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Monero Atomic Swaps: What They Are and How to Use Them

Introduction

Atomic swaps allow for the direct exchange of cryptocurrencies between different blockchains without the need for intermediaries or centralized exchanges. This guide will explain what atomic swaps are, how they work with Monero, and how you can use them to securely exchange Monero with other cryptocurrencies.

1. What Are Atomic Swaps?

Atomic swaps are a technique for exchanging one cryptocurrency for another without needing a trusted third party. They leverage smart contracts to ensure that either both parties fulfill their obligations or neither does, thus making the transaction secure and trustless.

2. How Do Atomic Swaps Work?

The process of an atomic swap involves several steps:

  1. Hash Time-Locked Contracts (HTLCs): Atomic swaps use HTLCs, which are smart contracts that require both parties to fulfill certain conditions or the contract will be invalidated. This ensures that the swap is completed as agreed or the funds are refunded.
  2. Creating the Swap: Both parties agree on the terms of the swap, including the amount and the cryptocurrencies involved.
  3. Initiating the Swap: One party generates a secret and hashes it. This hash is used in the HTLC. The second party then locks their funds in a contract that can only be unlocked with the secret.
  4. Completing the Swap: Once the second party reveals the secret to unlock the funds, the first party can use the same secret to unlock their own funds. If the secret is not provided, the funds are returned to the original owners after a timeout period.

3. How to Use Atomic Swaps with Monero

To perform an atomic swap with Monero, follow these steps:

  1. Choose a Compatible Exchange: Find a platform or service that supports atomic swaps with Monero. Examples include decentralized exchanges (DEXs) or specialized atomic swap platforms.
  2. Generate Swap Details: Specify the amount of Monero and the cryptocurrency you want to receive. Ensure that both parties agree on the swap terms.
  3. Initiate the Swap: Follow the platform's instructions to initiate the swap. You will need to generate a secret and hash it, which will be used in the HTLC.
  4. Complete the Swap: After the other party locks their funds, you will need to reveal the secret to claim your funds. Make sure to follow the platform’s procedure to finalize the swap.
  5. Verify the Swap: Check both the Monero and the other cryptocurrency wallets to ensure that the swap was completed successfully.

4. Using XMR.GURU Nodes for Atomic Swaps

For enhanced privacy and security during atomic swaps, you can use our Monero nodes:

Connecting to these nodes can help ensure that your atomic swaps are conducted in a more private and secure environment.

5. Benefits and Risks of Atomic Swaps

Atomic swaps offer several benefits but also come with risks: