So, lets say you've developed a new altcoin and you're going to do an ICO. How does escrow protect coin purchasers? I mean, the dev team is eventually going to get access to the BTC at the end of the crowdsale, at which point they could just steal it all.
Escrow holds the funds until development is done and the promised product(shitcoins) hit exchanges and available for public, means the coins now are openly accessible so those with bags of coins can sell at will because when listed in exchanges it has value and funds are released because the equal value of funds are in hands of investors.