Bitcoin [BTC] and Litecoin [LTC] Atomic Swaps Explained by Exchange Union
Bitcoin and Litecoin atomic swap was first executed and publicly documented by Conner Fromknecht in November 2017, and Lightning Labs confirmed that they successfully tested the first Lightning cross-chain atomic swap between the Bitcoin and Litecoin testnets.
We did it! 🙌 #2 Atomic Swap on Lightning between BTC & LTC!
Kudos to @bitconner from @lightning pioneering this. Who is #3? @SatoshiLite ? Follow our step-by-step guide to DIY 👇Tweet a vid #lnswap @exchange_union#bitcoin #LightningNetwork #Litecoin https://t.co/C1b6XrPEPL
— Kilian Rausch ⚡ (@kilrau) June 8, 2018
Kilian Rausch, a Bitcoin Maximalist and Product Minimalist at Exchange Union, wrote a Medium post how the Bitcoin and Litecoin swap happened instantaneously. The Bitcoin – Litecoin swap was executed directly between two LND nodes with privacy. Exchange Union is an open source project, developing the XU node software. XU nodes are operated by independent digital asset exchanges, which form the decentralized Exchange Union Network. The technology enables instant, secure and trustless trades of different digital assets between exchanges
The successful completion of the atomic swap of Bitcoin and Litecoin means a lot for Exchange Union. It’s concrete proof that the underlying technologies powering Exchange Union (cross-chain atomic swaps on payment channels) work in reality. Folks keeping an eye on Bitcoin and Litecoin would watch out for Exchange Union closely in days to come.
What is a Swap?
A cross-chain atomic swap is used to exchange funds between two participants, say A and B, whose assets reside on separate blockchains. This is achieved by having A and B execute a protocol that guarantees the atomicity of the transfer. Here, the atomicity of a swap refers to the constraint that the protocol should only have two outcomes, either A and B successfully exchange assets, or nothing happens. This property is crucial, as it ensures that neither party can cheat the other, and offers a method of swapping cryptocurrencies without a trusted third-party.
The capability to exchange currencies instantly using Lightning offers multiple benefits, such as immediate settlement, increased privacy, and low trading fees. The seamless exchange between Bitcoin and Litecoin through atomic swaps means more compatibility for the coins. It executes through smart contracts and does not depend on a third party like an exchange to make it happen. It would also mean more swaps like Bitcoin and Litecoin may happen in near future.
With the successful completion of an atomic swap between Bitcoin and Litecoin, Bitcoin prices are expected to go north. The variation in Bitcoin prices has been pretty sharp over a couple of months. The difference in the value of Bitcoin has adversely affected the value of almost every other cryptocurrency, causing the overall market capitalization of all cryptocurrencies to fall to USD 256 Billion. This is the lowest it has reached in the past three months, after reducing by over 70% from its all-time highest during January 2018 (about USD 800 Billion). Bitcoin enthusiasts are bullish about the Bitcoin price.
Image via Exchange Union Twitter Page
Join our telegram group