Atomic Cross-Chain Transfer (ACCT) is a technology that enables digital assets (such as cryptocurrencies) to be transferred securely between different blockchains. This process is called “atomic” because it ensures that the entire transaction happens as a single, indivisible operation – it either fully completes or doesn’t happen at all, preventing partial completion which could result in a loss of assets.
In a typical atomic cross-chain transaction, there are two parties: one owning cryptocurrency A on blockchain A, and the other owning cryptocurrency B on blockchain B. The parties agree to swap their cryptocurrencies. This swap occurs directly between the two blockchains, without the need for a trusted intermediary or a third-party exchange.
The general process of an Atomic Cross-Chain Transfer involves smart contracts and cryptographic techniques such as hash time-locked contracts (HTLCs). Here’s a simplified explanation:
- Party A initiates the transaction by creating a smart contract on blockchain A. The contract locks up the agreed amount of cryptocurrency A and includes a cryptographic hash of a secret number (a “hashlock”) and a time limit for the other party to fulfill their side of the transaction (a “timelock”).
- Party B, upon receiving proof of this smart contract, creates a similar contract on blockchain B, locking up the agreed amount of cryptocurrency B. Importantly, this contract uses the same hashlock.
- Party A then unlocks the contract on blockchain B using the secret number, revealing it in the process. This allows Party A to receive cryptocurrency B.
- Party B is now able to see the revealed secret number and uses it to unlock the contract on blockchain A, thereby receiving cryptocurrency A.
- If Party A never submits the secret number to unlock the contract on blockchain B, then after the time limit expires, the smart contract allows Party B to reclaim their locked-up cryptocurrency B. Similarly, if Party B never claims the cryptocurrency A on blockchain A, Party A can reclaim it after its time limit expires.
So, these transactions are fully trustless (no need to trust the other party) and secure, as they’re based on cryptographic proofs. Atomic Cross-Chain Transfer technology has the potential to greatly increase the interoperability of different blockchains, allowing for a much more interconnected and efficient ecosystem of cryptocurrencies.