Atomic Swaps Can Change Everything
Let’s continue this discussion of decentralized exchanges shall we?
So let’s take a step back and look at what it is that users of cryptocurrency ultimately want.
We want to have control of our coins
We want to make trades as fast as possible- I mean, who actually enjoys waiting to see if their trade went through?
We want to know that we won’t be robbed when we put our coins up for a trade.
Decentralized exchanges are a good start to achieving this ideal.
They kill two birds with one stone by allowing you to stay in control of your coins- this removes third party risk altogether- but their major downfall is low volumes which lead to very slow or uncertain trades.
Thankfully the cryptospace is full of innovative thinkers and awesome developers who come up with impressive ways to improve how value can be transferred.
Today let’s learn about Atomic Swaps.
Atomic swaps are transactions that allow you to quickly trade one type of coin or token for another with another individual without paying any fees to a third party.
Right now in my eyes, this is the epitome of how decentralized exchanges should be.
It is this distinction -that you can trade across blockchains instantly- that makes atomic swaps something that will change how we interact with each other via cryptocurrency in a very dramatic way.
How it works involves smart contractsand the lightning network. If you want to learn about what smart contracts are and how they work and/or what Lightning Network is, check out the links down below.
So basically atomic swaps occur thanks to smart contracts, they are called atomic because they either happen 100% or else all parties are refunded their original coins or tokens. Because of the use of smart contracts, these transactions incur zero fees from a third party, and as long as both parties meet the agreed upon conditions for the trade then it will be initiated.
That’s the beauty of smart contracts, they remove human error and manipulation.
You’ll know that your trade either was a success or else you get all of your coins returned. If you’re interested in learning more about this specific type of smart contract, take a look at HTLC, a hashed timelock contract.
Atomic swaps require different blockchains to interact with each other; this means for an atomic swap to happen, it requires that the coins being traded are both from blockchains that use the Lightning Network. The Lightning Network allows blockchains to have off chain transactions and with a little bit of tweaking, it will allow for any blockchain that utilizes it to become interoperable.
So right now you can conduct atomic swaps using Bitcoin, Litecoin, Zcash, Decred. The only trick right now is finding someone to make the trade with.
In the near future, even if a merchant only accepts bitcoin, you would be able to pay him using Zcash and it would instantly be converted to Bitcoin for him to receive.
This is the type of innovation that makes me all the more excited and motivated to keep diving down the rabbit hole that is crypto and blockchain tech.
Additional Reading/Sources:
Learn more about Smart Contracts
Learn more about Lightning Network
Hashed Timelock Contracts- HTLC
The Merkle Article on Atomic Swaps
Medium Article on Atomic Swaps
Coindesk Article on Atomic Swaps
ZEC Devs demonstrate Atomic Swap with BTC
Zerohedge Article on Atomic Swaps and Decentralized Exchanges
Decred Adds Atomic Swap Option
Lightning Network and Atomic Swaps
BlockGeeks Explains Smart Contracts
Love to see that you are using the brave browser <3 and btw. your shooting spot looks beautiful.
I'm using the Brave browser as well; I love it! and you're right, she always does an excellent job on these videos; Love how she weaves in the beauty of nature with all her content.
Every time I read one of your post, you bring about more information about the crypto-wolrd for which I didn't know this or that. You are so resourceful and well connected in this realm. It is impressive! Thanks a lot for sharing your wealth of information with us, it is always appreciated from this end.
When it comes to decentralized exchanges, I can't help but go with Bitshares as they are bombproof, the fastest in the world and while being decreed as totally legit. The Atomic Swap option is very very interesting and I'm going to go read more about it right.
Thanks a bunch for it all again, namaste :)
I as well chose bitshares and while I believe the team and mission is off the hook, not to mention the instruments/tokens offered, I think atomic swaps are of the hook simple, gamechanger. I have to report sadly my first atomic swap experience somehow ended up as phish attack and resulted in me losing my eth. Beware of the phishing attacks (faulty/fake websites).
Triple check the urls don't click links from untrusted sources... I still don't know how it happened but I under up transferring eth to a fake shapeshift site! Be careful.
Oh my point is these swaps should be fully compatible to increase liquidity with platforms like bitshares as well.. Even before they implement the sidechain themselves.
Kind of you to share and give your worthy note of advice. Sorry to read you had such a bad experience, yet I' glad you learnt from it and keep going strongly. Good for you, good for us all! Namaste :)
I never try to be 'first' when it comes to new things; so I thank you for your service and sacrifice. That being said, I sent about 40 #ardr to the 'testnet' not realizing the platform I downloaded wasn't an actual Wallet; so I've got money 'floating' that i'll probably never get back; all comes with what happens, when going first; lol and it's why I never try to be first!! ... lol if I can help it.
Things like this happen when you (or I) are the lab rat. Sucks to be 'tested on' -- but the future of this kind of swapping is so exciting; as it means several of the coins we're grabbing now, will all rise in value in the future when we're able to easily exchange them with one another.
thanks for sharing your experiences; they're going to help others! When it's 'safe' to swap coins, get ready....
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Excellent video, Heidi, as always! I've been meaning to look into atomic swaps a bit more and this is a fantastic overview. I hope in the future all wallets will have a contract interface built right in where people can add their currency pairs of choice and put up bids and/or fulfill bids as needed. This will really piss off the governments as well. :)
Every time I think about the scenario you mentioned of each person using their own preferred currency, it reminds me of this talk by Andreas Antonopolis on currency as language. Such a cool idea to think about how value will be used in the future.
Keep up the great work. I added you to my steemvoter. :)
This is our reward for following this tech from the beginning, we get to see it evolve! Thanks for the link for Andreas's talk, he usually has a great way of relating crypto. Maybe next year he'll be at Steemfest :D
Thanks for the support, I appreciate it!
@pro-analyst Check this out. There are plenty of ways this can be implemented.
SO many ways to implement and I'm excitedly looking forward to seeing what all these intelligent forward thinking minds do with these breakthroughs!
Wow this is a game changer for sure. There seems no end to where this technology is taking us. We are all surfing the wave it seems and woe what a great wave it is. Incidentally those waves behind you look good perhaps you should get out there and do some surfing yourself.
Vey informativ a usual Heidi
Finally i found you on this platform
Firstly, you are the one who inspired me to start work in steemit.com.
Secondly, this video is really full of info and helps me alot regarding to the cryptos.
keep posting
overall fantastic work mam
:)
upvoted
Very cool, thank you for the vote! Glad you joined and I hope you can find a great community and success here :)
you're welcome
&
thank you for the best wishes
Power back to the people! Awesome video and blog explaining atomic swaps in detail. Thank you very much. I can't wrap my head around the fact crypo currencies aren't decentralized because of exchanges and exchange rates. Hopefully this will change everything. Such a bright future and interesting times we live in.
Speaking as a Steem developer, we have implemented the technology required to participate in atomic swaps (HTLC). It can be enabled through a hard fork if enough support is expressed.
I think that is a great idea. I would back it. Maybe this should go to #discussion??
Steem transactions are already super fast and free, to apply this with other cryptos seems like a logical next step.
Thanks for posting about this. My son was just asking me about this concept. I now know more about how Atomic Swaps work. I appreciate your crypto-tips videos and posts!
Thank you for sharing. Very interesting, I'm new to the crypto world and found the whole process somewhat fee heavy. To be able to do an Atomic Swap seems the right way to go. I shall be reading more of your posts.
Thanks again. Upvoted, Resteemed and Followed :)
Thank you for the support :)
very good information
Amazing info as always! You're the best Heidi!