$ 43,838
$ 2,358.6
$ 0.9998

Atomic Swap

An atomic swap, also known as a cross-chain trade or atomic cross-chain trading, is a technology that enables the direct peer-to-peer exchange of one cryptocurrency for another without the need for a trusted third party or intermediary, such as an exchange.

How Does It Work?

  1. Smart Contracts: Atomic swaps utilize smart contracts, which are self-executing contracts with the agreement directly written into code. These contracts ensure that the swap between parties is either fully completed or fully refunded, making the process “atomic” – it either happens in full or not at all.
  2. Hash Time-Locked Contracts (HTLCs): A crucial component of atomic swaps is the HTLC, which ensures that the two parties fulfill their obligations. It requires the recipient to acknowledge receiving payment by generating a cryptographic proof within a specific timeframe. If they fail to do so, the funds are returned to the sender.

Benefits of Atomic Swaps:

  1. Decentralization: Atomic swaps allow for true peer-to-peer exchanges, reducing the need for centralized exchanges.
  2. Security: Without the need for intermediaries, the risk of hacks or funds being stolen from exchange platforms is minimized.
  3. Reduced Fees: Direct peer-to-peer exchanges can lead to reduced transaction fees, as there are no intermediaries or platforms taking a cut.
  4. Interoperability: Atomic swaps can foster greater interoperability between different blockchain networks.

Challenges and Considerations:

  1. Complexity: Setting up and executing an atomic swap requires a certain level of technical knowledge.
  2. Liquidity Issues: For less popular cryptocurrency pairs, there might be liquidity issues, making it challenging to find a trading partner.
  3. Network Compatibility: Both cryptocurrencies involved in the swap must support the specific type of hashed timelock the swap requires.

Real-World Application: While still in its early stages, several projects and platforms are exploring atomic swap capabilities. For instance, the Lightning Network for Bitcoin has incorporated atomic swap functionality for faster and more scalable transactions.

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CryptoCurrencyUSDChange 1hChange 24hChange 7d
Bitcoin43,838 0.10 % 0.62 % 13.09 %
Litecoin77.82 0.19 % 3.02 % 8.54 %
XRP0.6860 0.29 % 5.40 % 11.72 %
Ethereum2,358.6 0.03 % 0.19 % 12.26 %
Dogecoin0.1021 0.45 % 4.73 % 21.70 %
Solana77.06 0.21 % 5.70 % 23.85 %
USDC1.000 0.10 % 0.02 % 0.08 %
Cardano0.2543 0.15 % 1.68 % 3.38 %
Tether0.9998 0.08 % 0.02 % 0.07 %
Binance Coin (Wormhole)222.47 0.38 % 4.71 % 3.08 %