Algorithm

Cryptos:

2,117

Exchanges:

10

Marketcap:

$2,120,311,295,469

Volume 24h:

$50,109,644,881

Atomic Swaps

What does Atomic Swaps mean in crypto terms?

An Atomic Swap, also known as a cross-chain trade or atomic cross-chain trading, is a technology that allows for direct peer-to-peer trading across different blockchain networks. In simple terms, it enables the exchange of one cryptocurrency for another without the need for a trusted third party, such as a centralized exchange.

The term 'atomic' here is borrowed from computer science and implies that the operation is indivisible, meaning it can only be executed in its entirety or not at all, thus ensuring the security of funds in the transaction. If anything goes wrong during the swap, the transaction will be canceled, and the funds returned to their original owners, ensuring that neither party is left out of pocket.

This innovative concept was first proposed in 2013 and has become increasingly prominent with the growth of the cryptocurrency market. The principle behind Atomic Swaps relies on a cryptographic technology known as Hashed Timelock Contracts (HTLCs). HTLCs are a type of smart contract that ensures the parties involved in the transaction meet their obligations as agreed.

It sets conditions that require both parties to acknowledge receipt of funds within a specific timeframe using a cryptographic proof. For example, let's consider Alice wants to swap her Bitcoin for Bob's Ethereum. Both Alice and Bob would create a transaction on their respective blockchains (Bitcoin and Ethereum) locked with the same secret cryptographic hash.

Alice sends her Bitcoin to Bob, and Bob sends his Ethereum to Alice. They then have to unlock the received funds using the secret key. If either of them fails to acknowledge the receipt, the transaction will not go through, and the funds will be returned.

Did you find this term clearly defined?

Yes

No

Explore Other Crypto Terms

ATL

In financial and particularly cryptocurrency contexts, 'ATL' is an acronym for 'All-Time Low.' It refers to the lowest price point that a specific asset, such as a stock or a cryptocurrency, has ever achieved throughout its entire trading history.

Read More

ATH

In the realm of finance and particularly in cryptocurrency markets, 'ATH' is an acronym standing for 'All-Time High.' It refers to the highest value or price that a particular asset, such as a stock or a cryptocurrency, has ever reached in its entire trading history.

Read More

Airdrop

An 'airdrop' refers to a method in which free tokens or coins are distributed to the holders of a particular cryptocurrency. This is typically done as a strategy to promote a new cryptocurrency or to reward loyal users of a blockchain network.

Read More

Arbitrage

Arbitrage refers to the practice of taking advantage of price discrepancies across different crypto exchanges. This occurs when a cryptocurrency is being sold for different prices on separate platforms.

Read More

Bag Holder

A bag holder refers to an investor or trader who is holding an asset that has decreased significantly in value, usually with little to no prospect of regaining its former price.

Read More

Bearwhale

Bearwhale is a term used in cryptocurrency markets, combining the words 'bear' and 'whale.' Let's break down these two terms individually first.

Read More

Blockchain

A blockchain is a decentralized and distributed digital ledger that records transactions across many computers so that any involved record cannot be altered retroactively, without the alteration of all subsequent blocks.

Read More

Block

A block is a collection of data that contains a batch of verified and confirmed transactions. It serves as a building block of the blockchain, hence the name.

Read More