Over-the-counter trades happen outside centralised exchanges and in that setting each side has to trust the other. The risk is obvious: the first mover and the counterparty never delivers. An escrowed trade removes the first-mover risk by holding one leg of the trade until the other leg settles. This is practical across the coins OTC desks actually trade, and the small charge is negligible against the amount at risk.
Fraudulent escrow services are a common tactic in high-value online deals. The seller insists on a particular escrow provider, which is fake, and the buyer's deposit never comes back. Warning signs are a very new domain, no published fee structure, no resolution mechanism, anonymous ownership and above all refusal to use any other escrow. A real escrow operation welcomes scrutiny and will never be chosen by the seller alone.
Cryptocurrency payments are final the moment they confirm, so this creates a trust problem when neither side knows the other. An escrow arrangement solves it by placing a neutral third party between the two parties. The buyer pays into escrow for telegram deals, the seller delivers, confirmation follows and at that point the funds are released. Nobody has to move first. The cost is usually around one percent, a figure trivial compared with losing the entire payment.
Trading communities frequently rely on self-appointed middlemen. The principle mirrors escrow: a third party takes custody. What separates the two is what happens when things go wrong. A group-chat middleman offers no paper trail, no dispute process and no verifiable identity. A real escrow service records every deposit, states its terms up front and crucially gives both parties recourse both parties agree to.
Escrow for cryptocurrency use one of three models. Human-operated escrow holds the funds and releases them when staff verifies the conditions are met, which suits deals with judgement involved. Multisig escrow depends on multiple signatures to release payment, reducing reliance on the provider. Smart contract escrow settles by code without human involvement, which works well where delivery can be proven on-chain although it cannot exercise judgement.