Similar to how you would send money from one bank account to another, an atomic swap is a process of exchanging cryptocurrencies between different blockchains. The process is referred to as ‘atomic’ because there can only ever be two outcomes – either each person receives their requested cryptocurrencies or they don’t. This means that for a successful atomic swap to be made, both parties must have fulfilled the respective conditions involved in the trade.
Also known as atomic cross-chain trading, this exchange became possible thanks to the arrival of smart contracts: lines of computer code that ensure all terms are met before a trade can occur between two different crypto wallets. These swaps are an essential part of the blockchain ecosystem as they follow one of the fundamental principles blockchain was founded on – decentralisation.
Thanks to this process, people who want to remain disconnected from centralised infrastructure like crypto exchanges can do so without having to limit their trading options. Since there are no middlemen in this process, transactions using atomic swaps are faster and more affordable, with 100% control of the assets remaining in the user’s hands.