What is an Atomic Interchange? The Merkle

Ter the world of cryptocurrency, there is a strong concentrate on how different ecosystems seemingly rival with one another. It always emerges to be Bitcoin against the surplus of the markets. When atomic interchanges will be introduced, that situation could switch rather quickly. The objective of atomic interchanges is to create interoperability inbetween altcoins and Bitcoin. It is expected this feature will be introduced by the Lightning Network.

Atomic Interchanges Will Switch Cryptocurrency Forever

It is safe to say there is a growing need for ways to convert Bitcoin into altcoins and vice versa. Right now this process can only be done through centralized services, such spil exchanges. Fortunately, it emerges a technological solution is just waiting around the corner. That is, assuming wij will everzwijn see the Lightning Network activate on the Bitcoin network. The upcoming UASF activation will pave the way for this to toebijten come August 1st.

This technological feature te question is known spil an atomic interchange. Te some circles, it is also known spil atomic cross-chain trading, but it means exactly the same. The concept of atomic exchanges is not all that fresh spil it wasgoed very first introduced back ter 2013. It has taken some time until cryptocurrency developers found a way to make this concept become a reality, but it emerges the Lightning Network will grant us this power.

An atomic exchange works te the same way users would send funds to one another, but there are some major differences. More specifically, it permits users to cross-trade different cryptocurrencies without relying on centralized parties. If user A has bitcoin, and user B wants Ethereum Classic, for example, they can agree to a immovable trading price and accomplish the transaction instantaneously.

One might argue using an atomic exchange would require a certain degree of trust, but that is not the case. Every atomic interchange uses a hashed time-locked contract , which is a part of the scripting language used for most major cryptocurrencies te existence right now. Both parties submit their individual transaction to the adequate blockchain. User A sends bitcoin on the Bitcoin blockchain, and user B sends ETC on the Ethereum Classic chain. The recipient can only eis this transaction by exposing a secret number.

This results ter both transactions being linked to one another, despite them taking place across two different blockchains. The process sounds a lotsbestemming more complicated than it indeed is. To be more precise, it will be a lotsbestemming lighter on the Lightning Network if successfully activated on the Bitcoin network. Any altcoin forked from Bitcoin’s codebase is more than capable of implementing the Lightning Network spil well. Litecoin may be one of the very first to do so. Other currencies require extensive scripting capabilities to make atomic interchanges possible.

Once different lightning networks can execute atomic interchanges on their own, this entire process will become a lotsbestemming less complicated. Users can open payment channels on both blockchains and effectively create a transaction processor. This also means users can exchange different currencies they do not even own themselves, spil long spil they have a payment channel to someone who does own said coin. It will, potentially, substitute cryptocurrency exchanges altogether. It will take some until atomic exchanges become a reality, but it is certainly something to look forward to.

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About The Author


JP Buntinx is a FinTech and Bitcoin enthusiast living te Belgium. His passion for finance and technology made him one of the world’s leading freelance Bitcoin writers, and he aims to achieve the same level of respect te the FinTech sector.

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