The first ever off-chain atomic swap between Bitcoin and Litecoin has been successfully completed, according to news sources. The swap is particularly important because it was made off chain, meaning that ownership of the coins changed hands, but there was no transaction recorded on either Blockchain.
According to Litecoin founder Charlie Lee:
“Previous atomic swaps that I have done were on-chain, and had the on-chain limitations of slow [transactions] and high transaction fees. Off-chain atomic swaps are significantly better. They are instant, [have] low fees, and better protect one’s privacy.”
This system would allow users willing to connect between chains the opportunity to pass cryptocurrencies without having to wait for the on-chain confirmations, and with far lower fees. This connection would produce incredibly faster transactions for Bitcoin, as well as a simple but elegant solution to the ongoing scaling debate among enthusiasts.
The other substantial benefit to such transactions is that they are effectively fully anonymous. Because they leave no trace on either chain but are complete, they are untraceable in any form. Such privacy is something that is being pursued by ZK options on the Ethereum chain.