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Author Topic: Will atomic swaps replace crypto currency exchanges?  (Read 164 times)
ash_waz
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June 06, 2018, 12:30:48 PM
Merited by Jet Cash (1), theyoungmillionaire (1)
 #1

Was recently going through a article about atomic swaps which was rather a new and interesting concept for me. I do understand at a macro level of how such a technology could impact the transfer of one cryptocurrency to another without the aid of an exchange but I fail in my understanding how this would render crypto currency exchanges as being obsolete? How will this affect trading activities if this technology takes over and adopted in coming years? Would appreciate if someone with good insight to explain this to me!

For anyone who is not familiar with this concept or a crypto newbie I have tried summarizing the article in my words.


1. Atomic swaps is a concept that claims to allow for the direct, peer-to-peer transfer of cryptocurrencies across different blockchains.

2. Atomic swap has been a concept having its presence for several years though the real implementation or focus of developers to bring it to force is
    seen rather recently. The compelling reason for this shift is predominately due to the increased focus on cryptocurrencies which has attracted the
    interest of not just the investors but also the interest of hackers as well.

3. Since the advent of cryptocurrencies there have  been quite a few notable crypto currency exchange hacks and as the world moves further with this
    industry its no secert that the currently functioning exchanges are under immense threat of holding their customer funds. Basically having money on
    exchanges is like giving up custody of your assets to a third party. Atomic swaps seems to be addressing this problem by enabling users to hold their
    private keys without relying on others.

4. As per the article atomic swaps currently do happen and that is between different blockchains built on similar code (decred, litecoin & bitcoin-
    executed) and swaps between cryptocurrency tokens on the same blockchain with decentralized exchanges such as OX. However cryptocurrencies
    running on blockchain with much different code has to have purpose built tools for these atomic swaps to take place.

5. Apparently creating atomic swaps between cross chain platforms are highly complex and some say its not gonna happen in the next few months.

    



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June 06, 2018, 01:04:55 PM
 #2

It's certainly awesome technology as far as trading goes, but I don't think it will kill off exchanges at all. Some people dislike peer-to-peer trading because it's usually less convenient than buying/selling at an exchange. Bitcoin trading, for example, don't necessarily require the use of exchanges anymore because so many people are buying and selling it via platforms like Localbitcoins, but people still seek them anyway.

I'm not sure if it will make trading drastically different as I see it more of a quality of life enhancement (it lets you save escrow fees, exchange fees, and time, etc.) rather than an actual necessity.

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June 06, 2018, 01:16:47 PM
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It's certainly awesome technology as far as trading goes, but I don't think it will kill off exchanges at all. Some people dislike peer-to-peer trading because it's usually less convenient than buying/selling at an exchange. Bitcoin trading, for example, don't necessarily require the use of exchanges anymore because so many people are buying and selling it via platforms like Localbitcoins, but people still seek them anyway.

I'm not sure if it will make trading drastically different as I see it more of a quality of life enhancement (it lets you save escrow fees, exchange fees, and time, etc.) rather than an actual necessity.

Yes you do have a valid point as it beingi a life enhancement which I do agree as well, but what if security concerns overrides this then does it not become more of a necessity?
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June 06, 2018, 01:30:42 PM
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Yes you do have a valid point as it beingi a life enhancement which I do agree as well, but what if security concerns overrides this then does it not become more of a necessity?

Maybe? It should be noted that exchanges are a security concern now, and yet people still risk their money with them. It's not like peer-to-peer trading is completely safe either -- the one who sends first is at risk, etc. It all depends on the individual which method he finds riskier.

In the end, the method which manages to be proven better will win more users. It's hard to say which is better now because the other half of the comparison doesn't even exist yet, so while I'm somewhat skeptical, I would prefer to wait and see.

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June 06, 2018, 02:10:06 PM
 #5

Yes you do have a valid point as it beingi a life enhancement which I do agree as well, but what if security concerns overrides this then does it not become more of a necessity?

In the end, the method which manages to be proven better will win more users. It's hard to say which is better now because the other half of the comparison doesn't even exist yet, so while I'm somewhat skeptical, I would prefer to wait and see.

Yes I agree with you, its a matter of time I guess to see which method is more adopted, depending how much of a threat security issues are and personal risk appetite of masses things can change so it is a wait and see how things evolve.

