With the mainstream media tending to focus its crypto coverage on the price volatility of bitcoin, many of the advances taking place in cryptocurrency are underreported and misunderstood. Atomic swaps are one of the innovations that fall into this category.
Cross-chain atomic swaps, more commonly known as ‘atomic swaps’, are cryptographically-powered smart contracts that enable the trading of two cryptocurrencies on a peer-to-peer basis without the need of a trusted third party and without the risk of one party defaulting on their side of the trade.
If two individuals want to exchange, for example, bitcoin for ether without the use of a centralized exchange, an exchange rate would be agreed and person A would send BTC directly to person B, while person B would send ETH to person A.
However, as cryptocurrency transactions are irreversible, person A is at a disadvantage if they send their coins first as there is no certainty that person B will also send their coins. Hence, for the decentralized peer-to-peer trading to work across blockchains, there needs to be a mechanism that enables this that ensures neither person A nor B could renege on their side of the transaction. In cross-chain atomic swaps, hash-time locked contracts fulfill this function.
Simplistically, in this type of exchange, no party can run off with the other party’s money before the trade is complete and this is ensured by the cryptographically powered smart contracts of atomic swaps.
Atomic Wallet
Atomic Swap VS Centralized Exchanges
Universal Multi-Assets Wallet
Usually, the process looks like this:
1- User creates account and verification is optional. Many exchanges put restrictions on trade volumes and daily withdrawal limit for unverified users (e.g. Bittrex, Binance)
2- The user creates an order to buy or sell the coin. Some also exchanges charge a fee for deposits (Bitfinex,CEX, Coinbase, Bitstamp)
3- The exchange takes a trading fee to execute an order. Once complete, the user can withdraw coins to an external wallet, if necessary.
Hence, the user pays a withdrawal fee, the network fee and a service fee.
Pros
Trading via bots.
Increased liquidity for popular trading pairs.
Automated order execution.
Friendly user interface.
Cons
The exchange is a centralized solution unsustainable to hacking attacks, regulation and hardware server failures.
Custodial working principles: users must entrust their funds to third-parties.
exchange receives a user deposit and transfers it to a payout (hot) wallet and/or cold wallet.
Hence, huge amounts of crypto are accumulated on cold wallets. Frauds can take away up to 90% of users’ deposited savings through security breaches.
Withdrawals may be frozen due to transaction verification issues, hot wallet maintenance, lack of liquidity and so forth.
Trading is available by predetermined trading pairs, usually BTC / ETH / USD pairs. To exchange one coin for another, users must make at least two trades.
Withdrawal limits for unverified users.
Delisting unpopular coins.
Untransparent orderbook and possible falsification of trading volume.
Examples: Bitfinex, Binance, Bittrex and many more.
As a reaction to the current challenges of the industry Atomic project was created — a convenient and versatile decentralized solution for the custody-free cryptocurrency trading. Atomic Wallet platform is based on a unique proprietary engine specially designed to solve its specific tasks.
Decentralized Wallet
Download new multi-asset Decentralized Wallet. We support most of the blockchains including XRP, XLM, XMR, exchange options and buy-crypto with credit card. In Atomic only you control your funds.
Platforms
Atomic Wallet team is focused on bringing truly decentralized experience to all the customers on all the platforms. Atomic Wallet technology is created with the idea of omni-channel product which customer can access from any device he\she has.
Atomic Wallet supports the following platforms at the moment:
● Microsoft Windows
● MacOS
● Ubuntu
● Debian
● Fedora
Within the development further platforms are to be supported as well:
Web
● Javascript web based application
