Crypto Escrow Has Real Limits: What It Cannot Protect You From

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Crypto escrow secures funds under agreed conditions but cannot verify a counterparty's honesty, identity, or the quality of what they deliver. Once funds are released on-chain, the transaction is final with no chargeback or reversal option, making early release a costly mistake. Dispute resolution through arbitration takes time and relies entirely on the evidence each party submits, not physical inspection. Escrow fees, gas costs, and potential arbitration charges can outweigh the protection on small deals, making it most worthwhile for transactions above roughly $500 with unknown counterparties. Vague contract terms and drifting from the agreed process are cited as the most common reasons escrow fails to prevent losses.

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