How two of three is put together
A multisignature address is generated so that spending from it requires signatures from a threshold of the keys involved. In the arrangement described here there are three keys, one with the buyer, one with the vendor and one with the market, and the threshold is two.
That gives three working pairs and no other way through. Buyer and vendor can settle between them. Buyer and market can send funds back to the buyer. Vendor and market can release to the vendor. A single key on its own does nothing at all, which is the whole point of a threshold.
The number is counted because it is a definition rather than a measurement. Say a threshold of two over three keys and everything above follows with no further assumption, which is the test the counted page applies.
| Pair signing | Effect | When it happens |
|---|---|---|
| Buyer and vendor | Funds move with the market not involved | A finished order, or a settlement after a market goes quiet |
| Buyer and market | Funds go back to the buyer | A dispute decided for the buyer |
| Vendor and market | Funds go to the vendor | A dispute decided the other way, or a release once the window closes |
What two of three protects
It removes the single point of theft. Nobody moves the money alone, so a market that decides to keep a payment cannot simply take it. It has to persuade one of the two people in the trade to sign alongside it, which is a different and much noisier act than pressing a button.
It also gives a trade a life after the market. If the market stops answering, the buyer and vendor still hold two keys between them, and in principle those two can finish without anybody else. In principle carries real weight in that sentence, since it needs both people to still hold their key material and to agree. The windows that govern when a release is due sit in the time section.
And it changes what a dispute is. A dispute is not a request for a refund from a company. It is an argument about which pair signs next. Because nothing reverses, that next signature produces a new transfer forward rather than an undo of the old one.
What two of three does not stop
The market can still end up with the money. It holds a key, so it needs only one of the other two to agree, and it is also the party deciding disputes. Siding with a vendor willing to sign is enough. The threshold stops unilateral theft and does nothing whatever about collusion.
There is a deeper version of the same problem. Whoever generates the keys decides what the keys are. If setup happens inside a web page the market controls, that party is in a position to know more than it should about all three, and the arrangement can look correct while providing nothing. The arithmetic is only as good as the place the keys were born, and a fingerprint check is the only tool in this subject that speaks to who you are dealing with.
The last assumption is that a market advertising multisignature is running it. This site does not know what this market implements. It has no account there, has never opened an order and has never held escrow, so the honest statement is that the paragraphs above describe what two of three means rather than what happens here. Read every escrow description you meet the same way.
What changes two of three
The implementation, and only the implementation. The threshold is chosen when the address is generated, so a market could run two of two, or three of three, or an ordinary single key wallet with escrow existing as a column in a database.
That last case is common across this kind of site and it is invisible from a browser. A pooled wallet showing a balance next to your order behaves exactly like escrow until the moment it stops. Nothing you can inspect from outside separates the two, which is why the honest reading of any escrow claim is that it describes an intention.
Questions people ask
If the market disappears, can I get my money back?
If the escrow really is two of three and you still hold your key and recovery material, you and the vendor can in principle sign together. That rests on facts nobody can check from outside.
Can I tell whether escrow is real multisignature?
Not from a browser. A pooled wallet showing a balance against your order looks identical until a dispute or a disappearance forces the difference into the open.
Why is this counted rather than judged?
Because two of three is a definition. What is uncertain is whether it is in use, and that uncertainty is written on the page rather than hidden inside the number.