When they actually do it that way, the &quot;channel&quot; relationship is between buyer and seller, without going through &quot;21.co&quot;. That&#x27;s fine.  But that only works if you do enough transactions with one buyer to justify a blockchain transaction.  You have to tie up some predetermined amount of BTC for a day or so, and you get back change for what isn&#x27;t used.  That&#x27;s a pain.<p>The more common case is what they call &quot;Off-Chain Transactions (BitTransfers)&quot;. &quot;21.co&quot; acts as a clearing agent for microtransactions, and so you have funds tied up against &quot;21.co&quot;, not with the seller. This involve some degree of trust in &quot;21.co&quot;, in that they can potentially steal your balance. (In keeping with Bitcoin scam tradition, they&#x27;d probably claim they were &quot;hacked&quot;.)<p>Their terms of service demand confidential arbitration (!), so you&#x27;re gagged if they screw you.[1]<p>[1] <a href="https:&#x2F;&#x2F;21.co&#x2F;terms-of-use&#x2F;#dispute-resolution" rel="nofollow">https:&#x2F;&#x2F;21.co&#x2F;terms-of-use&#x2F;#dispute-resolution</a>