Equibit Successfully Integrates Atomic Swaps Into Their Wallet
Toronto-based Equibit recently demonstrated what they believe to be the first atomic swap, a technique that transfers funds across blockchains, inside a wallet. Atomic swaps are fairly new to the blockchain industry and they believe this to be the first time the technology was successfully integrated into a wallet.
Although still in the development phase, Equibit plans to become a blockchain securities platform. Equibit is a fork of Bitcoin, meaning it was developed on top of Bitcoin’s source code. They expanded upon Bitcoin’s distributed ledger technology and modified it to create an easy way for companies to issue securities.
An issuer can create shares and then sell them on the Equibit market. An investor who wants to buy those shares can do so fairly simply, all they need is some Bitcoin and an Equibit wallet. Once their Bitcoin is deposited into the Equibit wallet they can purchase the desired securities. The transaction is done automatically through an atomic swap.
Why are atomic swaps important?
Atomic swaps are currently the holy grail of blockchain innovation. Many great minds in the industry are working towards ways to integrate atomic swaps into existing blockchains. Atomic swaps create a trustless environment where digital funds can easily be converted and exchanged across blockchains.
Converting digital currencies from one to the other without atomic swaps is done through the use of a third party exchange. If someone wants to convert some Bitcoin to Litecoin, for example, they would have to first deposit some Bitcoin onto an exchange. Next, they would have to use the exchange to find someone who is hoping to convert their Litecoin to Bitcoin and an exchange is then made.
The problems with this system are that it takes time, there are usually fees involved and you are placing your trust in the exchange.
Atomic swaps do all of this instantly, with no fees and without the need to trust a third party. Equibit accomplishes their atomic swaps using hash-time locked contracts (HTLC), a type of smart contract that runs on the blockchain.
To initiate a transaction a seller creates an order and broadcasts it to the Equibit network. A buyer then generates a secret key and uses it to lock the required payment for the security. Next, the seller uses that key to lock their security. This is then submitted to the blockchain, once there it signals the buyer unlocks the security and sends it to the address. Lastly, once this is complete, the payment is unlocked and sent to the seller.
As of now their atomic swaps only work between Bitcoin and Equibit, but they are planning to incorporate other digital currencies in the future.
Chris Horlacher, CEO of Equibit explains atomic swaps in a bit more detail in this video.
Equibit is close to launching but still has a few hurdles left
The technology is “very close to being completed” said Stephen Barnard, Vice President of Marketing at Equibit. The majority of the technical work is done, they are now working to conform to any regulatory issues prior to launching.
“Apart from the significance of Equibit Group being able to demonstrate an atomic swap, this demo also illustrates the huge capability of our development team and the potential we have for the future,” said Horlacher.
Blockchains that hosts securities are a natural evolution for the technology. Many companies are developing blockchain based securities platforms. Equibit’s inclusion of atomic swaps may be the thing they need to set them apart from the rest of the pack.
Image credit: Equibit logo
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