Atomic swap

An atomic swap allows for the exchange of one cryptocurrency for another cryptocurrency without the need for a trusted third party.

Overview

In traditional cryptocurrencies a trusted third party such as an cryptocurrency exchange or decentralized exchange (DEX) is necessary to perform a swap of cryptocurrencies in order to prevent one party from sending a currency without receiving a currency in return. An atomic swap is an all-or-nothing way to trade cryptocurrencies without those risks. An atomic swap system can use a hash time-locked smart contract so that a party must deliver the currency to be swapped within a specified time, or else the transaction will be cancelled. This preserves atomicity in that either the swap will take place, or no currency will be swapped. [1][2]

History

The idea of atomic swaps was first described in 2013 by Bitcointalk user Tier Nolan.[3]

ZCash releases their tool atomic swap tool, ZXBCAT, in experimental stage Oct 2017. [4][5]

Usage

In September 2017, Decred began to support atomic swaps between Decred, Bitcoin and Litecoin .[3]

Using multi-hop locks, atomic swaps can be realized without hashing.[6]

A Lightning Network is a second, optional layer that removes the mining fee and creates an instantaneous transaction.[7][8][4] Lightning Network was released March 2018 by Lightning Labs.[9]

See Also

References

  1. ↑ van der Hoeff, Mitchel (9 May 2018). "Atomic Swaps Simply Explained: How to Swap Cryptocurrencies without a Middleman". Hackernoon. Retrieved 29 September 2018.
  2. ↑ van Aaron, Wirdum (11 Jan 2017). "Atomic Swaps: How the Lightning Network Extends to Altcoins". Bitcoin Magazine. Retrieved 29 September 2018.
  3. 1 2 "Decred Adds Atomic Swap Support for Exchange-Free Cryptocurrency Trading". NASDAQ.com. 2017-09-20. Retrieved 2017-10-24.
  4. 1 2 O'Leary, Rachel Rose (11 Jan 2018). "Atomic Action: Will 2018 Be the Year of the Cross-Blockchain Swap?". Coin Desk. Retrieved 29 September 2018.
  5. ↑ "zcash-hackworks/zbxcat". GitHub. ZCash. 19 Oct 2017. Retrieved 29 September 2018.
  6. ↑ Malavolta, Giulio; Moreno-Sanchez, Pedro; Schneidewind, Clara; Kate, Aniket; Maffei, Matteo. "Multi-Hop Locks for Secure, Privacy-Preserving and Interoperable Payment-Channel Networks" (PDF). International Association for Cryptologic Research. Retrieved 29 September 2018.
  7. ↑ "Decentralized Exchanges, Off-Chain Atomic Swaps, And A Brief Look Into The Future". Coin Telegraph. 20 Apr 2018. Retrieved 29 September 2018.
  8. ↑ Castor, Amy (27 May 2017). "Cross Blockchain Trades? Lightning Gives New Life to Atomic Swaps". Coin Desk. Retrieved 29 September 2018.
  9. ↑ Torpey, Kyle (11 Mar 2018). "Bitcoin's Highly-Anticipated Lightning Network Goes Live As Startup Raises $2.5 Million". Forbes. Retrieved 29 September 2018.
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