> Multisig offers the same basic function as an escrow: an independent third party signs off on the payment or the cancelling of it.
Multisig allows the escrow to do _just_ that, and nothing else with the money (at least, not without the buyer/seller agreeing to it). Regular escrow puts the funds under the full control of the escrow provider, where he _could_ do something else with the money, regardless of the buyer and seller wishes. I find this to be an important distinction.
> So, once a payment has been made, how does multisig reverse the payment, as the article title promises?
The payment is made to the multisig address and not released to the seller until the buyer is satisfied. If there are any problems with the sale, the buyer and the arbitrator could together send the money back from the multisig address to the buyer. You aren't exactly reversing the original transaction, you're creating another transaction that reverses the effect of the original one.
> The payment is made to the multisig address and not released to the seller until the buyer is satisfied. If there are any problems with the sale, the buyer and the arbitrator could together send the money back from the multisig address to the buyer. You aren't exactly reversing the original transaction, you're creating another transaction that reverses the effect of the original one.
It doesn't really fall under the definition of an escrow:
a bond, deed, or other document kept in the custody
of a third party and taking effect only when a specified
condition has been fulfilled.
[usually as modifier] a deposit or fund held in trust or
as a security
The arbitrator gets "voting power" in regards to deciding where the funds goes, he doesn't keep it in his custody nor he have full control over it. What Bitcoin allows to do is really unique, and was never possible before. When the money is in a multisig address, it isn't really "owned" by anyone.
Edit: perhaps you could say that its owned collectively by the Bitcoin network, that can decide to allow moving it elsewhere if a transaction that fulfills the Bitcoin rules is received. Under that definition, one could say that the funds are in an escrow controlled by the Bitcoin network as a whole.
Multisig allows the escrow to do _just_ that, and nothing else with the money (at least, not without the buyer/seller agreeing to it). Regular escrow puts the funds under the full control of the escrow provider, where he _could_ do something else with the money, regardless of the buyer and seller wishes. I find this to be an important distinction.
> So, once a payment has been made, how does multisig reverse the payment, as the article title promises?
The payment is made to the multisig address and not released to the seller until the buyer is satisfied. If there are any problems with the sale, the buyer and the arbitrator could together send the money back from the multisig address to the buyer. You aren't exactly reversing the original transaction, you're creating another transaction that reverses the effect of the original one.
Disclaimer: I'm the creator of Bitrated.