According to various news sources, the first atomic Bitcoin Litecoin swap on a Lightning network testnet has been deemed a success.
Why is this so important, you ask? The swap is monumental due to it being ‘off-chain’ which means the ownership of the coins switched hands but there was no recording of it on either blockchain.
These swaps are a form of a smart contract and allow a frictionless decentralized exchange of cryptocurrency between two compatible networks. This could be deemed as a solution for decentralized exchanges and could create “families” of coins that would allow different functionalities.
Charlie Lee, Litecoin’s founder, states:
“Previous atomic swaps that I have done were on-chain, and had the on-chain limitations of slow [transactions] and high transaction fees. Off-chain atomic swaps are significantly better. They are instant, [have] low fees, and better protect one’s privacy.”
This method would allow users to pass different cryptocurrencies to other people without having to wait for on-chain confirmations and would have substantially lower fees. This could deem as a simple solution for scalability for bitcoin, as well as produce much faster transactions.
Another benefit to these particular transactions is they are completely and fully anonymous, due to leaving no trace on either chain. They are entirely complete transactions but untraceable.
Featured Image: facebook