We often see the word " atomic exchange " in some blockchain media reports. So what does it mean?
Today, we will come to understand.
Atomic exchange is a point-to-point exchange of cryptocurrency from one party to another without the need for third-party services like cryptocurrency trading platforms. Throughout the process, the user completely controls and owns his private key.
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Atomic exchange can be performed directly between different blockchains, so it is also known as cross-chain trading.
So how does atomic exchange work?
A very simple explanation is that the two parties that are going to exchange the atom decide a shared secret. The parties will share their cryptocurrency if and only if their secrets match.
Ok, now that you know the concept, but how does it actually work? Let's take a look at the specific process.
Zhang San has some BTCs, and Li Si has some LTCs. They wanted to exchange, so they opened a payment channel. The initiator of this exchange (assuming Zhang San) created a "contract address", which is like a multi-lock safe, responsible for depositing funds for two people.
By creating a contract address, Zhang San will deposit it into his BTC and generate a value that acts like a key, and the hash it generates is like a lock on a safe.
Then, Zhang San sent the hash to Li Si, who used Zhang San to generate a contract address for his hash and sent his LTC to the contract address. Only Zhang can unlock the LTC in this address because he has the private key that generated the particular hash.
Zhang San can obtain the LTC by signing the transaction at Li Si's contract address. When he unlocks the address, he displays the value to Li Si. Li Si, who obtains the value, can obtain the BTC by signing the transaction of the Zhang San contract address.
The above process is the process of atomic exchange between Tokens on two different blockchains.
In atomic exchange, a very important technique is used: Hash time-locked contracts. For a detailed introduction to this technology, check out the tweet "Hash Locking of Cross-Chain Technology Solutions" before the vernacular blockchain .
The current blockchain faces two major challenges: scalability and interoperability. Through atomic exchange, we have a solution that can make two birds a stone.
The biggest advantage of atomic exchange is the opening of the DEX gate without trust. Atomic exchange eliminates the existence of third-party trading platforms and makes transactions as straightforward as possible, and you have complete control over your encrypted assets.
However, current atomic switching technologies also face three major limitations:
The first limitation that atomic exchange faces in its current iteration is that two cryptographic assets need to satisfy three conditions for atomic exchange: cryptographic assets must have a hash algorithm inherent to both; both cryptographic assets must be able to start. Hash time locks the contract; must have specialized programming capabilities.
As of now, these features will greatly limit the amount of cryptographic assets actually participating in these exchanges. However, this is not the worst part. It also limits the number of companies and users who can now experiment with them. This will increase the time the public is accustomed to this new technology.
In current iterations, atomic swaps still require a lot of refinement and enhancement before they become fast enough to process large amounts of data. Lightning networks can greatly help atomic exchanges in this regard.
3. Lack of compatibility
There are indeed more wallets that will use atomic switching technology, but in fact, the total number of compatible wallets and trading platforms is still very low.
If the atomic switching technology is mature and large-scale, what do you most want to use to realize the redemption of Token? Feel free to share your opinion in the message area.
Author | Wayne
Produced|Baihua blockchain (ID: hellobtc)
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