List of All Atomic Swap Coins
April 2024

What is Atomic Swap?

Atomic Swap is a smart contract technology that allows you to exchange one cryptocurrency without using centralized intermediaries such as exchanges. It is based on smart contracts and allows users to buy and sell their coins directly from their personal crypto wallets. That is, atomic swap coins are, in essence, a peer-to-peer trade that is carried out between different blockchains. Tier Nolan was the first to define a complete atomic swap protocol in 2013. Also, in 2012, Daniel Larimer developed a related protocol called P2PTradeX, which is considered by many to be the prototype of the technology. However, technically it became generally known only in 2017.

How does Atomic Swap work?

Let’s see how atomic swap coins work now. Atomic swaps can be done in two different ways, on-chain or off-chain. On-chain atomic swaps take place on the network of one of the two currencies (on the Bitcoin or Litecoin blockchain). On the other hand, off-chain atomic swaps occur on the second layer. Atomic swaps are based on Hash Timelock Contracts (HTLC) and hash transactions. HTLC contracts ensure that the exchange either takes place literally or does not take place at all. Each HTCL includes a HashLock that can be used to lock and unlock the deposited currency with a key that can only be used by the depositor and a TimeLock that automatically returns the money to its owner if the transaction was not completed within a certain period of time.

Users who want to exchange with each other must confirm or deny the exchange within a certain period of time. In other words, in order for the Atomic Swap to take place, both sides must approve this trade. If both parties do not approve this exchange, the exchange will not take place. This, in turn, prevents possible fraud. Confirmation operations are performed with the help of cryptographic hash functions.

The decentralized nature of atomic swaps is one of their most significant features. Decoupling the need for a centralized exchange or any other intermediary, cross-chain swaps are such that they do not need mutual trust between two (or more) parties. The security level also rises because users do not trust their funds to a central exchange or a third party. Instead of using the tool, purchases and sales are made directly from users' personal wallets. Moreover, the operational cost of this type of peer-to-peer trade is much less, since the costs of buying and selling are either decently low or absent. Atomic swaps allow you to make trades very quickly, with a high level of interoperability. In other words, altcoins can be swapped directly without using Bitcoin or Ethereum as an intermediary coin.

Advantages of Atomic Swap

At the same time, the atomic swap has some downsides, of course. We can discuss these in two separate frameworks as complex conditions and privacy issues. atomic swaps offer higher security. This, in turn, comes with stricter trading conditions than those imposed by exchange platforms. Thus, it requires the parties to interact directly without means of communication. On the other hand, atomic swaps may take time to execute. As a result, the transaction is active on the blockchain network for a longer period of time. We can consider these as downsides of atomic swap coins.

Disadvantages of Atomic Swap

Atomic swaps have a very great potential for developing the cryptocurrency world. Although atomic swaps are quite new and have limitations, this technology led to significant changes in blockchain interoperability and cross-chain trading capacities. The technique has a huge potential for the growth of the cryptocurrency industry and opens up new possibilities in the sense of decentralism and peer-to-peer money transfer. In last words, it is a platform where both the seller and the buyer can safely carry out their transactions.