Thanks for the insightful response.
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June 06, 2018, 02:18:19 PM
 #6

It's certainly awesome technology as far as trading goes, but I don't think it will kill off exchanges at all. Some people dislike peer-to-peer trading because it's usually less convenient than buying/selling at an exchange. Bitcoin trading, for example, don't necessarily require the use of exchanges anymore because so many people are buying and selling it via platforms like Localbitcoins, but people still seek them anyway.

I'm not sure if it will make trading drastically different as I see it more of a quality of life enhancement (it lets you save escrow fees, exchange fees, and time, etc.) rather than an actual necessity.

it certainly needs enhancement and a lot of work then it needs to be adopted to be able to replace anything. but i do believe that it will some day replace the centralized altcoin exchanges. not those exchanges that work with fiat.

imagine a platform either a website or an application that you open on your PC or phone and you meet the same people to trade with as if you went to a traditional exchange but on this platform you use Atomic Swaps. that is basically the same thing and same features but without you trusting any third parties.

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June 06, 2018, 02:33:17 PM
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I personally don't think it will replace exchanges per se, but both will coexist. If I'm not wrong, atomic swaps are pretty instant; hence missing the feature of putting up buy/sell offers on specific prices, stop orders, and such. Pretty much the order types that are present on exchanges.

Not 100% sure. Correct me if I'm wrong.

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June 06, 2018, 03:31:23 PM
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I personally don't think it will replace exchanges per se, but both will coexist. If I'm not wrong, atomic swaps are pretty instant; hence missing the feature of putting up buy/sell offers on specific prices, stop orders, and such. Pretty much the order types that are present on exchanges.

Not 100% sure. Correct me if I'm wrong.

I'm not 100% sure either but I think atomic swaps need a blockchain transaction so wouldn't be instant. I would see it as being used for p2p exchange by people that have a specific need for another currency. Exchanges would still be used by traders looking to profit from market movements.

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June 07, 2018, 03:51:47 AM
 #9

1. Atomic swaps is a concept that claims to allow for the direct, peer-to-peer transfer of cryptocurrencies across different blockchains.

Seems like a natural progression from cryptocurrencies. Cryptocurrency was created, in part, on removing the middle man in financial transactions. Atomic swaps do the same thing. It puts exchanges out of business...it sends ShapeShift running for the door. I love it!

Exchanges are getting paid and their customers take all the risk. If Atomic swaps can fix that I'm a huge fan.

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June 07, 2018, 03:56:51 AM
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I personally don't think it will replace exchanges per se, but both will coexist. If I'm not wrong, atomic swaps are pretty instant; hence missing the feature of putting up buy/sell offers on specific prices, stop orders, and such. Pretty much the order types that are present on exchanges.

Not 100% sure. Correct me if I'm wrong.

i believe you can still set open orders and walk away. the exchange that is happening through Atomic Swaps is more like a contract so you set the conditions and then let everyone know about your conditions aka buy/sell order then you can wait until someone fulfills those conditions and fills your order.
the problem that i see is that you may not be able to  fill half an order. for example if i want to buy 10 LTC some other person has to sell 10 LTC to me not 9 or ...

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June 07, 2018, 04:02:13 AM
 #11

I personally don't think it will replace exchanges per se, but both will coexist. If I'm not wrong, atomic swaps are pretty instant; hence missing the feature of putting up buy/sell offers on specific prices, stop orders, and such. Pretty much the order types that are present on exchanges.

Not 100% sure. Correct me if I'm wrong.

the problem that i see is that you may not be able to  fill half an order. for example if i want to buy 10 LTC some other person has to sell 10 LTC to me not 9 or ...
That doesn't sound good at all. But knowing that I wouldn't need KYC and stuff, I'd personally still use it. How are prices decided anyway? Through scraping info out of APIs like Coinmarketcap? Or are people just going to set exchange amounts? e.g. Setting an offer like 1BTC for 0.015LTC or something.

I definitely need to research more on this.

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June 07, 2018, 04:14:40 AM
 #12

I personally don't think it will replace exchanges per se, but both will coexist. If I'm not wrong, atomic swaps are pretty instant; hence missing the feature of putting up buy/sell offers on specific prices, stop orders, and such. Pretty much the order types that are present on exchanges.

Not 100% sure. Correct me if I'm wrong.

the problem that i see is that you may not be able to  fill half an order. for example if i want to buy 10 LTC some other person has to sell 10 LTC to me not 9 or ...
That doesn't sound good at all. But knowing that I wouldn't need KYC and stuff, I'd personally still use it. How are prices decided anyway? Through scraping info out of APIs like Coinmarketcap? Or are people just going to set exchange amounts? e.g. Setting an offer like 1BTC for 0.015LTC or something.

