Blockstream Launches Atomic Swaps on Liquid Bitcoin Sidechain

by | Jul 5, 2019 | Bitcoin, Cryptocurrency, Cryptocurrency News

blockstream | atomic swaps | bitcoin | Sidechain

Blockstream creates an “experimental” tool dubbed as Liquid Swap Tool, that will enable users to trade “trustlessly” easily between tokens launched on its Liquid sidechain.

Blockstream uses “atomic swaps,” a cryptographic technology that will serve as the backbone for newer decentralized exchanges currently in development. Such transactions are focussed at most exchanges are middlemen trusted by users to exchange cryptocurrency on their behalf.

Over the years, many cryptocurrency exchanges have lost funds or suffered hacks, due to which technologists argue that these exchanges could not be trusted with money. Here comes the role of Atomic swaps.

This specific atomic swap tool is specifically geared for tokens launched on Liquid, a sidechain that’s pegged to bitcoin. In order to use it, users must send their tokens to the sidechain, effectively trading their bitcoin for “L-BTC.”

Quite similar to alchemy, it morphs bitcoin into an altered type of bitcoin that will be faster with more privacy features. However, it requires more trust in the intermediaries that run the sidechain. Blockstream recently launched a tool for launching security tokens on top of the so-called “sidechain,” which is pegged to the bitcoin network.

With the new Liquid Swap Tool, users would be able to trade one of these tokens without requiring an intermediary to do the exchange. Notably, for now, the instructions for the tool are pretty technical. After downloading Liquid the user will need to fiddle with a configuration file, then download a separate swapping tool and perform the instructions in the code repository to get it going.

The repository describes the tool as “early days,” arguing that it  “should be considered experimental,” going on to outline a way to make such trade more private. The description continues.

“It is recommended to use the tool with someone that you can trust to keep such data private. Users are also encouraged to encrypt/sign messages sent with their trading partners in order to mitigate against man-in-the-middle attacks.”

Read more: Fujitsu Unveils Blockchain-Based Identity And Credential Rating Service 

Image source – Blockstream twitter

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