📌 Atomic Swaps Summary
Atomic swaps are a method that allows people to exchange one type of cryptocurrency for another directly, without needing a trusted third party such as an exchange. The process uses smart contracts to ensure that both sides of the trade happen at the same time, or not at all, making it secure for both parties. This technology helps users maintain control over their funds and reduces the risk of losing money to hacks or fraud on centralised exchanges.
🙋🏻♂️ Explain Atomic Swaps Simply
Imagine two people want to swap football cards, but they do not trust each other to hand over their card first. They use a locked box that only opens if both cards are placed inside at the same time, so no one can cheat. Atomic swaps work in a similar way, making sure both sides of a cryptocurrency trade happen together, so everyone gets what they agreed to.
📅 How Can it be used?
Atomic swaps can enable a peer-to-peer trading platform where users exchange cryptocurrencies directly, without relying on a centralised exchange.
🗺️ Real World Examples
A user wants to trade Bitcoin for Litecoin with someone in another country. Instead of using an exchange, they use an atomic swap protocol to trade directly from their wallets. The smart contract ensures that either both the Bitcoin and Litecoin are swapped, or nothing happens, providing security for both users.
A decentralised finance (DeFi) platform implements atomic swaps so users can seamlessly exchange tokens between different blockchains, such as Ethereum and Binance Smart Chain, without transferring their funds to an intermediary.
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