> So if I (as a customer or as a service) make a mistake I'm completely hosed.
In other words, the costs of making mistakes is internalized. I think externalities are a bad thing.
> And since the service isn't insured (yay no regulation),
Insurance and regulations (and by that, I assume you mean government regulations) are not the same thing. There is a lot government regulation unrelated to insurance, and a lot of insurance unrelated to government regulation.
> a mistake on one customer's account can harm everyone else.
How's that?
> Escrow is not a competitive advantage.
What do you mean by that? I think escrow is a great idea, but I don't know what you mean by saying that it's not a competitive advantage.