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It replaces a trusted 3rd party with a trusted counterparty. It seems like in a dispute from either party, the funds are effectively lost unless there's resolution.
As a merchant or a customer, I'd be afraid to use this.
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This was a really early solution that did not consider all the scenarios, I'd be afraid to use it too.
If anyone interested, we announced our bitcoin-only escrow service here #1248555
Listed in the same announcements, various tools to safeguard your P2P trades.
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