I definitely need to research more on this.

it probably will be a platform where you go and set your orders but in a peer to peer way. in a market you don't need to use API of any service to set the price. for example if i want to buy LTC i go on this platform and see what others are offering.
current price is 0.01583152BTC so if i see someone selling it at 0.014 i will buy ASAP and if the best offer is 0.016BTC then i will just place an order and wait for it to be filled. in the end the arbitrage opportunities and those who are doing it will bring the price to other exchange levels.

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June 07, 2018, 04:19:01 AM
 #13

Was recently going through a article about atomic swaps which was rather a new and interesting concept for me. I do understand at a macro level of how such a technology could impact the transfer of one cryptocurrency to another without the aid of an exchange but I fail in my understanding how this would render crypto currency exchanges as being obsolete? How will this affect trading activities if this technology takes over and adopted in coming years? Would appreciate if someone with good insight to explain this to me!

For anyone who is not familiar with this concept or a crypto newbie I have tried summarizing the article in my words.


1. Atomic swaps is a concept that claims to allow for the direct, peer-to-peer transfer of cryptocurrencies across different blockchains.

2. Atomic swap has been a concept having its presence for several years though the real implementation or focus of developers to bring it to force is
    seen rather recently. The compelling reason for this shift is predominately due to the increased focus on cryptocurrencies which has attracted the
    interest of not just the investors but also the interest of hackers as well.

3. Since the advent of cryptocurrencies there have  been quite a few notable crypto currency exchange hacks and as the world moves further with this
    industry its no secert that the currently functioning exchanges are under immense threat of holding their customer funds. Basically having money on
    exchanges is like giving up custody of your assets to a third party. Atomic swaps seems to be addressing this problem by enabling users to hold their
    private keys without relying on others.

4. As per the article atomic swaps currently do happen and that is between different blockchains built on similar code (decred, litecoin & bitcoin-
    executed) and swaps between cryptocurrency tokens on the same blockchain with decentralized exchanges such as OX. However cryptocurrencies
    running on blockchain with much different code has to have purpose built tools for these atomic swaps to take place.

5. Apparently creating atomic swaps between cross chain platforms are highly complex and some say its not gonna happen in the next few months.

    




The idea of this technology seems to me that it is very advanced. I am not saying that it is not possible but it might take years of research to develop this kind of technology. Plus, if this is implemented, hackers will be roaming all around the globe and the cryptocurrency market might die in an instant.

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June 07, 2018, 04:43:11 AM
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Didn't the atomic swaps only valid for the same proof of concept of the coin.
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June 07, 2018, 06:36:26 PM
 #15

Though it is quite interesting but i don't think it can replace currency exchanges.

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June 07, 2018, 06:52:39 PM
 #16

atomic swaps will b what LN does
yp LN is not going to be a bitcoin only feature. devs already admit to this.
many bitcoin/litecoin devs are in the process of handling inchannel swaps if ltc to btc. within thier channel partners privately

as for guaging the price. thats going to be something that needs development on. so for not atomic swaps should be thought of as the private offchain OTC swaps stuff.. and not anywhere near global publication/ price control exchanging

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June 07, 2018, 07:45:36 PM
 #17

Well, thank you for the article. I personally think that it cannot replace cryptocurrency exchange. Atomic swaps is kind of instance. Though atomic swaps don’t need the trust of third party but I think that it cannot replace cryptocurrency exchanges.
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June 07, 2018, 08:08:04 PM
 #18

It cannot itself replace current exchanges but it is great technology to be taken advantage of, there are many innovations they will play big role in trading.

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June 07, 2018, 08:23:41 PM
 #19

Don't just think about currency exchanges as in buying and selling coins to hold. Think about blockchain services that use different tokens working together seamlessly: that's why decentralized exchange protocols are a game changer. For instance, a video may be uploaded on Paratii (PTI), transcoded using Livepeer (LPT) and stored on IPFS (FIL) - doing those operations without decentralized exchange would be a huge pain in the ass, but 0x (for example) makes it easy and practical.
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June 09, 2018, 06:24:10 AM
 #20

Atomic swaps might remove the need for larger cryptocurrencies to be traded on exchange or the use of programs like shapeshift.

Smaller and new projects will still need exchanges. Atomic swaps won't work for brand new or smaller projects - its technically quite difficult.

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