Why do you need Joint Escrow?
Suppose you would like to do business with someone across the world: you live in Canada and the person you’re hiring to design a website lives in Uzbekistan. You obviously don’t trust each other, but the potential value to both parties is substantial and you would like to try and work together.
The problem here is that the two countries have vastly different legal systems. In the case of a possible conflict, it would be very hard for you (both financially and legally) to protect your interests. What if you paid an advance but the work was not completed? And the other person too may not trust you and may be wondering whether he’ll get paid in full after he completes the task.
The solution we propose is an escrow, but a much more advanced version of it. In traditional escrow you lock funds with a third party, which ultimately makes the decision in case of a conflict. In our solution, only the two parties control the escrow and it is up to them to resolve the conflict and unlock the funds.
Removing the third party ensures a greater degree of trust and a commitment of both parties to a successful resolution of the contract.
How does it work?
How much is to be deposited to escrow from each party
It could be, for instance, 10BTC from each side, or, if potential risks are different for each side, then it could be adjusted to become 10BTC from you and 25BTC from your counterparty.
How much is to be released from escrow and to whom
Normally, in the simplest case, you’d want the same amounts to be released back. This is the case when the actual payments are done independently of escrow, through a bank wire, for example. Sometimes you’d want to include the actual payment into the escrow though, and in this case you may want to specify, for example, that 5 out of 10 BTC deposited by you should go to the counterparty when the contract is finalized.
Contract terms in plain english
This is where you describe the terms you previously discussed with your counterparty. While it’s not affecting the contract itself, these terms are embedded into the Bitcoin transaction, so that later you can check back with it and discuss it with your counterparty in the case of a dispute.
After the contract is prepared, both parties sign it with their payment passwords (which they generate on the same page) and then they deposit bitcoins to the addresses specified on the contract page.
As soon as each party finds the contract terms to be satisfied, they once again use their payment password to sign the release transaction after which the funds will go to the addresses specified in the contract.
It is also possible to renegotiate and change the terms before the funds are released from escrow. It can be done on the contract page. Both parties would have to agree to the new terms - only when they both sign the release transaction the funds are released.
Is it safe?
Yes. Mycelium Gear doesn’t hold the funds, it doesn’t store payment passwords or any other critical information. You can even create a contract without signing up with Gear, however for your convenience we recommend you to do so - you will then be able to manage your contracts effectively, track their status and engage easily with other Gear users.
Can I integrate this functionality
into my website?
Yes. In a very short time Gear will present an API, much like our payment processing API, that will allow any site to provide Joint Escrow functionality to their users. You won’t need to learn any crypto or Bitcoin, since everything will be done through a simple Joint Escrow API.
Can I integrate this functionality
into my android app?
Much like an API for websites, we will also provide a more sophisticated API for mobile developers. Using our opensource library, you will be able to easily create joint escrow contracts inside your android app and then use Gear API to broadcast them. Once again, you won’t need to know any crypto or Bitcoin to do that.