Atomic cross-chain swap (ACCS) enables two parties to trade bitcoins across two blockchains directly.
Technology is in the process of development. Currently, only a subset of blockchains is supported. For conventional smart contracts, blockchain support is not necessary to implement the trade. The challenge of executing related activities in unrelated blockchains is resolved when both parties must complete their respective set of contract-mandated procedures in order for the transaction to proceed.
Implementations that are conceivable in theory:
- On the blockchain itself (on-chain) – a portion of blockchains is already supported. (explained in further depth below)
- Using some payment channel (off-chain) – presently only the Lightning Network and Raiden are being developed. Even for test networks, there are no ready-made implementations available. (explained in further depth below)
The technique is based on the Hashed Time-Locked Contract tool (HTLC). This is a system for time-separated cryptographic verification of the legality of participants’ activities. This tool combines two ways for preventing the completion of a transaction: time (time lock) and a secret number whose hash is published on the blockchain (hash lock).
Such a strategy secures the operation’s reversibility if one of the participants “disappears” (does not perform the required part of the actions).
HTLC is an established technology that is used in the Lightning network in particular. Support for HTLC and implementation of the same hash function are prerequisites for the feasibility of an atomic swap between a given pair of blockchains.
To eliminate the chance of fraud, the distributed ledger should prohibit transaction plasticity. The transaction ID cannot be modified arbitrarily, since doing so might deceive the exchange partner. This possible vulnerability is resolved by activating Segwit on the blockchain, which is also one of the requirements for supporting ACCS.
A good example of an Atomic cross-chain swap implementation is the Atomex cross-chain exchange.
ACCS implementation on payment channels
Although the ideas underpinning ACCS and payment channels are similar, these two terms should be distinguished. A pair of participants may conduct many transactions by establishing a payment channel between them. For the exchange across blockchains, an open payment channel in each blockchain is required. Participants then shut the payment channel, therefore immediately recording the trade on the blockchain.
The alternative of exchanging through a payment channel is quicker since it removes the requirement for a lengthy wait in the absence of partner activity.
The first transaction of this kind was conducted utilizing the Lightning network between Bitcoin and Litecoin.
Existing Merchandise
These types of trade need complete blockchain nodes where the exchange may be executed. Let’s explore exchange-operation-simplifying services.
There are few exchanges that implement ACCS reliably. Atomex facilitates the direct exchange of money across the Bitcoin, Ethereum, Litecoin, and Tezos blockchains. Swapping WBTC to BTC pair is easy with this platform. You are not required to deal with wraps, synthetics, etc. A cryptographically-secure atomic swap technique is used to conduct cross-chain transactions.
Commence trading immediately on the Atomex DEX. No paperwork, registration, Know Your Customer (KYC) or identity verification, or personal information is needed. For the protection of our users, we monitor trade activity to prevent service misuse and suspect swaps.
