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Default Escrow Contract
By nature, it is a programmable contract that works similarly to escrow. The only difference is how the payment is stored and who manages it.
In traditional escrow, the escrow agent, an independent third party, holds the funds and negotiated assets until the contract conditions are met by both parties. This gives the escrow agent the right to decide if the parties delivered on the agreed terms and whether or not the deal must be closed. The obvious downside of the traditional escrow is in its central authority (an escrow agent), time and costs.
In contrast, a Zenland escrow smart contract has no central authority and is a simpler and safer alternative to paper-based contracts. A smart contract is a programmable agreement between the parties that keeps funds in the blockchain until the payment conditions are met. Once those conditions are met, the contract follows the specified instructions and releases the funds. Because of the blockchain, these escrow contracts are party-neutral and can be checked at any time.
The default escrow contract form is a simple agreement filled out by one party and approved by the other. Based on the code logic, the contract follows the commands given by its participants known as the contract actions.
Some of the cases where the default escrow contract is used include both physical and digital products:
- domain names,
- game skins,
- gift cards,
- headphones, etc.
Let's see why buying or selling a domain name or headphones would make more sense with the escrow contract.
It's no surprise that changing the ownership of the domain is a risky deal. You either have to know the person you are dealing with, use the registrar's broker services, or an escrow. Then, there are hefty escrow and transaction fees, and the ownership process may take anywhere from a few weeks to a month.
With the smart contract agreement, you are guaranteed to speed up the process at a fraction of the cost.
Headphones and headsets are among the most frequently purchased physical products peer-to-peer. P2P commerce can be faster and easier for both parties. The parties negotiate the payment directly, and therefore, have no escrow commissions.
On the flip side, so-called "stranger deals" are risky with no guarantees for either party. The default escrow contract may give the guarantee of a fair deal without the escrow agent's charges.
Regardless of the product/service agreed upon, every contract follows through the phases known as the contract states. These states guide the contract through the process allowing its successful completion. Each state is enacted, controlled, and changed only after specific action(s) are taken by its participants. All changes done to the contract are reflected in the Contract Chat.
As mentioned above, once approved by both parties the contract is published to the blockchain. Just like with any database, it remains there long after completion and cannot be accidentally deleted or edited for personal gain.