Great Week for Segwit as First on-chain Swap is Completed
Last week was indeed a great week for the SegWit technology and Segwit enabled coins. Litecoin, which moved to Segwit earlier this year managed to successfully exchange LTC for Decred, Vertcoin and Bitcoin through Atomic swaps.
Recap: What are Atomic Swaps
Atomic swaps allow for peer-to-peer exchange of coins from two different blockchains. They use Hash-Time Lock Contracts (HTLC) on a multisig wallet and hence are called "on-chain".
In the simplest terms, HTLC is completed with two multisig addresses, one for each coin on the end of the swap transaction. In the swap, both parties will send their respective coins to the multisig address that applies to them and this will be locked up for a certain period of time. There is also an inbuilt function that will send the coins back to the owners in the chosen time if it is not completed properly.
The one end of the transaction will open up a payment channel for the particular coin and the other party will open up an offer for a certain amount of the coin being swapped. If both agree then the parties will sign their respective channels and close them.
This is indeed a revolutionary concept as it will allow people to swap their coins in a peer-to-peer fashion without the need of an exchange. Hence, it will further advance a key characteristic of cryptocurrency, decentralisation.
Three in a Row
The successful swap was confirmed by the creator of Litecoin, Charlie Lee and his counterpart at the Decred Project, Alexlyp. They were able to swap 1.337 LTC for 2.4066 DCR. It was not completely flawless as they had to complete the swap transactions via an on-chain transactions using Decred's repo wallet.
Charlie was not done there as the next day he was able to complete a swap with James Love Joy, the lead developer at Vertcoin. James moved over Decred's code to the VTC network and there was a successful exchange of 1 LTC for 55 VTC. This went off without a hitch and was an on-chain transaction.
On the 22nd of September, there was a swan song as Charlie worked with a guy called John in order to make an atomic swap between LTC and BTC. They used the same methods that they had employed for the two previous swaps and managed to successfully complete a 10 LTC swap for 0.1137 BTC.
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Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.