Decred is announcing support for on-chain atomic swaps, which will allow cryptocurrency holders to trade directly, without having to rely on external exchanges. The cryptocurrencies initially supported are Decred (DCR), Bitcoin (BTC) and Litecoin (LTC).
“Support for on-chain atomic swaps is extremely useful,”Jake Yocom-Piatt, Decred Project Lead said in a statement. “Thanks to the foresight of the Lightning Network authors and developers, and the dedication of our own developers, it is our pleasure to deliver an important capability that has been discussed since the concept of cross-chain atomic transfers was proposed in 2013.”
Users can already begin performing exchanges between DCR, BTC and LTC using tools that the Decred developers have created. The tools are text-based at the moment, but will be integrated into the Decrediton GUI wallet in a future release.
According to the Decred team, this advancement disintermediates the exchange process, allowing for greater market fluency. It also delivers on the market desire for improved interoperability between currencies and the demand for new efficiencies that drive investor value.
“This is the first step in a progression toward high-utility, non-Turing complete smart contracts,” Yocom-Piatt told Bitcoin Magazine. “We look forward to a new generation of greater fluency between projects. It was a pleasure collaborating with the dev teams at Litecoin and Lighting Labs.”
The concept of atomic swaps (or atomic cross-chain trading) were first described by Tier Nolan back in 2013. A previous Bitcoin Magazine article provides a step-by-step explanation of a simple example where two users agree to swap agreed amounts of BTC and LTC and use the multisig and time lock features available in both Bitcoin and Litecoin basic scripting to synchronize two transactions on two independent blockchains without having to trust each other.
It’s worth noting that Lightning Network payment channels, now enabled by SegWit, make atomic swaps more powerful and easier to implement, and permit adding support for off-chain swaps.
“The addition of LN support allows for both on-chain and off-chain atomic swaps, meaning that trustless cross chain exchanges can occur,” noted Yocom-Piatt. “Since supporting LN does not break any existing functionality and only adds to Decred’s capabilities as a system of value storage and transmission, it is a very attractive target for addition to Decred.”
“On-chain atomic swaps are an important step towards enabling peer-to-peer cryptocurrency trading,” said Laolu Osuntokun, Lightning Network Daemon (LND) lead developer. “We are excited for this process to continue with off-chain atomic swaps over the Lightning Network in the near future. By taking this process off-chain, substantial latency and privacy improvements can occur.”
Decred (DCR) describes itself as “digital currency for the people,” completely independent, community funded and community owned. The project wants to build an open and progressive cryptocurrency with a system of community-based governance integrated into its blockchain, including a hybrid consensus system to ensure that no group can control the flow of transactions or make changes to the currency without the input of the community.
“Decred is Bitcoin as it should have been,” noted crypto-investor Jon Creasy. “Bitcoin would be of the people, for the people. As great an idea as this was, however, Bitcoin soon became controlled by an ‘oligarchy,’ so to speak.”
It’s important to note that some countries, such as China, are attacking cryptocurrency exchanges as the weakest links in the crypto ecosystem. The Decred move shows that, at least for crypto-to-crypto trading (for example, exchanging bitcoin for litecoin), it’s perfectly possible to operate without exchanges. However, it doesn’t solve the problem of crypto-to-fiat and fiat-to-crypto trading, which is arguably of top concern for cryptocurrency users.