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The founder of Litecoin Charlie Lee states that the Lightning network can use Litecoin as Bitcoin sidechain via atomic swaps. Continuous transfers promise to be faster, cheaper and safer.
LN with atomic swap makes Litecoin effectively Bitcoin sidechain, but with much better security thanks to the decentralized PoW mining compared to the federated extraction / union of regular sidechains. The value can go through seamless chains to take advantage of LTC's faster / less expensive onchain txns. pic.twitter.com/7b2oZacukY
– Charlie Lee [LTC⚡] (@SatoshiLite) 12 August 2018
Currently, to exchange an altcoin for Bitcoin, traders place orders with cryptocurrency exchanges that correspond to buy and sell orders. A completed transaction consists of the seller, the buyer and a third party trust broker such as Binance or Coinbase.
Atomic swaps facilitate cross-chain trading without a third party. For example, Charles can exchange his 10 Litecoin for Brian's BTC 10 directly, peer-to-peer, without Binance or Coinbase.
Atomic swaps use time-locked hash contracts (HTLC) to ensure that both parties confirm their end the deal once the parties submit transactions to their respective blockchains. Each party therefore needs a key to show proof of payment and release coins exchanged.
The Lightning network connects the two parties through payment channels, allowing real-time transactions that eliminate blockchain delays and custodial intermediaries. An increasing network of blockchains that exchange assets atomically could also eliminate the risks of trading on centralized plants that are vulnerable to hacks, attacks and bankruptcies.
Crypto's next level in scalability and speed will also be addressed by the Ethereum development team with Plasma and the Komodo development team, an atomic exchange token platform – among other projects
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Disclaimer: The opinions expressed in The Daily Hodl are not investment advice. Investors should do their due diligence before making high-risk investments in Bitcoin or cryptocurrency. Your transfers and exchanges are at your risk. Any losses you could sustain are your responsibility. Keep in mind that The Daily Hodl participates in affiliate marketing.
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