Will the LN's Atomic Swaps eliminate the need for centralized exchanges?

[Abiky]

Do you think that once the Lightning Network becomes used in the mainstream world, it will eliminate the need for centralized exchanges with its atomic swaps feature?

This brings a new breakthrough in the Blockchain space, as it would allow anyone to exchange one coin from the other in a P2P fashion without the need to interact with an exchange platform. The approach seems to be much more convenient than decentralized exchanges themselves too, as the process of exchanging coins is seamless.

Still though, even if atomic swaps don't succeed in taking over centralized exchanges, they'll be a nice alternative for anyone who's looking for a quick and easy process to exchange one crypto to another without the intervention of a middleman.

In some ways, centralized exchanges seem to be too big to fail as they're the ones with the most liquidity, and money. Still though, as people realize the risks of hacks and theft within centralized exchanges, they will resort to other means. Which is why, there might be a possibility that decentralized exchanges and atomic swaps will become extremely popular in the future.

Nonetheless, what do you think about this?

[dothebeats]

Perhaps it will be as it will bypass KYC process and a painstaking creation of account and all those processes just to exchange apples to oranges. Also, knowing that this will be seamless, who wouldn't want to get what they wanted in just a few moments? In a fast-paced world where everyone seemed to be always chasing something, atomic swaps is a pretty neat idea that suits their needs. Anyways, the hardest part of this perhaps is starting. We all know that centralized exchanges already have the edge. LN Atomic Swap must generate enough hype, interest and users in order to go against centralized exchanges in the future.

[BitHodler]

It will only eliminate centralized exchanges and services when people run their own LN node, which I can't see happen. If you use a third party node, you're not much better off than using a centralized exchange.

Don't forget that Bitcoin's blockchain is only increasing in size, so the resources needed are getting more expensive and it will also require the private keys to be online all the time, which is something to take into consideration.

It will take years before atomic swaps will become a thing you and I will use on a frequent basis. It's not that I think it won't happen, but I'm just being realistic here. LN has a lot more maturing to do.

[franky1]

LN atomic swaps are possible but things still need to be worked out
such as:

1. price discovery
imagine it like localbitcoins. loads of listings of offers but no aggregated 'average price' with no central lookup for people to see an average price, it makes the 'store of value' more volatile as there would be no common spot price

just try using local bitcoins without looking up a website that shows an average price. you will find it a little harder to set your own price. and if everyone tried it. the price would go all over the place

2. speed of trade
exchanges offer fast trading which can be profitable. but if people have to search out trading partners in LN under a peer to peer scenario and then route to that peer, is slower than an exchange based trade. there can be instances of by the time you found someone offering a trade, by the time you commit a signed htlc, the other peer has already took an offer from someone else.
this is an actual problem, bcause even in central exchanges they have issues of multiple uses trying to make/take same orders which is where trading engines get designed. in LN doing per-to-peer atomics. there is no way to have a engine managing offers.

3.offer discovery
with routes having to 'find their own way' by going through partners in a 'try, if fail try else' method to get a destination. trying to find an offer involves searching all active nodes for possible offers. this alone can be very bandwidth heavy pinging thousands of nodes. and by the time you found 1-3 offers, one of those could have expired by someone else taking up the offer

summary
LN will become more central around hubs and factories which offer central services like exchanges with trading engines to get around issue above. the ONLY difference of 'centrality' is that its accessed via a node interface rather than a webbrowser interface

[hatshepsut93]

You can view atomic swaps as a decentralized exchange (DEX), and the main limitation of DEX is that it only works with cryptocurrency, because cryptocurrency is programmable money - it can execute transactions automatically and under certain conditions, but with fiat you can't do that, because fiat payments are centralized, and even if they provided an API, it still wouldn't work well with crypto. So, centralized exchanges will exist for as long as centralized money exists, and since crypto is not going to replace fiat anytime soon, centralized exchanges aren't going anywhere.

[bitmover]

Centralized exchanges will always be needed when trading FIAT x Crypto.

Atomic swaps is amazing, but you cannot atomic swap USD, and USDT is not USD.

