Sparkswap To Allow Trade Of Litecoin And Bitcoin Through Atomic Swaps
Google engineer turned Litecoin creator, Charlie Lee took to Twitter to announce an upcoming crypto project called ‘spakswap’ this Thursday.
“This project @sparkswap looks very promising. You’ll be able to trade $LTC and $BTC via atomic swaps through the Lightning Network. They don’t have a product out for the main net yet but I like what I see so far! #Litecoin #Bitcoin”
This project @sparkswap looks very promising. You'll be able to trade $LTC and $BTC via atomic swaps through the Lightning Network. They don't have a product out for main net yet but I like what I see so far! #Litecoin #Bitcoinhttps://t.co/ExRSPSRxDo
— The Litecoin School of Crypto ⚡️ [UASF] (@theliteschool) August 1, 2018
SparkSwap works by finding counterparties who agree on the prices of the currencies to be traded. It accomplishes this by using the SparkSwap relayer and then executes the cross-chain swaps over the Lightning Network. Transaction times on SparkSwap are comparable to traditional exchanges with trades completing in less than a second. Only the Bitcoin/Litecoin pair is currently supported with more Bitcoin pairs to be added soon. The SparkSwap software is officially in a pre-alpha state and is not on the mainnet. But users can test the swaps on Bitcoin and Litecoin testnet.
The primary focus of the project is the removal of trust concerns linked with intermediaries. The fundamental reason for this project is to focus on the elimination of the involvement of third parties so that users' assets can be protected from hacking instances. Furthermore, the users will no longer have to worry about local regulators or bad actors present in the market.
Lightning Network at the Heart of This
The Lightning Network is a second layer scaling solution and a payment protocol. It allows fast transactions between two users at cheaper transactions costs by creating a secure channel between the sender and receiver. This channel involves creating a multisig wallet by the two parties which require two digital signatures. The wallet now holds a finite amount of cryptocurrency.
The wallet address is saved on the blockchain. All transactions are now done in this channel and the information is stored on an updated balance sheet. The sheet is signed by both the parties on each transaction. No changes are made to the information stored on the blockchain. The channel is closed and the remaining balance is updated on the blockchain once all transactions are finished.
Traditional exchanges involve the risk of investors of digital assets being frozen by the local government. SparkSwap offers users complete control over their assets. The peer to peer system allows investors to trade directly with other investors without the involvement of any third party.