Litecoin is effectively Bitcoin’s sidechain, says Charlie Lee
Charlie Lee’s recent tweet brightens the day for crypto fans searching the cryptoverse for blockchains with more faster and secure transactions. The Litecoin founder tweeted that the Lightning Network can use Litecoin as Bitcoin’s sidechain. Transactions can happen across chains sans borders. He also promises faster and cheaper with security assured by decentralized PoW mining.
Atomic swaps help blockchain transactions to happen without intermediaries. These swaps use Hash Timelock Contracts. It is a time bound smart contract which generates a cryptographic hash function that can be verified between partied involved in the transaction. Atomic swaps support cross chain trading without a third party, like a crypto exchange being involved.
LN with atomic swap makes Litecoin effectively Bitcoin’s sidechain, but with much better security via decentralized PoW mining compared to federated/merge mining of regular sidechains. Value can move across chains seamlessly to take advantage of LTC’s faster/cheaper onchain txns. pic.twitter.com/7b2oZacukY
— Charlie Lee [LTC⚡] (@SatoshiLite) August 12, 2018
To exchange an altcoin for Bitcoin, traders are required to place orders with crypto exchanges. They match buy and sell orders to complete the transaction. A typical transaction to exchange an altcoin for Bitcoin requires a seller, a buyer and an intermediary which is a coin exchange.
The lightning network like atomic swaps also cuts out intermediaries. The network links two parties via payment channels permitting real-time transactions. It is a peer to peer system for making micropayments without delegating custody of funds to an entity like an exchange. It is touted as a solution to blockchain scalability problem. The atomic swapping of digital assets can reduce the dependence on centralized exchanges which are vulnerable to hacks and failures. With continued innovation, atomic swaps will supposedly help run decentralized exchanges.
Charlie Lee has successfully completed atomic swaps using Litecoin in exchange for Bitcoin, Decred, and Vertcoin. Atomic swaps have got a step up with the KOMODO team completing an atomic swap on their Electrum server. Electrum server allows a user to interact with a cryptocurrency without having to download the whole blockchain. This makes the concept of decentralized exchanges more realistic.
Image via Shutterstock
Join our telegram group