[sandra_x]

Centralized exchanges are currently a major point of failure for cryptocurrency- frauds,widespread hacks,privacy violations,government take over (just to name a few), LN atomic swaps is sure to be a welcome alternative, the only challenge will just be the crypto -to- Fiat conversion by users

[Abiky]

Perhaps it will be as it will bypass KYC process and a painstaking creation of account and all those processes just to exchange apples to oranges. Also, knowing that this will be seamless, who wouldn't want to get what they wanted in just a few moments? In a fast-paced world where everyone seemed to be always chasing something, atomic swaps is a pretty neat idea that suits their needs. Anyways, the hardest part of this perhaps is starting. We all know that centralized exchanges already have the edge. LN Atomic Swap must generate enough hype, interest and users in order to go against centralized exchanges in the future.

Exactly. The LN's atomic swap feature must become widely adopted by the mainstream world, or else, centralized exchanges will still be the norm within the crypto space. One concern of the capabilities of the Lightning Network, would be its regulatory implications at least in the US. The FINCEN could easily categorize LN nodes as MSB (Money Services Businesses), especially when atomic swaps allow the exchange of one crypto to the other. As such, anyone running an LN node providing atomic swap functionality, could be easily targeted within the US.

Still though, the idea is great as there would be no need to use an exchange platform which is often complicated and takes time to use. Centralized exchanges might survive as they have a lot of money invested in this space. Binance is a big player here, and might not want decentralized alternatives to succeed (although it has launched Binance DEX). It's only a matter of time whenever people choose from one concept to another.

Nonetheless, the LN is still in development and not widely used within the mainstream world. Which means, that it could take years before we could be able to experience atomic swaps at their full potential for safe and secure P2P crypto trades. Just my thoughts

[pooya87]

maybe some day but not anytime soon.
in my opinion LN and atomic swaps not being ready and mass adopted is only part of the problem. the other part is that people aren't ready to give up the ways that they are used to so they keep using centralized exchanges even though they are horrible and keep scamming their users.
not to mention that for trading bitcoin, usually fiat is involved so i don't see how you could decentralized that.

[figmentofmyass]

Do you think that once the Lightning Network becomes used in the mainstream world, it will eliminate the need for centralized exchanges with its atomic swaps feature?

that doesn't solve the issue of fiat onramps. atomic swaps will be great for bitcoin/altcoin/token swapping, but what about people with fiat money who want to buy coins? or those who need to sell coins for fiat in their bank account? LN does nothing for them. these people will mostly turn to centralized exchanges.

[uray]

Do you think that once the Lightning Network becomes used in the mainstream world, it will eliminate the need for centralized exchanges with its atomic swaps feature?
This brings a new breakthrough in the Blockchain space, as it would allow anyone to exchange one coin from the other in a P2P fashion without the need to interact with an exchange platform. The approach seems to be much more convenient than decentralized exchanges themselves too, as the process of exchanging coins is seamless.
Still though, even if atomic swaps don't succeed in taking over centralized exchanges, they'll be a nice alternative for anyone who's looking for a quick and easy process to exchange one crypto to another without the intervention of a middleman.

People depend on centralized exchanges for a reason, the high liquidity and the ease of which they can execute their orders and some major exchanges allow features such as stop loss and other options to make things easier for the users and so is the reason decentralized exchanges did not get much traction or liquidity even though there are many in the  market and that will be the case with any other feature, as you mentioned it will be an alternate option for swapping small amount of coins.

[acroman08]

as long as LN is limited to crypto to crypto transaction I doubt it can eliminate centralized exchange sites since
centralized exchange is not only focused on crypto to crypto transactions and the market they cover is wider
than LN.

[Wind_FURY]

Perhaps it will be as it will bypass KYC process and a painstaking creation of account and all those processes just to exchange apples to oranges. Also, knowing that this will be seamless, who wouldn't want to get what they wanted in just a few moments? In a fast-paced world where everyone seemed to be always chasing something, atomic swaps is a pretty neat idea that suits their needs. Anyways, the hardest part of this perhaps is starting. We all know that centralized exchanges already have the edge. LN Atomic Swap must generate enough hype, interest and users in order to go against centralized exchanges in the future.

Exactly. The LN's atomic swap feature must become widely adopted by the mainstream world, or else, centralized exchanges will still be the norm within the crypto space. One concern of the capabilities of the Lightning Network, would be its regulatory implications at least in the US. The FINCEN could easily categorize LN nodes as MSB (Money Services Businesses), especially when atomic swaps allow the exchange of one crypto to the other. As such, anyone running an LN node providing atomic swap functionality, could be easily targeted within the US.

Still though, the idea is great as there would be no need to use an exchange platform which is often complicated and takes time to use. Centralized exchanges might survive as they have a lot of money invested in this space. Binance is a big player here, and might not want decentralized alternatives to succeed (although it has launched Binance DEX). It's only a matter of time whenever people choose from one concept to another.

