How Atomic Swaps Work and What They Are

What is an Atomic Swap?

Atomic swaps are a type of cryptocurrency exchange that allows users to trade different cryptocurrencies without the need for a third-party intermediary. This type of exchange is also known as a cross-chain atomic swap or atomic cross-chain trading. Atomic swaps are decentralized, secure, and trustless, meaning that no one party has control over the funds or the exchange process.

Atomic swaps are made possible through the use of smart contracts, which are self-executing contracts that are written in code and stored on the blockchain. These smart contracts are programmed to execute a trade only when certain conditions are met, such as when both parties have sent their respective funds. This ensures that both parties receive their funds in a secure and trustless manner.

Atomic swaps are still relatively new and are not yet widely used, but they have the potential to revolutionize the way that cryptocurrency is exchanged. By eliminating the need for a third-party intermediary, atomic swaps can reduce transaction fees and make trading faster and more secure.

How does an Atomic Swap Work?

Atomic swaps work by using a smart contract, which is a computer program that is used to facilitate the exchange of cryptocurrencies. The smart contract is programmed to execute the exchange only when both parties have fulfilled their obligations, such as providing the necessary funds. This ensures that the exchange is completed without any risk of fraud or double-spending.