Cryptocurrencies keep changing the world, allowing us to look at some problems and fields (like banking and healthcare, for example) from a new perspective. However, even though they are a staple of our lives, cryptos still have some issues that they need to solve. The inability to trade them directly between blockchains is a major one, and there have been a lot of attempts to fix that. Atomic swaps are one such attempt.
- What Are Atomic Swaps
- How Do Atomic Swaps Work
- On-chain vs Off-chain Atomic Swaps
- 10 Coins Using Atomic Swaps
- #1. Bitcoin (BTC)
- #2. Bitcoin Cash (BCH)
- #3. Decred (DCR)
- #4. Litecoin (LTC)
- #5. Monacoin (MONA)
- #6. Particl (PART)
- #7. Qtum (QTUM)
- #8. Vertcoin (VTC)
- #9. Viacoin (VIA)
- #10. Zcoin (XZC)
- About Changelly
What Are Atomic Swaps
Without going into the very specific and technical language, atomic swaps is a rather novel technology based on smart contracts. You can read about those on our blog as well. It allows for a quick crypto exchange between two different blockchains (for example, Bitcoin and Litecoin) without any intermediaries. It is a peer to peer exchange, where two parties trade BTC or Altcoins directly from their wallets.
While atomic swaps exchange has come to the light only in 2017, the talks about the possibility were there since as early as 2012. There were few likely predecessors to atomic swaps, the one being P2PTradeX that was released in the same 2012 by Daniel Larimer. Sadly, it didn’t manage to overcome existing differences between various cryptos, but it proved that the concept itself is feasible.
The first coins that were traded via atomic swaps technology were Litecoin, Decred, and Bitcoin. Communities of those coins took an active part in brainstorming, conceptualizing, developing, and testing the new tech, and continue to do so now, though different Altcoins and their users are getting in the process as well.
How Do Atomic Swaps Work
As was mentioned before, atomic swaps operate on smart contract technology. They prevent access to the exchange from the outside of parties making it, as well as prevent cheating. Now, let’s take a closer look at the inner workings of this exchange.
The transaction begins with the parties forming a smart contract for the exchange. Let’s say, Bitcoin for Litecoin is being exchanged. Now, the initiator places the agreed amount of Bitcoin in the special account that the contract creates, which serves as a deposit. After that, they get a key to access this account and have to share its cryptographic hash so that the second party could create another safe account to deposit their crypto into.
To get that crypto, the first party has to use their key, so it gets revealed to the second party as well (through the use of a hash lock). With that, both parties are getting their desired cryptos and the atomic swap is officially complete.
Why are they called ‘atomic’ swaps instead of just swaps? Well, it comes from the initial meaning of the word ‘atom’ — ‘indivisible’. Atomic swaps are atomic because the exchange either happens entirely or not at all. If any party changes their mind, the contract is canceled and the crypto returns to its original owners.
On-chain vs Off-chain Atomic Swaps
Atomic swaps can be completed in two different ways: on-chain and off-chain. They differ on where the transaction is completed, and, for now, different coins have different ways.
- On-chain: this type of atomic swaps takes place at the blockchain of one of the cryptos participating in the process. It is a quick and secure process, as it requires no complicated steps or intermediaries to work. However, in order to exchange cryptocurrencies this way, they should meet the following requirements: have the same hashing algorithm and support HTLC. Without that, on-chain atomic swaps exchange will not be possible. A good example of a compatible crypto would be Decred and Litecoin.
- Off-chain: this is the second type of atomic swaps, available for cryptocurrencies that do not share the same hashing algorithm, or don’t support HTLC. This way, the swap goes through the second layer off the blockchain. It is commonly known as ‘layer 2’. By using this method, Bitcoin and Litecoin were first exchanged through atomic swaps back in 2017.
It should also be noted that any fees for the exchange would need to be paid twice for atomic swaps.
10 Coins Using Atomic Swaps
For now, atomic swaps exchange is not yet ready to expand on the majority of crypto coins. It becomes even harder since new coins keep appearing and disappearing all the time, which is even truer for tokens. However, we have a list of 10 coins that are more-or-less ready for atomic swaps and solved scalability issues.
#1. Bitcoin (BTC)
Bitcoin ever remains at the top of cryptocurrencies with the biggest price, community, and media coverage. it comes as no surprise that it would be one of the prime candidates for making it atomic swaps exchange compatible. It was accomplished back in 2017, putting atomic swaps on the map of cryptocurrency’s most promising trends. Right now, it is possible to use off-chain swap to exchange BTC with others, since its hashing algorithm isn’t that compatible with altcoins.
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#2. Bitcoin Cash (BCH)
Incidentally, Bitcoin Cash came to fruition in the same year as atomic swaps exchange. With its popularity rising, attempts to solve the scalability problem, as well as concentration on improving the speed of transactions, while decreasing the following fees, it was promptly taken on board of the rising atomic swaps developing community. It was also used to attract even more attention to the project, as BCH received a lot of attention from the media interested in the cryptocurrency, crypto enthusiasts all around the world, and traders, who were drawn in by the promise of lesser fees and faster transactions. Right now, you can exchange it with BTC on-chain, and with other altcoins off-chain.
