A team of cryptocurrency startup developers is open-sourcing technology that enables trustless trading between the bitcoin and ethereum blockchains.
Now available on GitHub, the code has already been used to execute what startup Altcoin Exchange claims is the first so-called “atomic swap” between the largest cryptocurrencies by market value. As a result of the release, a now larger community of developers can play around with and build on top of the code.
For example, using Altcoin Exchange’s tech, developers can lock ether tokens in an ethereum smart contract that specifies the funds will only be sent if an equal amount of bitcoin is sent to a bitcoin address during a specific time window.
At a high level, that’s how the developer team at Altcoin Exchange executed the trade (the ethereum code for the transfer can be viewed on the ethereum block explorer Etherscan), which shows how 0.12345 ether was traded for 0.12345 bitcoin.
But while that might seem experimental or complex, developers instead see the milestone as another step toward the tangible goal of replacing centralized cryptocurrency exchanges with the ability to swap assets directly between blockchains.
Long theorized, the idea of atomic swaps has been around since at least 2013, but it’s seen a burst of new activity of late, with developers testing the technique to trade bitcoin for litecoin and bitcoin for zcash.
‘Stepping stone’
Still, it’s important to note the technology is in its early stages.
This means there are practical reasons atomic swaps might not be viable today, including the fact that one-to-one bitcoin-to-ether exchanges aren’t exactly fair trades given the price disparity between the assets.
To this, Altcoin Exchange CEO Andrew Gazdecki told CoinDesk that the team set up the demonstration this way for “testing purposes,” though the likely next step will be to trade bitcoin to ether for their respective U.S. dollar amounts or another fiat currency equivalent.
Further, though Gazdecki believes this marks a “milestone” for atomic swaps, he admitted developers still have plenty of problems to iron out before this new type of trade sees everyday use.
As such, he framed today’s release as a small step toward a better alternative, adding:
“Decentralized trading is the next step forward in this industry.”
Two-way sign image via Shutterstock