What Is an Atomic Swap?

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What is an atomic swap? An atomic swap is a way to trade using two different virtual currencies. Since there is no physical exchange, the virtual currency does not have to be actual money. Instead, it works by way of an atomic transaction between two or more virtual currencies. atomic trades make use of a special kind of self-enforceable contract, which executes certain specific functions when certain pre-agreed conditions are met fee-free, with no risk to either participant.

what is an atomic swap

With that said, how does an atomic swap function? Basically, when a buyer places a sell order for litecoin to one of the litecoin exchanges, then a sell order for another virtual currency from another buyer is instantly generated. This generates a win-win scenario for both parties. In this case, the seller of litecoin who is the buyer will receive immediate payment while the other buyer will gain access to fast capital.

Litecoin and other virtual currencies have been traded online for quite some time now. With the advent of modern technology and the internet, these trades have been made available to every single individual around the globe. However, not every transaction is covered by the exchanges and this is where atomic swap comes into play. Atomic swap is a kind of virtual contract that allows users to transact in currencies without the hassle of having to deal with currency exchanges.

With what is an atomic swap, you will never enter into a contract where you will have to worry about locking in a particular rate. With what is atomic swap, you can freely choose a specific time to purchase and sell your assets. You can do it anytime of the day or night that you want. For instance, you can open up your online account to trade during off hours when there is no trading platforms operating. At the same time, you can also close your account anytime of the day when you are done with your transactions. These platforms conduct the exchange without the involvement of any third party which makes sure that your transactions are 100% secured and reliable.

There are two kinds of atomic swaps which include the cross chain and the main network transaction. With what is atomic swap, you will be able to make trades across different blockchains. With these transactions, you will only be required to make one payment which is much faster than the traditional payment methodologies. With the help of this process, you will be able to complete transactions with ease.

Atomic swap works through two different types of swapping which include centralized exchange platforms and cross chain. The former involves having a central exchange platform that allows participants in the transaction to interact with each other. The platform of these transactions will perform the transaction through the use of its own smart machines. On the other hand, the cross chain involves the use of a series of decentralized exchanges which have their own independent machines. Atomic swap which is conducted through a centralized exchange platforms are mostly reliable and secure. However, it will still be preferable to go for the cross chain transaction as they are less prone to hack attacks.

Atomic swap is beneficial for buyers and sellers. What is atomic swap is a kind of private market where buyers and sellers can transact with each other. Basically, the buyers will buy a contract from sellers using a pre-determined price and complete the transactions on their own timeline. The major benefit for sellers when using this method is that they do not need to wait for their buyers to complete the transactions before they make a sale. As such, the sellers will also get instant confirmation of the sale which will in turn increase their profit.

Unlike the traditional exchange wherein there is a third party involved, what is atomic swapping is entirely driven by the buyer and seller. In this method, the parties involved are both leveraging on the power of their own computers. Through this method, users will not be limited to only few currencies or commodities because there will be a constant trading of currencies using different commodities.

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