Blockchain interoperability is becoming a very popular concept that allows the trading of two different cryptocurrencies without the need for a third party. Last week on August 25 two Zcash engineers, Ariel Gabizon and Jay Graber demoed a working implementation of XCAT (cross-chain atomic trades) – a tool that can exchange bitcoins and zcash in a trustless way.
Performing Cross-Chain Atomic Trades With Zcash
Engineers Demonstrate Zcash and Bitcoin Atomic SwapsThe cryptocurrency zcash (ZEC) is a digital asset that aims to provide both digital scarcity as well as enable privacy-centric transactions. Similarly to bitcoin, the currency also has a fixed supply of 21 million but uses a transaction anonymization method called zero-knowledge proofs (zk-SNARKs). This technology claims to provide complete anonymity, but alongside this zcash can perform transparent publicly recorded transactions as well. Recently the team has been researching and developing blockchain interoperability tools with ethereum and bitcoin. Last week two zcash developers gave live viewers a demonstration of a cross-chain atomic trade between ZEC and BTC.
Atomic trades are becoming a hot topic within the cryptocurrency ecosystem, and just recently Lightning Labs introduced bitcoin and litecoin interoperability in the team’s latest release. Gabizon starts the zcash presentation by explaining how the process works by utilizing Hash-Time-Lock-Contracts (HTLC).
The HTLC concept is also the main component of the Lightning Network and Zcash developers created a command line tool called XCAT that enables this technology. HTLC’s use hash-locks and time-locks that require the receiver to confirm the transaction within a set deadline. The protocol utilizes Pay-to-Script-Hash (P2SH) transactions which allow the funds to be sent to a script hash until the contract is settled.