There are always exciting developments in the cryptocurrency space to take note of. Monero atomic swaps are currently getting a lot closer than one may think. A new protocol has been created to exchange between BTC and XMR.
Atomic Swaps for XMR
On paper, it sounds virtually impossible to perform atomic swaps with Monero. The current concept of such swaps seems to have some limitations that make it difficult to integrate with certain blockchains. However, there is a lot of research still to be done that can yield surprising results.
In the case of the newly developed protocol, it took several years of research. Initially atomic swaps leveraged Hash Time Locked Contract technology. An interesting approach, but the technology doesn’t exist on Monero natively. For the developers exploring atomic swaps, a brand new solution had to be found and developed.
Both Monero and Bitcoin have different cryptographic parameters. This creates another roadblock to explore atomic swaps, as both chains have virtually nothing in common. At this point, most people would give up on exploring XMR/BTC atomic swaps, for obvious reasons.
Building a protocol capable of handling these differences is not easy. A draft protocol was presented in early 2020. Eventually, this resulted in a revamped protocol capable of supporting XMR/BTC atomic swaps.
Peeking Under the Hood
The new protocol has some serious potential. XMR Used for these atomic swaps are locked in an address generated by both participants. These addresses are not fully controlled by either party, as they only have access to half of the private key. This is done deliberately, as security is of the essence when handling these cross-chain swaps.
Both participants also need to prove that the address on the Bitcoin chain related to the Monero chain. Using Bitcoin scripts and ECDSA will allow for the revealing of partial private keys by taking the Bitcoin. This, in turn, allows the other party to take control over the Monero.
In situations like these, it is crucial to take all potential scenarios into account. A successful swap will allow for user A to reveal the key to user B. Canceling the swap has the opposite outcome. Avoiding a deadlock is crucial in this regard. In the whitepaper, this is explained a bit more in detail.
When can we use it?
For the time being, there is no working implementation on the mainnet yet. The protocol itself is viable, but there is a lot of engineering to be done before anyone can use it safely. A proposal will be submitted to the Monero community to gauge interest in exploring this option.
If the CCS proposal is approved, and funding is received, a working client for XMR/BC atomic swaps will appear eventually. How long that process will take, is very difficult to predict at this time. It will be a major challenge from an engineering point of view.