Lightning Network atomic swaps
The foundation of atomic swaps is the lightning network. Without that system running, it is not possible to initiate the process. Atomic swaps are far less complicated than they sound. It describes a procedure of trading Cryptocurrencies without a central party – an exchange.
(For example, Paul owns 1 BTC and wants to buy LTC. Laura, on the other hand, holds 10 LTC and intends to buy BTC. Without the system of atomic swaps, both parties would have to go to an exchange and place an order for selling or buying. Now, with atomic swaps, both parties can agree on a price/ratio and trade the possessions immediately. Let’s say 1 BTC is worth 10 LTC. Then Paul sends his BTC to the Bitcoin blockchain and Laura sends her LTC to the Litecoin blockchain. Both transactions will then be linked and can be claimed by a secret number.)
(In theory, this could even go so far, that if there were dif erent lightning networks on dif erent blockchains, the user could create a cross-channel payment channel and trade coins from one currency to another immediately.)
The whole process is far less complicated than it might appear to be and it has a chance to become a real game-changer and a huge benefit of Bitcoin’s blockchain. All Cryptocurrencies which are based on the Bitcoin blockchain can use atomic swaps.
Due to the high speed of progress, it is hard to predict whether the lightning network and all of its features will be the final solution. It could be that they come up with a better alternative in the near future since the lightning network still is in the development stage.
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