How does bitsquare sell/buy fiat currencies when it is decentralized?
In this situation you are the third party who verifies those deposits are legit. All banking transactions take place directly between the buyer and seller. Bitcoin goes into an on-chain 2of3 multi-signature address (in the case of bitsquare and cancoin) or a custodial wallet (in the case of localbitcoins). Once the bitcoin is in escrow the seller gives their bank payment details to the buyer and the buyer initiates a bank transfer directly to the sellers bank account. At this point the seller will release the bitcoin from escrow and send it to the buyer.