We know that escrow mechanisms are easy to implement when it involves a trusted 3rd party. For example if A and B don't trust each other they can simply send their goods to C whom they both trust. Then C can distribute the goods to them fairly.

However, is there a primitive that achieves the same when there isn't a trusted 3rd party? Basically, A and B don't trust each other and they want to exchange something. Can they do this without involving any trusted party?

  • $\begingroup$ Only for some specific goods. I heard about protocols to exchange crypto-currency across chain boundaries. Even fairly exchanging information is only possible with severe limitations. $\endgroup$ Commented Oct 13, 2017 at 9:38
  • $\begingroup$ What is often possible is designing the exchange so that C can choose to award the reward to either A or B, but not take it for themselves, scamming both A and B. $\endgroup$ Commented Oct 13, 2017 at 9:39

1 Answer 1


Yes they can!

This can be done through a public blockchain like bitcoin for instance.

Other blockchains such as Ehtereum provide more functionnalities like Smart Contracts. These would enable both parties to send their goods (cryptocurrency/ digital property of some good etc.) to a decentralized application - DApp - running on the blockchain (basically, a piece of logic code that would be cowritten by the two parties so it would wait to receive the expected goods from the expected parties until realeasing it to one another, effectively acting as a decentralised, no TTP, automated, bot-escrow).

  • $\begingroup$ These would enable both parties to send their goods. But how do one party knows the other has sent his tx to the chain? If say, I send the amount to the blockchain and the vendor doesn't then I will just lose money, right? $\endgroup$
    – SpiderRico
    Commented Oct 13, 2017 at 8:52
  • $\begingroup$ This is where the smart contracts come in. You don't know when a transaction will be sent, so you send it to a smart contract, not directly to the vendor. The SC will only give the cryptocurrency to the vendor when he will have sent his transaction to the SC. Of course there can be a check that everything went as it was meant to go, since the SC is written and agreed upon by both parties. $\endgroup$
    – Hillfias
    Commented Oct 13, 2017 at 9:36
  • $\begingroup$ Well, in a sense it uses a trusted third party. And a trusted fourth party and so on ;) A whole network of trusted parties. But 'trusted' only in a sense 'will do what's required of them and it's verifiable they don't stray from the contract' $\endgroup$
    – Torinthiel
    Commented Nov 12, 2017 at 21:16

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