Definition
An atomic swap is a method for exchanging assets between parties so that the protocol aims to complete both sides of the exchange or allow refunds, rather than leave one party paid and the other unpaid. A common design uses hash time-locked contracts: one participant commits to a secret's hash, and revealing the secret to claim one asset enables the other participant to claim the corresponding asset. Different deadlines provide refund paths when the exchange does not finish. The participating networks must support compatible cryptographic and timing mechanisms. Atomic does not mean instantaneous, free, or completely riskless. Users still face transaction fees, confirmation delays, monitoring requirements, and implementation errors. Cross-chain reorganizations and poorly chosen timeouts can also matter. Unlike a custodial exchange, the arrangement seeks to avoid handing both assets to an intermediary, but careful protocol design and reliable wallet software remain essential.
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