Learn Concept: Cross-Chain Atomic Swaps

By: Eva Baxter

Cross-chain atomic swaps are an advanced cryptographic technique enabling the exchange of one cryptocurrency for another, running on different blockchains, without requiring a trusted third party or centralized exchange. The technology uses hash time-locked contracts (HTLCs) to ensure that either both parties receive the exchanged assets, or the transaction is canceled. HTLCs use cryptographic hashes and time-based locks to securely enforce the swap conditions.

For instance, if Alice wants to swap Bitcoin with Bob's Ethereum, they both agree on a shared secret and the conditions of the swap via their respective wallets. The transaction is initiated when Alice and Bob securely commit their funds, and the shared secret ensures the successful transfer of assets. If conditions are not met within the specified time frame, the assets are automatically refunded to their owners.

This concept has significant implications for decentralized finance (DeFi), improving liquidity, security, and efficiency without relying on centralized authorities. For additional details, refer to the source article.