What Does Escrow Mean?
Two people reach an agreement. When one person renders his end of the deal, the other person delivers on his end. One person delivers the services, and the other gives currency in exchange. They agree on the conditions of the contract. They agree on what it means to fulfill a contract, and what it means to fail to fulfill a contract. They are of one mind. They understand each other.
Yet, the deal goes wrong.
Throughout history, countless blood has been shed over this simple problem. What does it mean for a person to fulfill his end of the deal? When is the work done, in a way that both people agree the job has been done well? How can you tell when one person has failed the contract completely?
And so, a third person was brought in to be the fair arbiter of judgment — one person unrelated to the other two, who would be the final say in whether the contract had been fulfilled or not. This is an ancient problem, with modern solutions that are almost unchanged from what our ancestors did ages ago.
So what is escrow?
Escroe, or escrow, in ancient French, is a contract that binds two people into a common agreement. The escrow agent delivers the currency to the other person when the terms of the contract have been met.
As civilization evolved, one thing remained the same: People needed to come to agreements to do business. They needed a way to ensure they could focus on their work unhindered, without worries the other party would simply, say, run away, after getting their end of the deal.
Peace between people would simply not be possible otherwise. There has always been a need for a third party between men, to fulfill their need for justice and fairness. This fairness takes on the form of courts of law, of referees in sport, and in business, this person is known as the escrow agent.
The economy is impossible without it, and for their role in all this, escrow agents can take a percentage of the profit exchanged for their services. Without escrow agents, there is no trust. And without trust, there is no business. When new economic systems such as the Internet arise and people want to do business, all transactions are risky until an escrow service is put in place.
The moment conflict breaks out — or any wrongdoing takes place, the escrow is the trusted, neutral party whose word can be trusted when administering justice. Dispute resolution is possible because the words of escrow services are held in higher esteem than the two bickering parties. In internet law or real life, deceptive people might once again resort to faking an escrow service, by having an impostor pose as a fair judge.
It is therefore important to verify the credentials of all escrow companies. They are all listed on all government registers for this very reason, so citizens of a country can verify who is fake and who is not.
It’s an interesting quirk of the market that escrow services have organically grown in many fields without knowing of the existence of one another. Escrow agents or accounts are present in fields such as banking, law, real estate, and even gambling.
A necessary safeguard
While it differs in superficial ways, the purpose of an escrow is easily seen in all spheres of human life, and why they are necessary. It’s possible one can tell the health and integrity of a populace with the presence of their escrow services. It’s also possible it shows the integrity and happiness of a populace without one.
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