Atomic Swaps – Implications and Challenges

Atomic Swaps – Implications and Challenges

Share

Exchanging cryptocurrencies is becoming increasingly important with every passing day. Atomic swaps are gaining popularity since the current methods of exchange are suffering from significant flaws. There is a huge risk in the present systems of cryptocurrency exchanges and may involve hefty transaction fees. Therefore, the atomic swap has a huge potential to replace the existing systems of exchange. More research is going on in the field of atomic swaps to make it viable for mass adoption. The term atomic swap is derived from word ‘atomic’ that refers to a unitary action or object that isn’t divisible further. atomic swap, therefore, is a transaction that is solid and whole.

The process of atomic swap completely eliminates any possibility of theft or fraud because it is complete only when the transaction has taken from both sides and both the parties have received their money in the cryptocurrency they desired for. The process is further made secure by signing using private keys and creation of hashed and time-locked transactions. Once adopted at a larger scale, atomic swaps will improve things in the cryptocurrency world and make the process of exchange more reliable, faster, and inexpensive. Here’s how atomic swaps will change the way we look at cryptocurrency.

Implications of Atomic Swaps

Implications of Atomic Swaps
Implications of Atomic Swaps

Provision to instantly pay with a wide variety of cryptocurrencies

It is expected that in the near future when more payment merchants will start accepting Bitcoin and altcoins for payment, people will be able to pay instantly using any cryptocurrencies they have. For instance, five people have gone to eat or shop and each of them uses different cryptocurrency. The atomic swap will allow them to pay their share using their respective cryptocurrencies. This will increase the use of cryptocurrencies among the general population which otherwise isn’t possible.

Provides liquidity to the cryptocurrency ecosystem

Atomic swaps have the potential to provide more liquidity to the existing cryptocurrency ecosystem. It is expected that it will lead to a surge in the number of vendors who accept cryptocurrencies for their payment. At present, due to convertibility issues, the vendors do not accept payments in cryptocurrencies but atomic swaps will eliminate that limitation. Using atomic swap, converting from one currency to other has become easier than ever. This brings cryptocurrency into practical use.
The rise in the value of cryptocurrencies

Further, it is expected that atomic swaps have the ability to increase the value of cryptocurrencies that will adopt this concept. For instance, Litecoin is increasingly putting in efforts to implement atomic swap. First cross chain atomic swap by Litecoin was done in September 2017 when 1 Litecoin was swapped by the creator of Litecoin, Charlie Lee, for 55 Vertcoins. Data suggests that since the swap, the price of Litecoin has almost doubled.

Makes it easy for people to exchange money

The most important implication of atomic swap is that it will make it extremely easy for people to exchange money between each other, which is quite a tedious process at the moment. This utility will make it very easy for people to exchange money with their family members and friends. In the near future, a large number of cryptocurrencies could be used on a regular basis for daily needs using atomic swap. Atomic swaps promise seamless and secure means for cryptocurrency exchange among the people. It is expected that very soon atomic swaps will gain huge popularity with a lot of people using it for payments, transactions, and money exchange.

Join Our Telegram Channel  To Stay Updated About QuickX Protocol.

Challenges in the Way

Challenges in the Way
Challenges in the Way

The road to making atomic swaps ready for adoption by masses is not very smooth. It is facing a few hurdles due to the fact that the concept itself is in infancy. With time and better technology, the atomic swap will find a wider range of applications but as of now there are a few challenges which are discussed below:

Advance agreement on the value to be exchanged

During the atomic swap, the amount to be swapped has to be agreed upon by the two users in advance. This process isn’t automatic and can create problems because the values of cryptocurrencies keep changing very frequently. For instance, Bitcoin rises or falls by 10-15% in a single day. This rise and fall can risk thousands of dollars.
The atomic swap might have atomic price valuations of currencies in the future but as of now, it doesn’t do that. A value consensus on the part of both parties is still required to complete the swap.

Support for only a few cryptocurrencies

Another major challenge along the way is that not many cryptocurrencies support atomic swaps at present. The number of currencies supporting it is expected to rise largely as those who won’t support the concept may lose a major market share to those who do. This will risk the value of cryptocurrency to fall behind. However, at present not many cryptocurrencies supporting atomic swap is a big challenge.

Direct competition with established exchanges

Also, atomic swap is direct competition to the existing cryptocurrency exchanges. Currently, the exchanges are making huge money out of conversion of one currency to other as they charge people for every transaction. So due to atomic swaps, the currency exchanges are at the risk of losing business and it is possible that they might create their own atomic swaps. This can, then, bring normal atomic swapping into direct competition with these exchanges.

Despite all the challenges that atomic swaps of currencies might be facing at present, the idea is a brilliant one and has a huge potential. It is more reliable, faster, and easier than any other alternatives at the moment. QuickX is among the very few numbers of organizations that are using it since the concept is not very popular. However, with time it will gain popularity and will find extensive applications.

The team at QuickX is skilled in atomic swapping and is fully equipped to meet the challenges along the way and we are making efforts for the concept be usable by the masses. Atomic Swapping has allowed the cryptocurrencies to become frictionless and reduced the conversion costs largely.

Join Our Telegram Channel  To Stay Updated About QuickX Protocol.