Decentralized finance is accelerating in the financial world at a high rate. Today, we have so many decentralized assets such as DeFi Wallet, tokens, and exchanges. Atomic swaps are considered the next big step towards decentralization.
Atomic swaps are self-enforcing, automated crypto exchange contracts. They allow peer-to-peer trading of cryptocurrencies without the need for intermediaries or third parties.
Tier Nolan introduced the idea of atomic swaps in 2013 when he introduced peer-to-peer swaps without the need for any third-party. Charlie Lie became successful in giving life to the idea of atomic swaps in 2017 when he told the world how he traded LTC/BTC over a cross-chain atomic swap on a social media platform called Twitter. Since then, many individuals and even organizations have been using this technology for trading.
Atomic swaps have the potential to change the way crypto has been exchanged in the community for so long. Crypto exchange platforms often do not allow their users to have complete control over their wallets. Thus, users are dependent on these platforms for the security of their assets. Atomic swaps solve such issues and provide traders more flexibility at much lower costs.
HTCL-Hash Timelock Contract Technology is used in atomic swaps. It is basically a smart contract that locks your transaction and needs verification from both parties to complete the transaction.
It has two main security features:
Atomic swaps do have huge potential, but they are only found successful on a prototype system with less user-friendliness. It requires users to have basic coding knowledge, and its concept is quite limited in its current state. Thus, it still has a long way to go for mass adoption.
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