Being a web designer, I am always faced with the dilemma of how do I keep my clients data safe from malicious people. I try to educate them about not opening up suspicious links to emails and websites but of course this got me to thinking about just how safe our information is in the crypto world. Turns out: its through cryptography.
It works something like this: Each user has special codes embedded in the transaction which stops their information from being assessed by others. This is called cryptography and its nearly impossible to to hack. It’s also where the crypto part of the definition comes from. Crypto means hidden, so the information is hidden.
I’m not going to go into a long explanation of this ( I will put a video below that explains this in detail) but its pretty much like the process of sending an encrypted message to a business associate or your friend. If they have the same email program you have, you can just encrypt the email before you send it which basically scrambles the words and send it out so that it’s safe from malicious people until it gets to you safe and unaltered in any way. That’s pretty cool.
When you making money transactions on the internet the last thing you want to think about is if the wrong person is going to intercept the transaction. I know that cryptocurrency is still going through it’s growing stages but I feel much more confident knowing that developers are thinking hard about security and encryption.
Last weekend I went to a crypto meetup where the topic was atomic swaps. Of course I had no idea what this was so I was totally intrigued.
Atomic swaps are basically a way for 2 parties to swap different cryptocurrencies on their own without the need for an exchange which we all know can come with high fees and wait times. The “swap” on the other hand can be done without the need of an exchange or miners being involved. This kind of swap also has no to low transaction fees and can be done on or off the blockchain. The basic idea is sort of like a 3-way handshake between both parties that want to set up a transaction between themselves. Once they decide what they want to trade, they set up a contract that cannot be broken and only completes when both parties get what they agreed to.
Right now the only catch of these transactions are that:
Both currencies support HTLC
Both have the same hashing algorithm
This transaction is possible through a process called Hashed Timelock Contracts(HTLCs). Both parties agree to predetermined contract that is set up for them to verify the transaction and trade their coins through a secret channel that only they have access to. A more detailed explanation can be found at Blockgeeks website.
I thought this was pretty cool because this a great way to get something that you want without going through a lot of hassle and paying a lot of money in fees. The technology is still fairly new but there have been successful swaps and I’m definitely looking forward to more news on swaps in the coming year.