What is an Atomic Swap?
An atomic swap is a cryptocurrency exchange between two addresses without the use of intermediary exchange services like Coinbase, Binance, and Uniswap. Thus, atomic swaps avoid any signups, KYC, hacks, exchange transaction fees, and government regulations that come with using exchange services.
Since atomic swaps can allow participants to exchange across different blockchains, they are cross-chain cryptocurrency swaps. For example, across Bitcoin and Litecoin blockchains.
How do Atomic Swaps Work?
Atomic swaps are based on Hashed Time Contracts (HTLC). HTLC is like a locker with an address where both participants send their cryptocurrencies for verification before exchanging with each other. If one of them doesn't send cryptocurrency in the specified time, the transaction is cancelled.
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