Uploaded July 2020 | Updated September 2026, 2 hours ago
References:
Layer swaps: search youtube for Alex Bosworth - Submarine Swaps on the Lightning Network
(by SF Bitcoin Developers)
Coin swaps: gist.github.com/chris-belcher/9144bd57a91c194e332fb5ca371d0964
Data swaps: suredbits.com, rgb-org.github.io, getjuggernaut.com, boltz.exchange, and sphinx.chat
Also google Electrum, Breez, and Phoenix wallets
MISTAKES: I made a mistake when I said that hashlocks do not go on the blockchain. They do go on the blockchain as part of the script that unlocks a hashlocked utxo. This can help blockchain analysts identify layer swaps as well as an ownership transfer that uses them, and it hurts privacy.
I also made a mistake when I said that coin swaps set up a hashlocked address just like a layer swap. They can do that, but if they are set up that way, they suffer from the same privacy flaw involving the hashlock going on the blockchain. To get around this, the implementation by the joinmarket team will not use hashlocks. Instead, it will use 2p-ecdsa signatures, which is a single signature that is created by joining the public keys of two parties. These two-party signatures create a transaction that shows no evidence of being anything other than a regular bitcoin transaction. They also allow one party to give control of the address to the other party either by just giving him the private key with which he created that address or through public key tweaking, which enables the same password-like functionality of hashlocks, but without any identifying characteristics.
Also, near the beginning of the video, I made a mistake when I said that Phoenix Wallet uses layer swaps. This is incorrect, at least at the present time. They may change this in the future, but Phoenix currently uses a trusted arrangement where you give them money one one layer and then hope that they will send a payment on another layer. This gives them the opportunity to steal your money. In a real layer swap, the other party can't steal your money (though there are some corner cases where one party can burn the other party's mining fees and send them to a miner). See here for more details: medium.com/@ACINQ/introducing-phoenix-5c5cc76c7f9e
Also note that in this video I am not talking about the kind of swaps you do when you exchange bitcoins for altcoins on a custodial exchange. This video is about atomic swaps, and the first two examples are within bitcoin -- bitcoin-for-bitcoin swaps. The last type of swap -- a data swap -- can encompass bitcoin-for-altcoin swaps, but the model, as I describe it, involves a property called atomicity -- which means that no one can use such a swap to steal someone else's coins. If you're using a custodial exchange to do a swap, that's not an atomic swap because the exchange could steal your coins and refuse to give you whatever asset you traded for. In the swaps I'm talking about, that's impossible because of the property called atomicity -- if the first half of the swap happens, the second part must happen too.
bc1qefhunyf8rsq77f38k07hn2e5njp0acxhlheksn
References:
Layer swaps: search youtube for Alex Bosworth - Submarine Swaps on the Lightning Network
(by SF Bitcoin Developers)
Coin swaps: gist.github.com/chris-belcher/9144bd57a91c194e332fb5ca371d0964
Data swaps: suredbits.com, rgb-org.github.io, getjuggernaut.com, boltz.exchange, and sphinx.chat
Also google Electrum, Breez, and Phoenix wallets
MISTAKES: I made a mistake when I said that hashlocks do not go on the blockchain. They do go on the blockchain as part of the script that unlocks a hashlocked utxo. This can help blockchain analysts identify layer swaps as well as an ownership transfer that uses them, and it hurts privacy.
I also made a mistake when I said that coin swaps set up a hashlocked address just like a layer swap. They can do that, but if they are set up that way, they suffer from the same privacy flaw involving the hashlock going on the blockchain. To get around this, the implementation by the joinmarket team will not use hashlocks. Instead, it will use 2p-ecdsa signatures, which is a single signature that is created by joining the public keys of two parties. These two-party signatures create a transaction that shows no evidence of being anything other than a regular bitcoin transaction. They also allow one party to give control of the address to the other party either by just giving him the private key with which he created that address or through public key tweaking, which enables the same password-like functionality of hashlocks, but without any identifying characteristics.
Also, near the beginning of the video, I made a mistake when I said that Phoenix Wallet uses layer swaps. This is incorrect, at least at the present time. They may change this in the future, but Phoenix currently uses a trusted arrangement where you give them money one one layer and then hope that they will send a payment on another layer. This gives them the opportunity to steal your money. In a real layer swap, the other party can't steal your money (though there are some corner cases where one party can burn the other party's mining fees and send them to a miner). See here for more details: medium.com/@ACINQ/introducing-phoenix-5c5cc76c7f9e
Also note that in this video I am not talking about the kind of swaps you do when you exchange bitcoins for altcoins on a custodial exchange. This video is about atomic swaps, and the first two examples are within bitcoin -- bitcoin-for-bitcoin swaps. The last type of swap -- a data swap -- can encompass bitcoin-for-altcoin swaps, but the model, as I describe it, involves a property called atomicity -- which means that no one can use such a swap to steal someone else's coins. If you're using a custodial exchange to do a swap, that's not an atomic swap because the exchange could steal your coins and refuse to give you whatever asset you traded for. In the swaps I'm talking about, that's impossible because of the property called atomicity -- if the first half of the swap happens, the second part must happen too.
bc1qefhunyf8rsq77f38k07hn2e5njp0acxhlheksn
