An escrow is traditionally a third party who takes custody of an item, information or currency from one party until such time that the counterparty has fulfilled all obligations for release of the item held in escrow. Escrows solve the problem of trust where neither party will be willing to send something of value to the other party unless the other party sends it first which results in a deadlock unless both parties trust each other.
Escrows are not a new concept and have been around for a very long time. The advent of online trade and finance has meant that escrows have moved online too.
Blockchain and crypto provides a new paradigm for escrow services because smart contracts mean that there is no need for a human third party to serve as the escrow. Instead, escrows may be deployed on the blockchain as smart contracts which will release the item held in escrow automatically upon completion of a requirement. The blockchain based trustless escrow significantly reduces risk and provides for substantially lower cost than traditional escrows.