An atomic swap is one method to exchange two different cryptocurrencies from two different blockchains without any trusted third party, such as a cryptocurrency exchange. It also does not require you to trust the other person you will swap with. The protocol for atomic swaps forces both parties to follow the rules. The trade is completed or if it’s not, both parties keep the crypto they intended to swap. It will not be possible for one person to run away with the other one’s crypto.
Monero’s privacy features create unique problems for atomic swaps, but Monero teams, including COMIT and Farcaster, have implemented atomic swaps with Bitcoin and launched the one with Ethereum in 2021. Monero’s Ring Signatures keep a sender’s anonymity, but the Monero teams have come up with a process enabling Monero atomic swaps even if the sender’s address is obfuscated.
Here is a simple example of how the mechanism for Monero atomic swaps work.
Jane has XMR and wants BTC. John has BTC and wants XMR. They both have to download and run a program that will enable the atomic swap protocol. Once the software is running, Jane and John connect to each other and make shared secrets and keys. A new Monero address is created. Jane has half of the key and Bob has the other half. They also have a view key to this address so they both can see if the XMR arrives.
John sends his BTC to a special address. Jane sees the BTC on the address and sends XMR to the Monero address that she and Bob each have half of the key to. John can see the XMR using the view key. If the XMR is there, he then sends Jane a piece of a key that will enable her to withdraw the BTC. As she’s claiming the BTC, her half of the Monero key is revealed to John. John can now claim the XMR, but Jane can’t take it back since she only has half of the key.
Bitcoin, which has refund transactions, is sent first. Monero is sent only when the Bitcoin is on the blockchain already. Monero can use Bitcoin’s script for refund transactions even without having the same capabilities.
The team for atomic swap between Monero and Ethereum continues to develop the protocol. It is currently live on stagenet and they are encouraging Monero holders to try it out and give the team feedback or issues encountered. You can check out how it’s going and the milestones here. The full implementation of the atomic swap between XMR and ETH will be a major breakthrough as it connects the leading smart contract blockchain with the leading privacy-centric blockchain.
If atomic swaps are too technical and complicated for you, you can still exchange or get Monero from reputable centralized and decentralized exchanges, crypto brokers and peer-to-peer (P2P) exchanges. Most centralized exchanges require KYC (know your customer) and privacy-conscious individuals may find decentralized exchanges and P2P networks more ideal.
Before you pick an exchange, consider its security, liquidity, fees, history, markets, and user experience. If you opt for the services of crypto brokers, make sure they have solid financial backing, user-friendly trading platform, credibility, reliability, experience, customer service, commissions and fees, longevity, sign-up process (some require you to deposit large sums before you can sign up for an account, which is most likely a scam), technical support (not just customer service), online platform, and convenience.
Stay safe in P2P exchanges by making sure the website is secure. Verify their reputation through feedback and overall ratings. Be wary of newly opened accounts. Make a habit of taking screenshots of transactions. Use the platform’s escrow service if it’s available.
Before you even get on an exchange or a P2P platform, you’ll need to have a crypto wallet that supports Monero. XMRWallet is the first web-based Monero wallet. It allows you to use Monero without requiring you to download any software and has multiple language support. Best of all, it’s completely free, including importing previous transactions. Registration is not required, and it’s easy to use. Create your XMRWallet now and take advantage of everything it offers.
Once you have your XMRWallet, locate your Monero address. Go to your chosen crypto exchange or P2P exchange and sign up and start buying XMR. Hold it or use it! It’s a currency and can be used as payment for goods and services.