The Use Case
The escrow process is mainly manual and requires a lot of work to be undertaken before funds can be released. The criteria under which funds have been held need to be researched and validated, which can lead to issues around the transparency of escrow echanges.
A blockchain could write the escrow criteria into a smart contract. This would ensure that funds are automatically released when these criteria are validated. This would greatly speed up the process of releasing funds. Due to the immutable and open nature of a blockchain, it would also aid greatly in tacking the transparency issue.
How It Could Work
XChange Ltd. are engaged in an escrow agreement for the purchase of an asset. Given the nature of their arrangement, there are large delays in the money transfer. The investigation is a lengthy process and XXchange Ltd. have no real-time updates on the stage in the escrow process.
A blockchain based escrow transfer would have a smart contract which would guarantee funds would be transferred immediately when all pre determined contract conditions are met. Given the transparency of a blockchain, it would allow XChange Ltd. to see where in the process they are, which in-turn would aid them in planning.