What is a cross-chain atomic swap?

A cross-chain atomic swap is method of exchanging different cryptocurrencies directly between two peers. Like trading dollars for pesos, it's a process in which two people can exchange one cryptocurrency for another, but without trust or third-party moderation. We say the swaps are "atomic" because they must be all-or-nothing.

How do atomic swap wallets work?

It is done using cryptocurrency wallets and Hash Timelock Contracts (HTLC), which enforce the exchange when both parties agree to it. In reality, there are only a few atomic swap wallet providers and decentralized exchanges that can be used in a swap.

What are some examples of off-chain atomic swaps?

For example, Lightning Labs, a startup that uses Bitcoin’s lightning network for transactions, has conducted off-chain swaps utilizing the technology. Special cryptocurrency wallets have also been developed that are capable of cross-chain atomic swaps—Liquality has developed a wallet that will swap Bitcoin, ETH, and more.

What is atomic exchange & how does it work?

The swap is conducted between two entities without a third party's involvement. The idea is to remove centralized intermediaries like regulated exchanges and give token owners total control. The term atomic derives from the term "atomic state" in which a state has no substates; it either happens or it doesn't—there is no other alternative.