What if there were no exchanges to hack?
As a new generation of crypto users begin to invest in the technology, developers are growing concerned about its infrastructure. They've seen this happen before – new users enter the space attracted by big gains, then suddenly, a catastrophic failure, usually at the very exchanges designed to hold and custody those funds.
But out of adversity, inspiration is taking hold, with high-profile coders turning their focus to atomic swaps, a concept that claims to allow for the direct, peer-to-peer transfer of cryptocurrencies across different blockchains. In the place of the vulnerable exchanges we use today, the idea behind atomic swaps is that these large repositories of customer money could be rendered obsolete by code.
And seasoned blockchain developers like Alex Bosworth believe this is all too necessary, especially given that users today need to effectively give up custody of their assets if they choose to hold funds on exchanges.
----He told CoinDesk:
"Putting users in control of their own private keys has the best aggregate track record for security despite individual cases of loss. Funds under centralized control on exchanges have led to the most massive security failures we've seen."
Andrew Gazdecki, CEO and co-founder of Altcoin.io, which recently launched a beta wallet for atomic swapping between crypto tokens, describes the problem in similar terms, arguing that users should be empowered to hold their own private keys (the alphanumeric strings that allow users to unlock, access and spend their funds) without relying on others.
"There are literally billions of dollars being held within these digital honeypots, and it's nearly impossible to find the perpetrators," he said.
Early examples of atomic swaps technology emerged in various stages in 2017, and while there's disagreement as to the timeline they'll be available to the public, some believe 2018 will be their year.
As Jameson Lopp, a BitGo software engineer, recently tweeted:
"Nearly instant atomic swaps . are coming soo than the everyone thinks. Definitely not a year away, but mere months."
----Atomic swaps already?
In some ways, atomic swaps are already here – depending on the kind of atomic swap you're looking to make.
For instance, last year saw swaps between different blockchains built on similar code – the cryptocurrencies decred, litecoin and bitcoin – executed. Meanwhile, atomic swaps between cryptocurrency tokens on the same blockchain became more commonplace, with decentralized exchanges such as 0x and, as mentioned above, Altcoin.io, adding instant trades between tokens on ethereum compatible protocols.
Cryptocurrencies running on blockchains with much different codebases, though, must rely on purpose-built tools to facilitate these kinds of transfers today.
Toward this goal, a tool for exchanging zcash for bitcoin called ZBXCAT was developed last year. Described by co-developer Jay Graber as the "walkie-talkie of payments," the tool will soon be accompanied by a simplified web interface.
Indeed, atomic swaps "could always be done manually," Graber said. However, because this requires a degree of technical skill, before atomic swaps see mainstream use, easier to use platforms will need to be developed.
At the same time, Lightning Labs, a company devoted to promoting bitcoin's Lightning Network, recently conducted its first off-chain atomic swap on its test block chain. Completed in November, the transaction saw litecoin and bitcoin swapped on an off-chain payment channel.
source : https://www.coindesk.com/atomic-action-will-2018-year-cross-blockchain-swap/