Atomic swaps are being used more and more. Maybe you've heard of the recent news from Charlie Lee, Basically an Atomic Swap between Litecoin and Bitcoin has gone through recently which has causes a lot of celebration. An Atomic swap allows 2 parties to exchange Litcoin in this example for Bitcoin with no need of any form of exchange. So there is no fees or chance of your funds getting lost because there is no third party that acts as an intermediary to trade your coins.
So recently exactly this happened with LiteCoin and BitCoin which is huge for both of the currencies. Max Lee announced this on Twitter to great acclaim.
Tweet:
https://twitter.com/SatoshiLite/status/911328252928643072
- SatoshiLite
In this case Charlie Lee traded 11 Litecoins for around 0.1 bitcoin with one of his peers, the transaction was tax free and the currencies went straight to each other with absolutely no middle man.
How is Works, Simple Explanation
If you have two people that want to trade coins they have to set up a small contract that will exist on the blockchain which will state how many Litecoins (or any other currency) you would like to trade for an amount of bitcoin(Or any other currency). This contract will exist on the Blockchain and will not be allowed to be tampered with in any way. Once they both send off their coins both of the coins will exist in an escrow. One of the peers will get a secret number that they have to give to the other peer to get their coins. Once the other peer enters the secret number both coins will be released. This allows for secure transactions and direct peer to peer trading. Clever isn't it?
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