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#3. Decred (DCR)
As it happens, atomic swaps began on Decred blockchain, with its community being the most proliferate (at least in the beginning) in its development. Most often, Decred was paired up with Litecoin, as they share the same hashing algorithm and both support HTLC protocol. Even now, the atomic swaps developing team uses Decred repository on Github to continue the development of atomic swaps. It can safely be exchanged with other coins on the list.
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#4. Litecoin (LTC)
Another ‘founding’ coin behind atomic swaps, Litecoin was used to exchange both Decred and Bitcoin, proving the possibility of on-chain and off-chain swap to the public. It also shares the same peer to peer nature as the atomic swaps exchange itself. For now it, along with Bitcoin Cash, is one of the fastest Bitcoin fork cryptocurrencies in terms of transactions, and Litecoin keeps working to keep that leadership in the future, adopting and improving the Lightning Network system.
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#5. Monacoin (MONA)
Monacoin is another peer to peer decentralized crypto with a Proof-of-Work concept behind its reward system. It first appeared in 2014, and since then became widely popular in Japan, easily on par with Bitcoin and Ethereum. It was also legally accepted by the Japanese government, making it enticing crypto to mine for many people. That, and it is a hard fork from Litecoin, made it a natural choice to include in the atomic swaps exchange list. Now, it is fully atomic exchange-ready crypto, though most coins would require an off-chain type of the exchange to trade.
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#6. Particl (PART)
Particl is a blockchain system built specifically to be able to interact with any other blockchain out there. Its native coin, PART, besides being adapted to work with atomic swaps, is also a privacy coin, allowing for greater security and anonymity of its transactions. While it is a relative newcomer to the scene of cryptocurrency, Particl managed to get on the radar of serious traders thanks to its fast and continuous improvement, and formidable security protocols.Not that bad for a coin that was introduced less than 2 years ago.
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#7. Qtum (QTUM)
Qtum is a hybrid project, with its developers using a UTXO model from Bitcoin combined with the support for Ethereum Virtual Machine-based smart contracts. All of that is secured by a consensus-based on a proof-of-stake model. This resulted in a decentralized cryptocurrency that can work with most Solidity-based smart contracts, while being compatible with Bitcoin, thanks to using its UTXO. This allows using SPV protocol on light platforms, such as mobile phones and IoT devices. And now, with Qtum optimized for atomic swaps, it could be traded for any of the coins on the list or can be used to hold assets from other cryptos for a time.
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#8. Vertcoin (VTC)
Vertcoin is one of the Bitcoin-like cryptos popping up now and then. What makes it different, however, is how it handles coin mining, especially centralized mining and using ASICs to do that. In its base lies the protocol that severely restricts possible gains from using such mining methods, making it unprofitable for large coining farms to mine while allowing solo miners to get their rewards. To do that, Vertcoin developers use Proof-of-work (POW) protocols to determine who gets the reward for a block. In fact, developers of VTC are so intent on staying that course, that they’ve forked two times to improve on their protocols to offset centralized mining. Atomic swaps seem like a good way to attract more people and to introduce the crypto to more people via exchange and trade.
#9. Viacoin (VIA)
VIA is a coin derived from the attempt of improving on the original Bitcoin design, released back in 2014. In this case, the main issue that developers tried to fix was transaction delays. Delays not only slow down transactions but also prevent the usage of microtransactions. To fix that, devs used the Segwit technology, to speed up the process and to make it more secure. That results in Viacoin being 25 times faster compared to Bitcoin, and improvements keep appearing. Similar to Vertcoin, VIA uses Proof-of-work protocols to discern ones receiving the reward for their mining.
#10. Zcoin (XZC)
Zcoin is another crypto on our list that is mainly focused on privacy. In fact, it is such an important part of XZC, that its developers created their own security protocol, called Sigma. According to its official description on their website, with it, users can “mint” a private coin from the public one. It would break any transactional links and make it completely anonymous and untraceable. However, it is not the only unique protocol to the name of Zcoin’s developers. They’ve also created a unique PoW protocol, named Merkle Tree Proof (or MTP, for short). Similarly to Vertcoin, it is done to help solo miners compete against centralized mining and the widespread usage of ASICs.
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As you can see, atomic swaps exchange is a technology that has the potential to change the crypto world and protocols as we know them now, allowing us to swap coins between different blockchains at the moment’s notice. This will solve the problem of various cryptocurrencies being isolated from each other.
That, in turn, can finally lead them to expand even more in the real world. Right now, quite a few services (even Pornhub, in case you didn’t know) accept some coins as a payment method. However, with coins not being interchangeable, having scalability issues, and with major coins being more and more difficult to mine, cryptos sometimes feel almost like a self-contained community with limited outlets in the real world. With them connected like this, they might become a viable alternative for fiat currencies. That way, if atomic swaps hit the scene big, we might see entire companies giving and receiving payments mostly in crypto.
Still, while it is a far off perspective, and the crypto having a lot more issues to cover before it could replace fiat money, it is nice to see the community working hard on expanding and improving the existing protocols. After all, how can crypto fail with such a dedicated and hardworking community behind it?
And you can use atomic swaps if you buy any of the coins on the list. Just click on the button and choose the one you want.