactions. They protect buyers by holding funds until orders are confirmed received, while giving vendors confidence that payment exists. This complete guide explains the different types of escrow systems, how multisig transactions work, when you should and shouldn't finalize early, and how to handle disputes effectively. Understanding these systems is important for protecting your funds.

Comparison

Escrow vs Multisig

Traditional Escrow

Market-held funds

The market holds your funds in their wallet until you confirm receipt of your order. Simple to use but the market has full control of your money.

  • ✓ Simple to use
  • ✓ No technical knowledge needed
  • ✗ Market controls your funds
  • ✗ Vulnerable to exit scams

Multisig Escrow

2-of-3 signature system

Funds require 2 of 3 parties (buyer, vendor, market) to sign before release. The market alone cannot steal your funds even in an exit scam.

  • ✓ Protection from exit scams
  • ✓ No single point of failure
  • ~ Slightly more complex
  • ~ Requires market support

💡 Recommendation

Always use multisig when available. It's the only real protection against exit scams. Traditional escrow means trusting the market with your money.

Process

How Escrow Works

1
Place Order: You pay for an item. Funds go to escrow (market wallet or multisig address).
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2
Vendor Ships: Vendor sees payment in escrow and ships your order.
↓
3
You Receive: Order arrives. You verify contents match the listing.
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4
Finalize: You confirm receipt. Funds are released to the vendor.
Important

When to Finalize

✅ DO Finalize When:

  • You have received your order
  • You have verified the contents are correct
  • Quality matches the listing description
  • You are satisfied with the transaction

❌ DON'T Finalize When:

  • You haven't received anything yet
  • The vendor asks you to "Finalize Early" (FE)
  • Contents don't match the listing
  • There are quality issues you need to dispute

⚠️ Never Finalize Early (FE)

Finalizing before receiving your order removes all protection. Once you finalize, the vendor has your money and you have no recourse. Legitimate vendors don't require FE - it's almost always a scam indicator.

Disputes

Handling Problems

🔄 Opening a Dispute

  • Contact the vendor first through market messaging
  • Give them reasonable time to respond (24-48 hours)
  • If unresolved, open a formal dispute before escrow auto-finalizes
  • Provide evidence: screenshots, tracking, photos
  • Be factual and professional in your dispute
  • Market moderators will review and make a decision

📋 Evidence to Provide

  • Screenshots of listing and order details
  • Photos of what you received (if anything)
  • Tracking information if available
  • Message history with vendor
  • Any relevant PGP-signed communications
Best Practices

Protecting Your Funds

✅ Escrow Safety Tips

Follow these guidelines to minimize your risk when using market escrow systems:

  • Never finalize early for new vendors: No matter how convincing their profile looks, wait until you receive your order
  • Use multisig when available: Multisig provides the strongest protection against market exit scams
  • Track escrow timers: Know when auto-finalization occurs and dispute before it's too late
  • Keep order amounts reasonable: Don't risk more than you can afford to lose in a single transaction
  • Document everything: Save screenshots of listings, orders, and messages in case disputes arise
  • Verify delivery before finalizing: Check quality and quantity before releasing funds

⚠️ Exit Scam Protection

Traditional escrow offers no protection if a market exit scams. Your funds are held by the market, and if they disappear, so do your funds. Multisig escrow is the only system that protects against this scenario.

Comparison

Escrow Types Compared

📊 Which Escrow is Best?

Different escrow types offer different levels of protection and have their own trade-offs. Here's a detailed comparison of each type:

  • Traditional Escrow: Simplest to use but least secure. Market holds funds entirely. No protection against exit scams. Good for small orders on trusted markets.
  • 2-of-3 Multisig: Best balance of security and usability. Requires 2 of 3 parties (buyer, vendor, market) to release funds. Protects against exit scams in most cases. Recommended for larger purchases.
  • Walletless Multisig: Most secure option. Funds never touch market wallet. Transactions happen directly on blockchain. Slightly more complex but maximum protection against market compromise.
  • Direct Pay (FE): No escrow at all - funds go directly to vendor. Only use with extensively trusted vendors on very small orders. High risk of scams.
FAQ

Frequently Asked Questions

❓ Common Questions

  • What happens if I forget to finalize? Orders auto-finalize after a set period (usually 14 days). If you received your order, this is fine. If not, you lose the ability to dispute.
  • Can vendors see my real address? Only if you send it to them. Use PGP encryption for all shipping details.
  • How long do disputes take? Typically 3-7 days, but complex cases can take longer. Provide clear evidence to speed the process.
  • What if the market sides with the vendor unfairly? Unfortunately, there's no appeal outside the market. This is why vendor reputation research is critical.
  • Is multisig escrow harder to use? Slightly more complex initially, but most markets simplify the process. The extra security is worth the learning curve.
  • Can I get partial refunds? Yes, in some disputes moderators may award partial refunds if both parties share some responsibility.