Traditional crypto exchanges weaknesses
One of the most popular themes in the cryptosphere has been the fact that users had to resort to a small array of centralized exchanges especially in the early days in an unregulated space to deal cryptos. Lots of unfortunate events such as the collapse of Mt. Gox exchange or the compromising of the EtherDelta exchange and more similar circumstances in which platforms hold the users’ funds have highlighted more and more the weaknesses of traditional crypto exchanges.
Fees are less dangerous of course, but they are more than frustrating, and they’re basically another source of a headache for many investors in the cryptosphere.
Beyond hacks and fees, traditional exchanges are also going through the pains of hyper-growth. For instance, take a look at Coinbase which used to crash every time some explosive market movement was taking place in 2017, forcing users to watch only from the sidelines.
This is the point in which atomic swaps comes into the picture.
What are atomic swaps?
The revolutionary development of atomic swaps can take the promise of decentralization to an entirely different level especially when it comes to exchanging many cryptos or tokens for one another.
The main P2P trades problem is that the first sender in the transaction is disadvantaged because transactions are final and they cannot be reversed or disputed on the blockchain. After pressing send, you have to trust the party on the other side of your transaction.
Atomic swaps, on the other hand, are the best way to facilitate P2P trades in a totally trustless way. There will be no need for any third-party, centralized infrastructure in order to make these swaps work. This is the main reason for which we can consider them the future of crypto trading.
The two transacting parties will both make a respective “secret.” The whole process relies on generating hash functions such as random numbers in order to make a hash of the users’ secrets. These hashes cannot be reversed, and this means that they cannot be forged. Via a multi-sig, these secrets are used to make atomic swap transactions. They will have to be revealed in order for the cryptos to get swapped.
If both of the secrets are revealed, the transactions will be coupled instantly on both relevant blockchains. On the other hand, if one of the parties does not reveal the secret, the funds will come back to you safely. This makes mistakes and scams practically impossible. The trade happens successfully, or it does not happen at all.
Atomic swaps are considered the future of crypto trading because they can improve security and prevent scams. Merchants will be able to accept and transact more cryptos than ever before. This will definitely trigger a substantial wave of adoption.
Users will be able to move between any cryptos really quick. More than that, trustless and feeless decentralized exchanges that are based on atomic swap technology will bring more user friendliness to the cryptosphere.
Another essential benefit of atomic swaps is that users will be able to save money by switching to them.
Decentralized exchanges that use atomic swaps will benefit Monero and more cryptos because there will be no third parties involved to match buyers and sellers. There are already such exchanges on the market, and one of them is Altcoin.io which people see as the very first decentralized altcoin exchange.
The platform trades alternative coins that are usually not available on other platforms. These include the long-debated Monero (XMR), Ripple (XRP), DASH, MIOTA and more. The platform doesn’t belong to banks or other large organizations, and it’s built for traders by traders. It relies on a peer-to-peer network. Atomic swaps power Altcoin.io and this means that transactions and trading from one currency to another are made at high speeds lacking the need of a validation from third parties.