What are Atomic Swaps, and why do we need them?

tl;dr Atomic Swaps enable transferring funds from one blockchain to another, all without a centralized escrow.

Most people who have purchased cryptocurrency have, at some point, converted one coin to another, typically through an exchange. You send currency X to the exchange, sell X for your counties fiat denomination or a stable coin, paying a fee of some percentage of the sale price. Then you purchase currency Y, paying another fee on the purchase price, and then paying a small (usually) fee to withdraw your funds to your secure self-custody wallet.

It typically works fine, but those fees could have gone towards more crypto, and really we would like to break as many of the dependencies on CEXs as possible. Atomic Swaps allow you to safely trade one coin for another, based on a condition that is evaluated at some point in the future. This condition enforces that both parties have received the expected amount of currency. If either party has not received the agreed-upon amount, the transaction is effectively reversed.

This could have saved the person just recently that sold a Gen3 Avatar for moons and agreed/volunteered to send the Avatar before the moons were sent. Without selling the Avatar on OpenSea (middle man exchange acting as escrow), one side of the transaction would have to be the first to send, thereby taking on the full risk of the transaction.

Of course, we still need a smooth way for people to buy crypto without a centralized exchange, even if that means to participate we all have to get stripe accounts so that we can receive/send payments. Beyond the initial purchasing, there are still many times where swaps will be more efficient and more secure.

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This has many uses, and everyone should be encouraging their favorite projects to implement support for Atomic Swaps so we can push this into mainstream crypto adoption. Take out the middle man, take out the fees, take out opportunity for scams and malfeasance.

More info: https://www.coindesk.com/tech/2021/08/20/a-beginners-guide-to-atomic-swaps/