Nonetheless, the LN is still in development and not widely used within the mainstream world. Which means, that it could take years before we could be able to experience atomic swaps at their full potential for safe and secure P2P crypto trades. Just my thoughts

That's true. Plus there's also a decentralized exchange called BISQ, which doesn't have much users until now, and it has been around before Lightning.

Maybe not everything should be trust-minimized?

[CryptoBry]

Still though, even if atomic swaps don't succeed in taking over centralized exchanges, they'll be a nice alternative for anyone who's looking for a quick and easy process to exchange one crypto to another without the intervention of a middleman.

Centralized exchanges are getting to be more powerful these days and I dread to think of the time that they can be running the whole cryptocurrency show on their own. The coming of LN's Atomic Swaps can help check the growing influence of the centralized exchanges though we should be realistic in not expecting that this can put those exchanges out from the center of the action. This can therefore be existing alongside with the exchanges and a great option for all bitcoin lovers all over the world.

[gentlemand]

I think a lot depends on what type of user you are. I only use exchanges to switch coins, never to trade. In that case if something like this was implemented it would be perfect for me.

Most traders want order books to play with and centralised operations are the easiest way of accessing that.

Regardless of who or what you are the option should be there to completely bypass the need for anyone other than you to control how and where you swap your coins. It's one of the biggest missing elements and the sooner it's addressed the better.

If crypto's ever to become a closed loop then the inability to exchange painlessly and without permission is a significant inhibitor.

[BrewMaster]

i am fairly certain that centralized exchanges that work with decentralized cryptocurrencies will eventually cease to exist. lightning network and atomic swaps and all the other progress that we are making in the decentralized exchange front is only one part of the reason, the bigger reason in my opinion is that the centralized exchanges have ensured their own eventual demise by providing terrible services that aren't even safe.

[Haunebu]

In my opinion, this is just wishful thinking op. The reason why so many people including me prefer centralized exchanges over decentralized platforms despite the hacks and scams over the years is due to the ease of usage and regulatory authority which is somewhat comforting.

I am not saying that decentralized platforms are pointless, but they will gradually rise in popularity over time. However, atomic swaps or anything else will never overtake centralized exchanges in terms of popularity.

[gentlemand]

In my opinion, this is just wishful thinking op. The reason why so many people including me prefer centralized exchanges over decentralized platforms despite the hacks and scams over the years is due to the ease of usage and regulatory authority which is somewhat comforting.

Why would anyone actually want a centralised exchange if there's another option? You're willing to risk the total loss of your coins for 'ease of use'? Something in wallet and on chain will be effectively instant and foolproof.

And you don't have to send photos of your username written on your penis to anonymous strangers if they decide to deprive your of your own money because their piece of shit software triggered something.

[XinXan]

In my opinion, this is just wishful thinking op. The reason why so many people including me prefer centralized exchanges over decentralized platforms despite the hacks and scams over the years is due to the ease of usage and regulatory authority which is somewhat comforting.

I am not saying that decentralized platforms are pointless, but they will gradually rise in popularity over time. However, atomic swaps or anything else will never overtake centralized exchanges in terms of popularity.

Hacks can also happen to decentralized exchanges though, hackers can infect the websites these exchanges use and steal your private keys, etc, it has happened, it's simply not too popular because not many people use them. It's also comforting knowing that a mistake wont necessarily ruin you, in a decentralized exchange you are responsible for every move, if you make a mistake, you are fucked, no one will be able to help you or go back in time, you have no support, I doubt big investors will ever use decentralized exchanges, it makes no sense.

[gentlemand]

Hacks can also happen to decentralized exchanges though, hackers can infect the websites these exchanges use and steal your private keys, etc, it has happened, it's simply not too popular because not many people use them. It's also comforting knowing that a mistake wont necessarily ruin you, in a decentralized exchange you are responsible for every move, if you make a mistake, you are fucked, no one will be able to help you or go back in time, you have no support, I doubt big investors will ever use decentralized exchanges, it makes no sense.

I wouldn't class an exchange that runs through centralised hosting and domains as decentralised. It's non custodial but the risks are there as you point out and there's no one who's going to bail you out.

If this form of exchange became bigger it's just another route to hacking, and perhaps an even more efficient one. I wouldn't use one of these. It has to be on chain and via your own wallet.