By principle, an escrow refers to a contractual agreement between two parties involved in a financial transaction connected to a rendered service. In an escrow, a third party is able to receive and disburse money or documents under a condition that the service or a part of it is fulfilled. In some platforms or companies, this may be called a Milestone Payment. As the name suggests, the receiving party is able to get payment once a milestone in a project is reached.
Such a system is made possible through smart contracts on a blockchain. Contexts wherein the escrow system is employed include, internet transactions, banking, intellectual property, real estate, mergers and business acquisitions, and even court rulings just to mention a few. This system is effective for transactions that are done in instalments or those that require full validation prior to release of payment.